Home sale prices in some Charlotte-area counties are dropping

So here’s a rarity in recent years. Home sale prices are falling in some counties around Charlotte. And that’s causing some real estate agents to get creative in order to finalize deals.

For more, we turn now to Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.

Marshall Terry: Tony, where is this happening exactly, and just how much are prices falling?

Tony Mecia: Yeah, Marshall, here in the Charlotte region, we've become accustomed to having housing prices just go up, up, up, as though it's unending and it's always going to be that way. But if you look at the numbers from the local Realtor association, they show that in some Charlotte area counties that year-over-year, the median sales prices of houses is dropping. Not everywhere, and it's only in a few counties, but in Lincoln County and Cleveland County, in both of those counties in January, the median sales prices fell over what it was a year earlier. In Lincoln County in January, the median sales prices were down 6% from a year earlier. And in Cleveland County, they were down 9%. And in each of those counties, it was the third straight month of year-over-year declines. Now, the rest of the Charlotte region is still in positive territory. But I talked to a Realtor that works in Lincoln and Cleveland counties and he said that higher interest rates and higher mortgage rates were really knocking a lot of buyers out of the market. And so that's what he attributed the decline to.

Terry: Well, are there other signs besides price that the market is slowing, like homes sitting on the market longer?

Mecia: Yes. If you look at other data, it does indicate throughout the Charlotte region that the market is slowing. The number of days that houses sit on the market before being sold has increased. And then, you know, the numbers of closings and the number of pending sales, those are all down year over year. Now, we are in a little bit of a slower time in the winter. Traditionally, you know, you don't usually sell a whole lot of houses in January/February. It really starts picking up in the spring. But looking at the numbers, you can definitely say that, that there is a slowdown.

Terry: So back to that part about real estate agents having to get creative in order to seal the deal. What are they doing?

Mecia: Well, the Realtor I talked to in Lincoln County said that he's seen a lot of sellers now offer what are called "2-1 buydowns." And this is a financing technique that really has been out of favor the last 10 or 15 years, but is now perhaps coming back in vogue. What it involves is the sellers coming to closing and saying, OK, we'll put 5,000, 10,000 in escrow to essentially buy down the interest rate for the buyer. So what that allows the buyer to do is pay a lower interest rate for a couple of years before the rate reverts back to the normal, say, 30-year fixed rate. So it helps buyers get into houses. And this is a real switch, Marshall, because you'll recall a couple of years ago it was sellers that were not having to offer concessions at all. And now this Realtor told me they're seeing sellers having to offer some concessions to get the deals done. So, you know, Realtors describe this as, sort of, the market getting back to normal after a few hot and heavy years of sales and high prices, but certainly cooling off a little bit.

Terry: OK. So you didn't mention prices falling in Mecklenburg County. So why is that? And could they be falling in Mecklenburg County soon?

Mecia: They could be. We don't know yet. Hard to know the future. But we've seen in Mecklenburg and a lot of the surrounding counties, we used to see year-over-year price increases in the 20% range. In Mecklenburg County in January, the prices were up 8.5%. And that's fairly typical. You know, if you look at some of the other local counties, you know, Cabarrus, Union, Gaston, and they're all sort of in that single-digit positive range. But, certainly, if interest rates keep rising and they're expected to, you know, we could see a further chilling. And we could see a further reduction in that. Economists say that in the Charlotte region, demand is still expected to be strong. So it's anybody's guess where it goes from here.

Terry: All right. From home sales to office towers, now. We recently talked about how some office buildings in uptown are struggling financially as tenants leave amid the increase in hybrid work. But you report there's now a push to get businesses back in some of those buildings. What are building owners doing to try to lure people back? And why are older buildings in particular really hurting here?

Mecia: Local office brokers say that they're seeing a lot of companies that like moving into newer office space, into some of these new skyscrapers in South End, some of the newer ones, say at Legacy Union, uptown. But what that's doing as some of those employers move or consolidate their space elsewhere, it's leaving a lot of these older buildings vacant. And so there are several buildings, you know, built in the 1980s on College Street, other places of uptown, that are going to have to probably do a few things to try to lure tenants back in. They're probably going to have to, you know, renovate their buildings. They might have to look at converting them say into residential uses. There's not a huge demand for some of these older buildings. And Erik Spanberg, of the Charlotte Business Journal, last week reported that Charlotte Center City Partners is looking at things that it might do to help kind of ease that transition or to help smooth the deal for some of these office towers to become full again. It's unclear exactly what that might look like, but Center City Partners is supposedly working with the city to try to figure out what some options might be for reusing and repurposing, renovating, some of these older office buildings.

Terry: Charlotte's Phillips Place is also in the midst of a renovation project, including adding high-end stores and upscale restaurants. But you report a longtime restaurant there, P.F. Chang's, may no longer fit in. Are you telling me P.F. Chang's isn't luxurious?

Mecia: Marshall, I'm not throwing shade at P.F. Chang's. I like P.F. Chang's the big fan of their orange peel shrimp. But, you know, I think it's worth pointing out that those places attracted a lot of luxurious brands now. Luxurious retailers selling very expensive suits, all kinds of different clothing. You have a couple of new restaurants in there that are pretty pricey restaurants. And so this week, we looked at that trend and sort of felt the place becoming more bougie, as they say nowadays. We talked to a retail expert who said, well, it's going to be interesting to see how some of those older tenants, how they fit in, sort of with this push to be luxurious. In what was luxurious 20, 30 years ago, P.F. Chang's was looked at as pretty upscale. Now, you know, some of those visions are changing a little bit. So we'll see what happens over there.

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