Here's something we haven't heard in a long time. Charlotte-area home prices are falling. According to the latest data from the Canopy Realtor Association, the median sales price for a home in the 16-county Charlotte region was about $353,000 in February. That's a nearly 2% drop from the same month last year and is the first year-over-year decline in at least four years, according to those figures. For more, we turn now to Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.
Marshall Terry: Tony, all we heard the past few years is that the price of homes are going up, up, up. It didn't seem like prices could fall. So what's causing this drop?
Tony Mecia: Well, Marshall, it's a few things. The main thing in talking to Realtors that they say is that higher interest rates are keeping a lot of buyers out of the market. So unlike a couple of years ago, when you had very high demand and bidding wars for houses, that kind of thing, they're not seeing that kind of demand anymore because the interest rates are higher. And if you're in a house with a lower interest rate that you've got over the last few years in, say, the 2 to 3% range, if your interest rate on a new house would be 6 to 7%, that's going to maybe want to keep you in your existing house. And so the sellers of houses are getting less aggressive in pricing those houses because the demand has dropped. I think it's important to point out that in Mecklenburg County, prices were still up year over year 3.6%. That's about $399,000 was the median price. But, you know, we're seeing really a shifting in the market, something we really haven't seen here in a number of years.
Terry: Now, can we expect prices to continue to fall? Or are they going to shoot back up or hold steady?
Mecia: It's really hard to know. It's just going to depend. If you talk to real estate agents, they will point out that we're starting to enter the traditional house-selling season in the spring and summer. It could really shift either way. The conventional wisdom had always been because so many people are moving to Charlotte and the Charlotte region, that these prices aren't going to really collapse here. But the conventional wisdom isn't always right.
Terry: In Mecklenburg we just had this revaluation come out kind of right at the market's peak last year. Are people potentially going to be caught with a tax value that's higher than what they could sell their house for?
Mecia: I think it's possible, Marshall. You know, if the market prices keep dropping, that, yes, we're going to have values that are higher than the actual market price. And that sounds really bad. And I know it's a little bit confusing. But I talked to the tax assessor about this a few weeks ago and he made a few points. And he said, first off, the tax values they're valued as of Jan. 1, 2023. And those values are going to be a lot closer in value to house prices than the time of the last assessment, which was in 2019 — that's number one. Number two is, you know, they can't just keep revaluing houses if the market drops. They don't do that when the market increases. They're just trying to pinpoint what is a fair value as of a certain date, which is every four years. And, I would make the point further that most housing prices have gone up in the last four years, while the tax value has stayed low. So you could look at it like you're getting a little bit of a free ride over the last few years. The other point is that it only really matters if it's just happening to you. I mean, if overall in the market all the houses are overvalued by, say, 10%, you're not hurt any worse on your taxes because everybody is sharing in that burden. So it's an inexact science and I know it's complex, but there are a few reasons that that shouldn't be really a cause for alarm.
Terry: OK. So while median home sale prices are falling, you report the number of Mecklenburg County homes valued at over $1 million is actually growing. In fact, it's doubled since 2019. So where are these newly minted $1 million homes?
Mecia: Yeah, there are now million-dollar homes in a lot of different neighborhoods in Charlotte. There are a few areas that have multimillion-dollar homes. The Cornelius area on Lake Norman, Quail Hollow Club area, the Gleneagles Road area, of course. There some places off of Colony Road near Charlotte Country Day School that are among the most expensive. But now it's possible to have million-dollar homes all over the place, Plaza Midwood. There was a house on Seigle Avenue in the Belmont neighborhood that's valued at over $1,000,000. A lot of places in South Charlotte, you know, Providence Road corridor, Ballantyne. Having a $1,000,000 house, Marshall, is not as special as it used to be.
Terry: Well, let's move on to some banking news now. The FDIC this week announced Raleigh-based First Citizens Bank is buying chunks of failed Silicon Valley Bank. First Citizens has around 20 branches in Charlotte. Are customers here going to see any changes?
Mecia: If you're an existing First Citizens Bank customer, I don't think you're really going to see a whole lot. And now if you're, if you happen to be a Silicon Valley Bank customer — there aren't very many of those, I think in the Carolinas. But if you are, then basically they're just going to migrate your deposits. If you have a loan, for example, First Citizens will now be administering those.
Terry: Finally, it looks like sports gambling is coming to North Carolina after state lawmakers this week passed a bill legalizing it. And Gov. Roy Cooper has said he favors the legislation. What would that look like for folks wanting to bet on the Hornets or Panthers?
Mecia: Right. You're not talking about you, right, Marshall? You're talking hypothetically doing it as a listener service. Is that what we're doing here?
Terry: (Laughs.) I'm not sure betting on the Hornets or Panthers is ever a good thing.
Mecia: That's true. OK. So the North Carolina House passed a measure that would allow sports gambling — both online sports gambling, if from your couch on your phone, as well as allow some in-person sports gambling venues, at places like Bank of America Stadium, Spectrum Center, Charlotte Motor Speedway, that sort of thing. And the way it would work is the North Carolina Lottery Commission would issue between 10 and 12 licenses. They would charge the applicants $1,000,000 apiece. The state would take a 14% cut. And passing the House this week is significant, because that has been the stumbling block in the last couple of years. The House voted it down last year, but it passed pretty comfortably this week. So it looks like that's on track to happen and the betting could start as soon as Jan. 8, 2024, which is just in time for the NFL playoffs and the Super Bowl — if people have hopes for the Panthers in the playoffs and Super Bowl.
Terry: Well, the Panthers have the number one draft pick. So here's hoping. Thanks, Tony.
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