As we round into 2023, it’s natural to wonder, where is the housing market heading? After all, homebuyers in Charlotte (and across the country) are still recovering from a pandemic, navigating record-setting inflation, and dealing with rising interest rates. What can we expect for the market going forward?

At Fairway Mortgage, we see three trends Charlotte’s homebuyers and sellers need to know for 2023: 

  • Inventory will stay tight
  • Prices are expected to keep moving upward
  • Mortgage rates should decline

Although no one has a crystal ball and the future can never be foretold with certainty, data is pointing to these three factors as the likeliest outcomes, so it pays to be prepared.

Historically tight inventory

The fourth annual State of Housing in Charlotte report by UNC’s Childress Klein Center for Real Estate notes that although the Charlotte area housing market remains tight, there are signs it is softening somewhat. 

Homes were staying on the market for an average of nine days in September 2022, up from three days in May 2022. This could indicate more opportunities for savvy buyers than in the recent past, even if prices don’t fall.

Rising prices

Just two years ago in January 2020, the average home price was $273,000, according to the report. Now the most recent estimates put average prices at $420,000 in September 2022—about 54% higher. 

While man experts predict an upcoming dip in prices of between 1% and 10% nationwide, hot markets like Charlotte may not see the same kind of price corrections.

Combined with the rising mortgage rates of the pandemic era, these prices mean homeownership is rapidly becoming out of reach for many. The Childress Klein report acknowledges that less than 4% of homes sold for less than $150,000 in the greater Mecklenberg County area (as well as Cabarrus, Gaston, Iredell, Lincoln, and Union counties, plus South Carolina’s Lancaster and York counties). 

Although sellers may be grateful to see their equity climb, high prices can make it difficult to sell your current home and move to another. You may be able to sell and see a great return on your investment, but a new home could cost you those gains and more.

Mortgage rates should decline

However, this news may be balanced by a more welcome prediction for many: inflation is showing signs of coming down, and so are mortgage rates.

Award-winning market predictor Barry Habib of MBS Highway reminds us that mortgage rates follow inflation, and inflationary pressures are decreasing. 

This may create “the opportunity you have been waiting for in housing,” Habib said recently.

Nationwide, he said, there is more supply, and more inventory, even if that’s not the case locally. Demand is slowing, and it’s more expensive to take out money (with the recent Fed rate hikes), so the economy should cool somewhat. As inflationary pressures come down in the spring, deceleration will continue and rates should drop. Once the Fed funds rate flattens or comes down, and other market rates drop as well, you should see mortgage rates follow a similar pattern.

Habib predicts, in fact, that mortgage rates could fall to about 5% in the first half of 2023. Such decreases could “unleash buyers” who want to buy homes, but were unready to commit to the mortgage rates of 2022. Instead of “dating the rate” and marrying the home, as many often advise, these buyers instead will be ready to purchase in 2023.

Others will be eager to refinance or pay off existing mortgages.

Mortgages out there will be refinanced or paid off, and more buyers may be willing to move homes when mortgage rates are at 4% or 5%. All of these factors will affect national mortgage rates, and that has an effect on Charlotte housing.

Habib also expects that Americans will see a recession in 2023. Historically, he says, mortgage rates go down during recessions. Meanwhile, housing prices nationally, as measured by the Case-Schiller National Home Price Index, have gone up in 8 of 9 recessionary periods since 1960. 

The only time that wasn’t true was when the housing bubble burst and led the U.S. into a recession in ‘07-’08. Without the subprime mortgage products and mortgagebacked security crisis of that era (thanks to new federal laws), there should not be a similar effect on the housing market in 2023.

How Charlotte home buyers and sellers can prepare

No one can predict the future—but you can prepare for it. Whether you plan to buy or sell a home in the Charlotte area this year, make sure you stay connected with mortgage experts who can help you navigate these turbulent times. 

The mortgage specialists at Fairway Mortgage of the Carolinas understand how important it is to arm yourself with the knowledge, tools, and information you need to succeed in today’s home marketplace. That’s why we take a family approach to all of our customers and make it our guarantee that you will make it to the closing table. 

After all, with so much uncertainty in the world, it’s comforting to know that there’s one thing you can count on: the caring, community-first team at Fairway Mortgage of the Carolinas. 

Get in touch with us today to learn more about your mortgage options and prepare for the future.

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