Charlotte’s 2022 real estate forecast calls for more homes, slightly lower prices

Why it matters: We’ve been saying it for months, but buyers are tired. And even subtle changes in the market will provide some much-needed relief.

State of play: Charlotte’s market has cooled, as inventory creeps up and home values drop slightly, according to the latest from Canopy MLS.

Inventory is still historically low, though, down 37% from last year.

• Jeff King, a realtor who specializes in historic neighborhoods near Uptown, says there are only 8-9 houses for sale in Plaza Midwood right now.
• A decade ago, when inventory was already starting to dip, there were 120+ houses for sale in Plaza.

Data: Canopy MLS

What they’re saying: Home prices and interest rates are expected to rise in 2022. Spring, which is real estate’s busy season, should pick up in 2022 with more new listings and peak demand.

• But many potential buyers will hold off on purchasing a home, local experts tell me. And when demand cools, prices will come down, too.
• And even if prices don’t dip too far, experts say spring 2022 won’t be as frenzied as spring 2021 and summer 2020.

Donny Kirby, Wyndham Capital’s VP of sales, says mortgage rates are expected to rise up to 4% by the end of 2022. That’s almost a full point higher than the average rate for 2021.

• Depending on the size of your loan, that could make your monthly payment $150-$200 higher in 2022 than what it would have been in 2021.

“As prices and interest rates go up, I think we’ll see more people decide it’s not the best time for them to buy,” first time home-buyer specialist Jeff Clay said.

David Hoffman says, many savvy buyers have noticed more homes have been coming to market in recent months. And because inventory has held more steady, there’s less desperation.

• He predicts buyers will be more willing to wait for the right house, and the days of offering over asking sight unseen are likely over, for now.
• “Home prices will climb again, but not for five years,” Hoffman said.

Data: Canopy MLS

Yes, but: Charlotte’s a hot spot for newcomers, which means plenty of demand will still exists to keep home prices from falling too far, Libby Gonyea said.

• “Charlotte is one of the most sought after locations in the country and I expect it to remain busy,” she said.

Inventory is still tight but experts say it could improve in 2022 as sellers who held off in 2020-2021 decide to go to market.

Between the lines: Covid-19 is still a wild card, King says. Many potential sellers still aren’t comfortable with showings and open houses, which has affected inventory.

• King says it’s hard to know exactly how many people are waiting to sell until the pandemic is over, but “when the pandemic ends, we might see more of a correction.”

The other side: Despite homes selling for top-dollar over the last year, Charlotte’s market hasn’t been easy to navigate for sellers either.

• “There are plenty of people that want to sell but they feel anxious on where to go with so little inventory,” Gonyea explained.

There’s a lot of inventory tied up at the luxury level, too, Hoffman said. He’s noticed potential luxury sellers have opted to prioritize buying a vacation home in lieu of upgrading or downsizing their primary residence in Charlotte.

• These buyers are able to buy their next home without selling.

• And once they do sell, the market moves more and inventory will loosen.

So what does that really mean for buyers?

“For buyers I think it will still be a bit of a challenge to secure a home,” Clay said. “So start early if you can.”

King recommends buyers start looking at homes a couple of months before they plan to start making offers. It’ll give you a sense of how the market works, what’s out there and what you do and don’t care for in a home, he says.

• If 2022 follows a traditional market pattern, prices will peak in May so buyers are more likely to score a deal now and after Memorial Day.

Getting pre-approved for a mortgage loan will also help buyers once they’re ready to make offers.

• To qualify for a 30-year conventional loan, you need a credit score of at least 620+ and should be prepared to put 3.5% down, Kirby says.
• Even if your score isn’t there quite yet, your loan officer can help you move in the right direction, so when the time comes, you’ll be prepared.

Sellers will likely still be in a good position, but experts suspect we’ve already passed peak home values.

“This past year we’ve seen a lot of sellers just throw their homes on the market without doing a ton of prep and almost at any price they wanted,” Clay said.

• Gonyea said buyers will have high expectations, especially if they’re paying a premium. That means sellers will need to do more to prepare their homes for market than last year.
• And overpricing your home could harm your bottom line, Clay said.

Historically, early spring has been the best time to list, King said. But if your style of house is in demand — say, a three-bedroom charming bungalow — you could list now and get a good price for it.

Bottom line: Charlotte’s real estate market is poised to stay strong in 2022, but conditions are likely to improve for buyers, compared to 2021 and 2020.