Luxury Market Shows Surprising Strength

The luxury real estate home market in Charlotte has shown great resilience and surprising strength in the face of nearly 7% interest rates.  I’ll share some of the possible reasons for that later in the post, but lets look at the data.

For our purposes, I’m defining a “luxury” home as a home priced above $1M, in the closer-in neighborhoods near uptown (NoDa, Midwood, etc) and south Charlotte suburbs. This includes areas like Myers Park, Dilworth, Cotswold, and to a lesser extent Southpark. The highest closed price in this area is $591/sqft, and the highest Under Contract (UC) is listed at $990/sqft! Other areas of Charlotte, including  Ballantyne , show similar results.

A quick check in the MLS (Multiple Listing Service) reveals there were 119 homes “on the market.”

•          81 Active for sale
•          38 Under Contract

Interestingly, 14 of these had price reductions (36%) , and 13  of the Under Contract homes (34%)   went under contract in 10 days or less, and 63% in 31 days or less;  that is a pretty brisk pace for  the “cherry” homes.

Closed Home Sales

The same areas and price range saw 27 Closed transactions, which amounts to 80% of the same time period last year. Supply is up a bit in recent months but prices are relatively stable. The number sold indicates (roughly) a 2 to 1 supply of Active to Under Contract homes. Realtors and other housing experts  look at absorption rates, which is the ratio of Active to Closed. The absorbtion rate for luxuary homes right now is ~3, indicating about a 3 month supply of homes on the market. That's just barely a seller's market. 4 - 6 months of inventory in considered a neutral market.

There were 25 new listings, homes brought to market in the same 30 days, roughly replacing the number sold.

Home Prices

Across the Charlotte area, and all price ranges, November will show the 5^th straight month of home price declines from their May-June peaks of 24% above the same period a year earlier. Not so much (yet) in the luxury market, where prices are off their spring high somewhat, but still well above last year’s prices. For example:

•         Myers Park Up 25.6% (with no recent loss)
•          Dilworth Up 16.8%
•          Cotswold Up 16.1%

The beautiful tree lined streets of Myers Park remain  barely touched.

While the number of luxury sales are down 20%, the supply is up a bit up in the last few months, and prices remain high. The best homes still sell very quickly, and even the average luxury home is selling in under 30 days

What explains these facts? I think its more than one thing, including a strong local economy, Charlotte's warmer but four season climate, relatively lower taxes, and its high quality airport combine to make Charlotte a popular spot for young and old alike. 

Demand for luxury homes remains high. Our real estate market had what our finance folks would call "froth" on it in the spring, and that froth is now gone.  Underneath? A steady market, relatively affordable compared to other major cities in the upper price ranges. Looking forward, based on the recent sales data, and the new luxury homes coming to market, we're likely looking at a neutral luxury market as we head into the new year. The luxury market has been slower to respond to price decreases but that may change as we enter into 2023.