Charlotte’s Luxury Market Continues Upward Progress In Most Segments
If you rely on the media for your real estate news, you’re seeing a lot of dialogue about skyrocketing prices and inventory shortages. While this is true in some price points and areas, the luxury market in the Charlotte region can display a wide variety of conditions depending on where you are and what price segment you’re evaluating. This market update focuses on the mid-market luxury segment ($500,000 to 999k), the range above $1 million in value and up to $2 million, and then the ultra luxury segment above $2 million, all of which can display varying characteristics depending upon where you are.
Traditionally popular areas like Myers Park, Eastover, and the SouthPark area all reported solid second quarters of 2018, with the most significant activity coming in the segment above $1 million. The Providence Road and Union County areas continued a strong spring and summer, reporting numbers in line with last year’s busy summer and ending the quarter with 128 homes pending over $500,000 in value.
Showings In general, showing activity, particularly in the $500,000 to $1.99 million segments, has continued to be strong in Mecklenburg County, with most areas reporting double digit increases in showings over last summer. The period around July 4th can tend to fluctuate due to vacation schedules and this year’s heavy travel season is no exception. The ultra luxury segment, which tends to be more discretionary, was on track to post a record year moving into late May. Trade discourse and financial market volatility appears to have taken some temporary steam out of showing activity, as the $2 million plus segment saw a decline in showings year over year for the summer period of roughly 20%, although the past week’s market rally and tempering of the trade discourse appears to have rekindled some activity in the high end market.
Inventory In traditionally high demand areas, inventory has declined below 4 month’s supply in some price points, yet there remain others in which conditions remain more balanced in the six to eight month’s supply position. There are even some luxury price segments moving up the food chain in which there remain over a year’s supply of inventory, it very much depends on which of the communities below that you are evaluating. This tends to fly in the face of the mainstream reports of bidding wars and lack of inventory. In some segments yes, in others, not so much.
Prices Pricing levels in the various communities generally trended upward. Again, very much dependent upon where and in what price segment. The price segments with much larger unit sell thru (below $2 Million) are easier to quantify in terms of pricing trend than the ultra luxury range above $2 million where a handful of sales can skew prices per foot and the variables of location, trims and upfit, amenities, etc. can have greater individual impact and skew the averages. In this range, valuations are best done on a property to property basis.
The SouthPark area saw a solid level of selling activity in the mid-level luxury price
range albeit quarter over prior year quarter’s sold results dropped 18%. Fighting the downward trend were both the luxury and ultra-luxury segments above $1 million and $2 million in value. The $1m to 1.99m range posted a small gain over last year, while the ultra luxury range above $2 million more than doubled in sell through, as Foxcroft, Carmel Park, and Pellyn Wood all saw activity. Ivester Jackson Christie’s agents highlighted ultra luxury activity with sales of 3.3 million in Seven Eagles and 1.9 million in Morrocroft Estates.
Showings were up in the mid-level and million dollar range. while the $2 million plus range cooled as June finished up.
Inventory levels under $1 million sported roughly 4 months of supply, while the upper end reported 8 months, more balanced conditions.
Recent Ivester Jackson | Christie’s Sales in SouthPark
New Ivester Jackson | Christie’s Listings in SouthPark
Myers Park and Eastover enjoyed a solid 2nd quarter in closings, particularly in the
upper end pricing segments. Both the $1m-1.99m range and $2m plus range showed spikes in closings in comparison to last year’s Q2. While the range below $1 million showed a slight decline, in this area it’s more a function of available inventory than lack of appetite.
Showings in the 1m range jumped by over 40% while the market above $2 million, coming off a strong closing quarter, showed a similar tailing off of showings in June, as trade and stock market jitters caused at least a temporary pause in activity in the ultra luxury range. As July enters, some showing activity has returned in the upper end, and the ranges below 2 million remain active. With 65 homes on the market above $1 million in list price, there remains about 8 months’ supply of inventory, despite this, prices in Myers Park and Eastover have posted about 9% gains over last year’s same period.
Recent Ivester Jackson | Christie’s Sales in Myers Park / Eastover / Cotswold
New Ivester Jackson | Christie’s Listings in Myers Park / Eastover
The Lake Wylie & Palisades area saw a slight increase in the already active price segment between $500,000 and $1 million in list price. 89 homes closed in Q2, compared with 83 in the same period of 2017. Activity in the range over $1 million dipped and then rallied at the end of the quarter, with less than half the homes closing over $1 million in this year’s Q2 (4 sold vs 9 last year), yet a flurry of activity at quarter end sent 8 houses over $1 million in value pending to close as we move into the third quarter.
Inventory levels, which are healthy in the range below $1 million, remain stubbornly high over $1 million, with over 40 months of inventory. With over 21 homes in that range sold or under contract, the market is starting to chip away at that inventory level and conditions should improve for sellers in the range.
Recent Ivester Jackson | Christie’s Sales in Lake Wylie / Palisades
New Ivester Jackson | Christie’s Listings in Lake Wylie / Palisades
The bustling Providence Road Corridor saw solid activity through to Weddington and
Waxhaw. While both price segments (below one million and above one million in list price) saw very slight decreases in sell thru compared to last year’s Q2, a pretty robust 207 homes changed hands valued at over $500,000. The ultra luxury range saw 2 closings over the $2 million mark, as well as 2 more pending contracts, including an Ivester Jackson Christie’s deal at $2.1 million in Longview.
Showings in the range spiked upward in the range below $1 million range, while remaining steady in range above a million. Inventory supplies were at 4 months below $1 million, and 8 months above the million mark.
Recent Ivester Jackson | Christie’s Sales in Providence, Weddington, Waxhaw
New Ivester Jackson | Christie’s Listings in Providence, Weddington, Waxhaw
The Ballantyne/Fort Mill area showed increased sell thru activity particularly in the mid-level luxury market below $1 million in value. 97 homes closed in the $500k to 999k range, versus 83 in last year’s Q2, an increase of 16.9%, while the range above $1 million in value saw ten deals versus last year’s 9, very similar conditions with showing activity in both price segments mirroring last year’s spring activity.
Inventory levels in the sub-million segment dropped to just over 3 month’s supply, tighteninng conditions for buyers in the segment.
Recent Ivester Jackson | Christie’s Sales Ballantyne / Ft. Mill
New Ivester Jackson | Christie’s Listings in Ballantyne | Ft. Mill
Charlotte Market Forecast
Forecast- In general, today’s luxury real estate market continues to benefit from solid underlaying fundamentals. Rates remain fairly low historically, tax reform is injecting more cash into the economy, corporate earnings and employment outlooks remain solid. The summer months can be impacted by temporary speed bumps such as heavy vacation seasons, or as may be the case with this summer’s ultra luxury market pause (likely due to market volatility and trade discourse), be impacted disproportionately due to smaller sample size (an already finite buyer market being impacted by a handful of prospects stepping out or delaying activity). As an example, Mecklenburg County had 102 showings last July over $2 million, one less or delaying buyer, looking at 10 less homes, can produce a decline year over year of 10%, so we look at this segment over a 60-90 day trend due to the small sample size.
In the past week, financial markets have rallied and trade discourse appears to be moderating somewhat as we move toward mid-term elections, both probably good things for the luxury real estate market. As highlighted above, in many areas, showings have remained above last year’s summer levels, particularly in the price segments just below and just above $1 million in home value. Both of those segments appear poised for another solid performance the second half of 2018. That said, as we point out above, while the luxury market fundamentals remain mostly strong, its important to evaluate values and momentum at the neighborhood level in order to make the most informed assessment of a property’s value.