Charlotte’s housing market impacted by COVID-19 — but a rebound is on the horizon

Many of our clients are eager to hear how the Covid-19 pandemic has impacted the real estate market.  After getting a real look at the numbers over the past couple months, and there is no denying Covid-19 has continued to put a damper on Charlotte’s housing market in May. The number of home sales and new listings hitting the market has dropped again over the year by year stat. We do have some positive news going forward, however, as monthly data on residential real estate activity in the local market also showed that a rebound could be on the horizon.

A very positive sign for the immediate future are the number of pending contracts in May. Per Canopy Realtor Association, pending contracts jumped 14.8% year over year to total 5,926 across the 16-county Charlotte region. Pending sales serve as an indicator of buyer demand and signal future home sales likely to record in the next month – they increased 46.5% since April, when there were just 4,045 pending contracts during the month.

Looking at year over year stats can be a little dreary at first impression. Per MLS, actual home sales in May 2020 dropped 30.4% from May 2019. But the nearly 3,600 home sales recorded that month rose 1.8% from April. June sales are expected to show continued increase.

Some of the current delayed home closings could be attributed to Lenders. Many have had to make adjustments during Covid-19, as well. Lenders have impacted the ability to close quickly as buyers have had to adjust to increased lending standards and documentation regarding income, credit and employment.

New listings added to the market in May also dropped year over year, falling 22.1%. But again, new listings in May increased 21.4% since April. Charlotte metro area has about 6,700 homes for sale. That leaves the region with a 1.6-month supply, compared to a 2.6-month supply in May 2019.  This can be seen as positive news for would-be sellers considering putting their home on the market. With inventory so low, competition among buyers is steep.

The monthly increase in new listing activity and uptick in pending contracts are positive signs the market is actively recovering, though will take time for a full recovery.

For part of March and April, services offered by Charlotte-area real estate agents had been hampered by restrictions in place through Mecklenburg County’s stay-at-home order to stem the spread of Covid-19. As restrictions eased, both agents, buyers, and sellers became more comfortable with the Covid-19 protocols for safety during showings. Masks and gloves have become standard protocol for showings, and sellers are accustomed to leaving doors open and lights on.

Charlotte-area home prices have remained elevated amid tight inventory. Over the year, the median sales price rose 1.9% to $265,000 and the average sales price increased 0.2% to $310,166. The average list price of $375,709 jumped 11.2% from May 2019.

While overall numbers appear to be dampened from this time last year, the trend seems to show there is currently a huge advantage for sellers. The region is still a hotbed for investors, driving up the competition, particularly in the $200,000 and below range.  If selling is on the near horizon, now is a great time. 

Leasing out primary residences are also a great option for the time being, giving would-be sellers an opportunity to watch the market for a year.  We have also seen a trend of home sellers choosing to rent between their home sale and making their next purchase during this time, due to a lack of inventory, desire to watch the market, waiting on new construction, and simply trying to decide what area of town they want to live in next.  This is great for the rental business, particularly single-family homes.  We have an influx of newcomers to the Charlotte area, as well, also looking to rent a year before purchasing. Whether leasing or selling, the area seems to be on a roadmap for a quick recovery from Covid.

Written by Laura Grant