effect on jobs by reopening the economy. The positive momentum will be slowed by tightening lending restrictions, difficulty viewing properties, working with professionals remotely and decreasing consumer confidence. Charlotte Forecast: +0 percent to +3 percent FALL 2020-SPRING 2021 Once the forbearance period expires there could be an increase of foreclosures. We expect unemployment to remain elevated in this time, perhaps receding to 7 percent to 10 percent. Medical professionals warn of a resurgence in COVID-19 cases in the fall-winter period, potentially locking down some areas of the country again. Seasonal slowing of market demand, increasing defaults and continued challenges for many job sectors will weigh on real estate prices. Charlotte Forecast: -2 percent to -5 percent 2021-2023 There are many complex variables to predict home values for next year and beyond. During the Great Recession, U.S. unemployment rates peaked around January 2010; however, they took another two years for home prices to find the bottom (2010 to 2012 down -10 percent in Charlotte vs -8 percent nationally). The downward pressure of foreclosures on local valuations,

Index Trend of Rent vs Home Price vs Employment vs Income


Employment Change Employment Change Home Value Change

48.16% 46.12%


Household Income Change SFR Rent Price Change



31.77% 33.92%



















unemployment rate was at a low of 4.5 percent in early 2007 and jumped to a high of 12.9 percent in 2010. Prices began recovering in Jan. 2012, after 2 years of employment recovery and mortgage rates dropping below four percent. In February 2020, the median single-family home value in the Charlotte MSA was $237,000 (up 5.4 percent year-over-year). Since the lows in 2012, the Charlotte market has rebounded 59 percent over the last eight years, averaging 7.4 percent year-over-year growth. The multi-index trend shows many years with a high correlation between employment, wages, home and rent prices. However, in the past 2-3 years, the rent and price trends have surged ahead of employment and wages. WHERE ARE HOME PRICES GOING IN THE NEXT 1-3 YEARS? COVID-19 has brought a new set of socioeconomic changes to the world, which could have lasting impacts.

Fortunately, the effects on home values due to high unemployment look brighter now versus the last recession due to the speed at which events are occurring. It took two years to reach peak unemployment between 2008 and 2010, while during this pandemic we may reach a peak in only two months. Congress also acted quickly and broadly in response to the shutdown with the CARES Act and other FED-backed programs released in March and April. These programs will reduce any immediate impact of foreclosures by giving homeowners time to get back to work. Stimulus measures also provide liquidity to lenders so they may continue to offer financing to buyers. SPRING-FALL 2020 The next six months coincides with typically high demand spring/ summer seasons, low levels of inventory for sale, low-mortgage interest rates, the CARES act forbearance policies freezing foreclosures and the snapback

large numbers of underwater borrowers and low consumer confidence contributed to the decline in this time. If unemployment rates stay

elevated into 2021 and foreclosure rates increase, this will cause more price softness in the markets. Overvalued markets and higher-

priced properties are more susceptible to these shocks. On the positive side, the

88 | think realty magazine :: june 2020

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