State of Housing in Charlotte 2024 Report
The Charlotte housing market, while showing signs of cooling down from the peak of the COVID-19 pandemic, remains tight and presents significant affordability challenges, particularly for low- and moderate-income households. While supply is beginning to catch up with demand, rising prices, coupled with high interest rates (though declining in recent months), are creating a challenging environment for potential homebuyers.
Report Highlights
Population Growth: The Charlotte MSA population grew by over 49,000 people from 2022 to 2023, equivalent to adding a city the size of Huntersville or Kannapolis.
Housing Supply: After years of underbuilding, the Charlotte MSA produced a surplus of 5,000 housing units in 2023. However, experts predict this trend may not continue due to past construction slowdowns and eased monetary policies.
Limited Affordable Options: Only 2% of houses sold in 2024 were priced under $150,000, a stark contrast to 34.5% in 2014. This demonstrates the shrinking availability of "starter homes."
Income Required for Affordability: A family would need an income of $138,000 to afford a median-priced house in 2024, though this represents an improvement from the $152,000 required in 2023.
Subsidized Housing: A significant portion of the population relies on subsidized housing. A household at 50% of the Area Median Income (AMI) can afford to pay only $943 in rent, placing them below market rates for even "C" grade apartments.
Rental Market Trends: Over 12,600 of the 15,478 new apartment units delivered in the past 12 months have been absorbed, indicating strong demand.
Key Take Aways
Persistent Housing Shortage: Despite recent increases in housing supply, a shortage persists, particularly in affordable housing options. This is driven by rapid population growth, with the Charlotte MSA adding over 49,000 residents from 2022 to 2023.
Rising Housing Costs: Both home prices and rental rates have seen significant increases in recent years. The median home price reached $429,945 in September 2024, while the average rent for a "C" grade apartment is $1,202 per month.
Affordability Crisis: The rising cost of housing is putting a strain on affordability, particularly for lower-income households. More than 75% of households in the Charlotte region cannot afford a median-priced home.
Rental Market Dynamics: The rental market is also tight, with vacancy rates remaining low. While apartment construction has increased, leading to some stabilization in rental rates, demand remains strong.
Market Comparison
Overall, the Charlotte housing market presents challenges for both renters and buyers, with high home prices and rents. While Charlotte has a lower cost-burdened rate than many of its national peers, it still faces affordability issues, particularly given its rapid growth.
From 2022 to 2023, Charlotte had one of the highest population growth rates nationally, and only Charleston and Spartanburg grew faster regionally.
Median home prices are higher in Charlotte than in most of its regional competitors and are comparable to those in its national competitors.
Among regional competitors, only Charleston and Raleigh have higher median rents than Charlotte.
Nationally, Charlotte has a moderately low median rent, although its rental growth rate is among the highest.
Charlotte’s price-to-rent ratio, a measure of the relative value of buying versus renting, is lower than Asheville and Raleigh. Columbia, Greensboro, and Spartanburg have lower price-to-rent ratios than Charlotte, indicating that, in those markets, buying is more favorable.
Nationally, the price-to-rent ratios in Denver, Portland, and Sacramento are much higher than in Charlotte, indicating that renting is more favorable in those cities. San Antonio and Tampa have lower price-to-rent ratios, indicating that buying is more favorable.
Almost half of Charlotte renters are considered cost-burdened, paying more than 30% of their income for housing. However, this cost-burdened rate is lower than in many of Charlotte's national competitors.
The percentage of cost-burdened homeowners in Charlotte is lower than in most of its regional and national competitors.
Conclusion
The Charlotte housing market continues to face significant challenges, with affordability being a primary concern. Addressing these challenges requires a multi-faceted approach that involves collaboration between policymakers, developers, and community stakeholders. By focusing on increasing affordable housing supply, streamlining regulations, and supporting homebuyer assistance programs, the Charlotte region can work towards creating a more equitable and sustainable housing market for all its residents.
Real Estate Advocacy
CLT Public Relations provides Real Estate Advocacy Services, in the Charlotte Region, for those needing assistance with real estate policies at the local municipal government level.