CHARLOTTE, North Carolina – Charlotte’s real estate market is one of the most overvalued markets in the country, according to a new study.
Researchers from Florida Atlantic and Florida International universities looked at prices against long-term trends and found that Charlotte was in the top 10 for overvaluation.
“Many buyers are looking to gain a competitive advantage by offering homes while they are still in this upcoming status,” explained Nelvia Bullock, realtor at Compass.
She says people go to great lengths to buy houses.
“They buy as is. They agitate the inspections. They offer endorsements on the valuation spread,” Bullock said.
“It’s just a crazy time right now,” said Charlotte-area assessor Tom Kirby.
Kirby says some people forgo assessments altogether or accept the difference just to get into the house.
“Appraisers have to do their job the right way and that doesn’t always add up to the sale price,” Kirby said.
The price spike has resulted in over 50% overvaluation of home values in the Charlotte area.
“What we’re seeing right now is that all of the markets we’re seeing are overvalued relative to the trend. And those at the top of the list are overvalued by a very large margin,” Eli Beracha said.
Beracha is Principal and Professor of Real Estate at Florida International University. According to research he helped compile, Charlotte is the 10th most overrated city in America.
Compared to the trend, a $300,000 home costs around $450,000.
“A combination of low supply and at the same time high demand from people who just want to move to the area is creating this overvaluation that we’re seeing,” Beracha said.
Homebuyers can’t do much about the current market conditions, but mortgage rates are expected to rise over the next few months, which could cause home prices to plateau.
“In the medium term, it must bring down real estate prices a little. So that doesn’t mean you’re going to see a correction like in 2007 and throughout the Great Recession. I don’t foresee that,” Beracha said.
Bullock advises customers to have loans ready and be prepared to act quickly with an offer.
“If someone really needs to move, we put an action plan in place to make sure they get the home they want,” Bullock said.