Amid the many challenges currently facing potential home buyers and sellers nationally, the Charlotte real estate economy is predicted to have a solid year, according to local experts.

Mark Vitner, who serves as Chief Economist for economic consulting services company Piedmont Crescent Capital, stated in an email to Carolina Journal that Charlotte’s housing market will continue to see expanded growth in conjunction with growth across other sectors.

 “Charlotte’s economy continues to adapt to the post-pandemic environment relatively well,” he said. “The region has continued to enjoy strong job growth, as businesses continue to expand operations in the 11-county metropolitan area. Growth remains broad based, and the region is attracting significant new investment in healthcare and life sciences, including the new Wake Forest University School of Medicine as well as The Pearl, a life sciences innovation district being developed near it. The addition of a new medical school will add a new rapidly growing industry to Charlotte’s economic base.”

Employment numbers also continue to rise in the Queen City across of variety of professions, according to Vitner, with the local economy adding jobs in many disciplines.

“Nonfarm employment in Charlotte rose a solid 3.3% this past year, as employers added 43,900 net new jobs. The unemployment rate has declined to just 3.2%, underscoring the area’s economic vitality,” said Vitner. “While Charlotte’s large financial services sector saw a slowdown in hiring due to rising interest rates, other industries such as technology, life sciences, healthcare, leisure and hospitality, and government all posted significant gains. In addition to the new medical school, major industrial projects include a new $1 billion pharmaceutical plant for Eli Lilly in Concord and the TTX Corporation, which relocated its corporate headquarters from Chicago to South End.”

The increase in job growth goes hand in hand with Charlotte adding thousands of new residents each year. In a recent survey North Carolina is the No. 4 state in the nation for inbound migration and Charlotte is the No. 3 city in the US for inbound migrants.

“The region’s attractiveness as a destination for job seekers has led to a steady influx of new residents, with an estimated 45,000 individuals moving to the metro area in the past year alone,” Vitner added. “This influx has propelled the population of the Metropolitan Statistical Area (MSA) beyond 2.8 million residents, with the Combined Statistical Area (CSA), encompassing outlying areas like Hickory, Shelby, and Albemarle, boasting a population just under 3.4 million residents.”

Reports have also indicated that Charlotte is a top moving destination in the U.S.

Vitner echoed this sentiment, detailing studies from notable moving companies U-Haul and United Van Lines. U-Haul’s recent survey ranked Charlotte as the 7th on the list of top moving destinations.

“The mix of new residents varies considerably. Both U-Haul and United Van Lines rank Charlotte as one of the top destinations for households moving this past year,” he said. “The two surveys captured one of the more unusual aspects of Charlotte’s growth, which is being driven by strong inflows of young, college-educated workers as well as older residents. Charlotte is one of the top destinations for “baby chasers”, for example, which are parents that would like to move closer to their children and grandchildren.”

Mortgage rate outlook

Vitner sees the majority of homeowners in Charlotte, who likely have mortgages with interest rates lower than the current national averages, as hesitant to sell due to rising costs.

“The majority of homeowners that have a mortgage on their home are currently locked in at rates of 5% or less, which is well below the current rate of around 6.50%,” he said. “The latest data from the National Mortgage Database show that 78.7% of homeowners with a mortgage are locked in with a rate of 5% or less, while 59.4% have rates below 4% and 22.6% have rates at 3% or less. These homeowners are understandably reluctant to put their current homes on the market because their housing costs would likely rise significantly even if they downsized and moved to a smaller home. The share of homeowners with lower rate mortgages is likely even higher in Charlotte, as the region has experienced strong population growth throughout the low-rate era stretching back to the financial crisis.”

According to a recent analysis by New Western, a Charlotte-based real estate investment company, 57 percent of local independent Single Family Rental (SFR) investors expect their business to grow at least 25 percent this year.

In an interview with CJ, New Western Senior General Manager Brandon Chesley said the outlook for 2024 will be improved compared to the last two years, but expressed caution over the supply of homes available in the market.

“I think 2024 will look a lot better for everybody, more so than it did over the last two years,” said Chesley.  “I think for Charlotte specifically there’s a few problems that exist and I think it’s nationwide, and that’s the supply. The supply of homes for people. 2024 looks great for homeowners and investors.”

In terms of the forecast regarding home mortgage rates, Chesley said it’s difficult to assess whether there will be a significant decrease in rates.  

“No one has a crystal ball unfortunately,” he said. “I think we would all love to see that but I think if they do go down, there will be things we see from that. People are waiting for them to come down. Waiting may not be the best decision for an individual because what’s going to happen is people who were waiting are going to enter in to the market, so the competition is going to go up and you’d likely end up seeing supply go further down than it currently is. You may have a lower rate but your cost base is going to increase dramatically.”

Other experts agree, saying that no one should expect home mortgage rates to decrease by a large margin any time soon.

Apartment growth and housing demand

Charlotte continues to see explosive growth in the construction of apartment complexes as well, which includes multifamily housing development.

“Apartment construction remains in high gear. Multifamily permits increased by 24.7% in the past year, totaling 10,556 units,” said Vitner. “Currently, there are 33,000 apartments under construction throughout the Charlotte area, reflecting strong demand for rental housing amid population growth and job opportunities. Around 17,000 apartments are expected to be completed this year, many of which are located along the light rail line that runs south of though South End to Pineville and north of the city through North Davidson (NoDa) and onto the University area.”

Demand is also high for new construction, but the demand comes with added limitations.

“The growth in employment and population has fueled strong demand for homes and apartments,” Vitner said. “Permits for new single-family homes rose 0.8% in 2023 to 18,991 units. Construction continues to be limited by affordability concerns, tighter than usual credit, and a shortage of buildable lots in high-demand areas. Sales of existing homes in the broader CSA fell 17.3% this past year to 41,546 homes, according to data from Canopy. Sales have fallen on a year-to-year basis for the past 24 months, mostly reflecting unusually low inventories of homes for sale.”

Overall, Vitner expects the outlook for Charlotte’s economy to remain strong, with job growth, population increases, and real estate investment fueling economic stability in the region.

“Looking ahead, the outlook for Charlotte’s economy remains bright, driven by sustained job growth, population expansion, and continued investment in residential and commercial real estate,” he said. “Addressing challenges such as lot shortages and housing affordability will be crucial to ensuring the region’s long-term economic prosperity and quality of life for residents. Builders are relentlessly searching for infill and redevelopment opportunities closer to town, where they are building a limited number of single-family homes, townhomes and condominiums. The price points are fairly high, however, which is pushing first-time buyers further out into the suburbs, including the outer reaches of the metro area, where land is much more affordable.”