To offer a more thorough insight into one of our major markets on the platform, we are taking a closer look at Charlotte, NC. This blog post provides an in-depth look at the market.
Charlotte is a major city located in the southern region of the United States, specifically in the state of North Carolina. It is the largest city in the state and the 17th largest city in the United States. The Charlotte metropolitan area, also known as the Charlotte-Gastonia-Concord MSA, encompasses several counties in both North Carolina and South Carolina current estimates of the population are just over 3 million. The Charlotte Metro area is considered to be the 10th fastest growing metro in the US.
Fueling the growth of the real estate market is a diverse and growing economy.
The Charlotte metropolitan area has a variety of industries represented. Historically, the region's economy has been dominated by banking and finance, with the city of Charlotte being the second-largest banking center in the United States after New York City.
In recent years, the area has become more diversified and has seen growth in other sectors such as healthcare, energy, and manufacturing.
The healthcare industry, for example, has grown significantly with the presence of major hospital systems such as Atrium Health and Novant Health. The energy sector is also strong in the region, with Duke Energy and other companies providing power to much of the Southeastern United States.
The manufacturing industry is another significant contributor to the local economy, with companies such as Siemens Energy, General Electric, and Honda Manufacturing of America having a presence in the area.
Additionally, Charlotte has become a hub for technology companies, with major players such as Microsoft and Red Ventures establishing operations in the region. The area has also seen growth in the entrepreneurship and startup sector, with resources such as the Charlotte Regional Business Alliance and Ventureprise supporting new businesses.
Overall, the Charlotte metro area has a diverse economy with a variety of industries contributing to its growth and success. The region's economic diversity has helped to make it a desirable destination for businesses and individuals alike.
Here is an overview of the employment picture in the Charlotte Metro area:
The labor force has grown consistently since the bottoming of the acute time around the pandemic, and the unemployment rate remains low -- very low at 3.1%
Another attractive quality of the area is a very rich cultural scene, attractive to both young and advancing generations including numerous museums, theaters, and art galleries. The Mint Museum, Bechtler Museum of Modern Art, and Levine Museum of the New South are popular cultural attractions.
And we can’t overlook the natural beauty of the area because it certainly attracts new residents and visitors alike. Charlotte is surrounded by beautiful natural landscapes, including the Great Smoky Mountains and the Blue Ridge Mountains. It is also home to several parks and greenways, including Freedom Park, McDowell Nature Preserve, and the U.S. National Whitewater Center.
The city has a subtropical climate with mild winters and hot summers, making it a popular destination for outdoor activities such as hiking, golfing, and water sports.
Charlotte is a vibrant and growing city with a diverse economy, rich cultural scene, and beautiful natural surroundings. All of these elements combine to make a very solid and robust real estate market.
Let’s see how the residential real estate market in the Charlotte metro area is doing.
The Market Action Index (MAI) for this MSA confirms that Sellers are in control of the market.
The gauge reads between 50 and 51, and if we include the overall market profile we can look underneath the engine and see what’s happening.
The sparklines beneath each metric represents a 90 day look back. So we are micro focused on near term measurement in this overview.
Median list price has increased from $399k in late Dec 2022 to $435k today. A good sign as the spring market takes root. Like every other metro area we’ve reviewed in this blog the inventory has declined and then held constant. Average days on the Market holds just over two months which is above average and the price decreases have maintained a steady decline. All positive indications of price stability. I’ve talked about price stability a lot in these blogs because I am hyper focused on looking for signs that price is unstable. Nothing indicates to me reading the metrics (now focused), that home prices in this area are under great distress, in fact, stronger evidence to the contrary shows up weekly.
One area in other markets that has shown price pressure is the “Top End” market or Luxury Market. In Charlotte, reviewing the previous two years against the Top End of the market in 2023 we see a very like pattern.
The above chart shows measures a median price for the Top 25% (or top quartile) of the Charlotte MSA, the black line represents this year (2023) and we clearly see the same pattern that we say in 2022 and 2021. While we recognize the pressures that currently exist in all markets we also should recognize that different markets will perform differently, so for Charlotte, from this data, I see a like pattern of the previous years, not a departure away from this with massive signs of distress.
The above chart shows a current year over year measure of the Average Days on Market (DOM) for the Top Quartile segment of the Charlotte, NC MSA. It’s true that the DOM trend in 2023 (the black line) is not ‘cratering’ like it did in 2021 and 2022 and we expect that. 2021 and 2022 were relatively frenzied markets and this poses problems for our borrowers to the extent that they were in bidding wars for properties. In 2023 the bidding wars are less severe, but this market also shows a stable measured move, in the directional movement of the previous years and should be on a mild decline until the seasonal inflection point which occurs traditionally sometime around August. So, let’s not panic if we see the Top Quartile DOM rise gracefully in the last two quarters of 2023 because it generally does.
To see more data supporting this point lets look at the previous 5 years:
In every year DOM falls in the first half of the year and then on or about August gracefully increases. Seasonality may not be discussed in the news you read regarding real estate markets but try to keep this chart in mind as the headlines spark your curiosity relating to the performance of housing. I chose the market segment (the top quartile) purposely because it’s this quartile that can collapse the fastest when market dynamics falter.
In all, Groundfloor has $4.5M of loan volume outstanding in the Charlotte, NC MSA. Charlotte will be a growth area for Groundfloor loan volume in the coming years. I’ve visited this market more than any other MSA we lend in, (except for Atlanta) and I am always blown away by it’s charm and vitality. I am a bull long term on Charlotte!
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