Today, the Charlotte market is experiencing some changes that are worth discussing. The rise in interest rates is one of them, and it has changed the way home buyers conduct business. Christina Mauney from Team LBD at American Security Mortgage and Andy got together to talk about what they are seeing in the Charlotte market.
The conversation takes place in a beautiful home in Cotswold built by Roma Homes. The home is about 4,300 square feet with five bedrooms, three and a half bathrooms, and two separate one-car garages. The house is expected to go up for sale for around $2 million.
Charlotte Real Estate Market Update – Nov 2022
Home prices have increased about 17% from $390,000 to $457,000, and inventory has increased from one month flat to one and a half months in the last year in the Charlotte.
As things are changing, showings are tapering off on some Charlotte real estate listings. Christina is seeing fewer pre-approvals, but those that are getting pre-approved are more serious and know exactly what they want.
Christina mentions that she is seeing many people moving to Charlotte from out of town, mainly because of the great quality of life. She had spoken to some folks from Seattle who moved to Charlotte because they work from home and wanted to live somewhere that has sunshine instead of rain. Charlotte offers a higher quality of life, and you can get a five-bedroom, three-and-a-half-bathroom home that’s brand new in Cotswold for the same price as a two-bed, one-bath 100-year-old house in Seattle. The city offers everything one could want, including proximity to the mountains, beach, pro sports, music, and food.
As home prices continue to rise, the most well-qualified buyers are the ones who get help with affordability. Christina’s company has recently rolled out some buy-down programs, such as 2-1 or 1-0 buy-downs.
With a 1-0 buy down, the seller pays for a full percentage point lower for the first year, then it adjusts to the note rate the next year. The seller has to pay for it, but it definitely helps the buyer out for that first year with the monthly payment.
The 2-1 is a little bit more, where the first year is two percentage points lower than the note rate, and the next year is one percentage point lower than the note rate. The third year would go to the note rate, where it is today.
However, many people think rates will drop before then, so they can refinance out of it before that happens without penalty. The main benefit of doing something like this is that it offers a lower rate for the first year or two, which helps with affordability.
With a buy-down you know exactly where the rates will be in one or two years, versus with an adjustable rate mortgage (ARM), the buyer takes the risk of transitioning into whatever the rate is in the future.
On a $600k house, a 1-0 buy down costs about $4,000 while a 2-1 buy down costs around $10,000.