Leaders of Realtor organizations in five hot housing markets – Northern Virginia, Charlotte, Las Vegas, Denver and San Antonio – recently gathered to discuss whether housing in their regions is headed for a boom or a bust in the face of higher mortgage rates, low inventory and record-breaking home prices. Demand for single-family homes and multifamily developments outpaces supply in these markets just as it does nationally.
Charlotte: Nearly 100 people move to Charlotte every day, a city that has been a magnet for millennials for several years, says Anne Marie DeCatsye, CEO of the Canopy Realtor Association in Charlotte.
“Affordability is a big issue in Charlotte because of the tight supply of homes and limited inventory,” says DeCatsye. “Rising prices and higher mortgage rates are starting to slow demand now, so 2022 is looking more like 2019 in our market.”
The average rent was up 14.9% to $1,982 in May 2022 compared to May 2021, according to DeCatsye. The median sales price in April in the Charlotte metropolitan area was $395,000, an increase of 22.3% over April 2021.
“More multifamily developments are being built in the suburbs where land is cheaper,” says DeCatsye. “Unfortunately, renting isn’t much more affordable than buying, in part because builders find better returns on luxury rental developments.”
Denver: Denver has been the nexus of the great migration for years, which has pushed home prices to unaffordable levels for much of the local population, says Nobu Hata, CEO of the Denver Metro Association of Realtors.
“Nearly 70% of the population in Denver are blue collar workers and inflation – particularly for homes - is hitting them hard,” Hata says. “While there is a considerable amount of new construction in the area and a lot of it includes mixed-use developments with multifamily housing, labor and supply costs are pushing prices and rents higher.”
Institutional investors have snapped up single-family homes in Denver’s suburbs at a 14% higher rate than in the rest of the country, which also pushes up rents, Hata says.
“As in other parts of the country, we’re seeing a lot of multifamily demand and development in the suburbs and a lot of migration farther from the city, including as far as Colorado Springs in search of affordability,” Hata says.
Las Vegas: One-third of jobs in Las Vegas are tied to tourism, but the economy there is diversifying, says Wendy DiVecchio, CEO of the Las Vegas Realtors Association. The lack of a state income tax attracts people to the area, along with relatively affordable housing.
“Las Vegas is among the fastest growing economies in the country,” DiVecchio says. “Thousands of new homes are being built for both primary homes and second homes.”
Investors have been buying single-family homes, which is driving up rents, DiVecchio says. Rents that were $2,000 a year ago are now $3,000 a month.
DiVecchio says that rent control measures are being discussed to address affordability issues.
The median sales price in Las Vegas is close to $500,000, DiVecchio says, which she says will push people out of the purchase market and into rentals. As in other markets, multifamily development is increasingly occurring in the suburbs rather than in the city.
Northern Virginia: In Northern Virginia, sales prices have been increasing since July 2020, but inventory is down, and sales have slowed.
“Northern Virginia is essentially always a seller’s market and right now we have less than one month’s supply of inventory,” says Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors. “We’re considered the Silicon Corridor between Dulles International Airport and Reagan National Airport and 70% of the world’s internet traffic flows through our region.”
Housing affordability is an issue in the area, but the region also has some of the highest incomes in the country to offset high prices. The average home price in May was $766,000 in Northern Virginia, up 27% compared to 2019, McLaughlin says.
“Demand for rental housing is high in Northern Virginia and rents are rising rapidly,” McLaughlin says. “One source of demand for rentals we’re increasingly seeing is sellers who can’t find a place to buy.”
San Antonio: Approximately half a million people have moved to Texas each year since 2019, many of them to San Antonio, says Gilbert Gonzalez, CEO of the San Antonio Board of Realtors.
“Home prices here are rising but they’re relatively affordable compared to other markets,” says Gonzalez. “Our local government put a housing plan in place years ago, which helps.”
Still, the price per square foot for a home in San Antonio is up 38% since 2019, Gonzalez says, and the metro area has a severe lack of homes for sale. Average rents rose 12% to $1,849 in May 2022 compared to May 2021. That compares to a median home sales price increase of 25% in that same period to $363,000.
“Multifamily development for the longest time was all downtown and expensive,” says Gonzalez. “Since the pandemic it’s switched entirely and now it’s outside the city and somewhat more affordable.”