Ok here’s something we haven’t heard in a long time: rents in Charlotte have gone down. Compared to a year ago, average rents are down 2.2% in SouthPark, 3% in uptown, and about 4.5% in South End. That’s according to new data from real estate information company CoStar Group. For more, we turn now to Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.
Marshall Terry: So what's driving this drop in rents, Tony? And how much are we talking in dollar figures?
Tony Mecia: Marshall, it's just a matter of simple supply and demand. In the last couple of years, we've had a boom of apartment complexes all over the place. You probably see this driving around town. And when you have more supply than you do demand, the rents fall. And that's what we have. We have about 11,000 new apartments coming online in the Charlotte area this year. And many of those are filling, but there aren't enough people to fill all of those, so vacancy rates of apartments are at a record high of about 10.7%. And so because of that, people who operate apartment complexes, they dropped the rents to try to compete for some of those residents.
Now we are talking a very slight decrease over the last year. The average price in early November was about $1,559. That's down from $1,589 a year ago. So it's $30 a month. That is still higher than November of 2019 about $300 a month higher.
Terry: OK. So you mentioned supply outstripping demand. But wait, you and I have talked a few times on this segment about how high interest rates and labor costs have actually led to a drop in the number of apartments being built. Am I missing something?
Mecia: You're not missing something — very astute question as always. The issue is, Marshall, that it takes a couple of years for these apartments to be built. And so when we had a surge a couple of years ago in construction of apartments, those don't come online for a couple more years — until this year. That is still going on, we are still going to see a whole bunch of apartments coming online over the course of the next year. That what you and I have previously talked about: is that there is a slowdown this year in the start of new apartments. So that means in a couple of years there aren't going to be as many apartments coming online. So supplies could tighten then. We're seeing a whole bunch of apartments come online right now, and that even though there are more people moving to the Charlotte area, it's not enough to make up for all of the apartments that are now available.
Terry: So, how much longer can we expect this drop in rents to last? And, are we seeing anything similar on the for-sale side of the housing market?
Mecia: Well, I talked with Chuck McShane of CoStar. And he told me that yes, you know, we can expect to see these rents to be sort of suppressed for the next, certainly, few months as more of these apartments become available. But when we get into 2025 and 2026 — because we're not starting as many apartments now — supplies could tighten in a couple of years, and the rents could go up again. And we are seeing a little bit of this happen on the for-sale side.
You know, we've seen housing prices of single-family homes — they used to be, you know, double-digit increases year over year. Those now in the Charlotte region are fairly flat, some counties that are a little bit down. Mecklenburg is still mostly in positive territory, but certainly there has been a deceleration of the growth in prices.
Terry: All right. Well, let's go now to Union County, where you report one of the largest of flea markets in the Charlotte region is closing after almost 40 years. Why is Sweet Union Flea Market calling it a day?
Mecia: Well, the owners of this flea market, which is a pretty well-known flea market on US 74 between Indian Trail and Monroe, they've been at it for a long time. It started in 1984. And the owners of it are getting older, and they don't want to run it anymore. The three of the owners are in their 60s and their 80s.
We talked to a vendor at the flea market who sells ice cream and popsicles. He said when they got news a couple weeks ago, that everyone was crying and that it's a black Christmas for everyone there. A lot of the vendors are sad about it. They, sort of, used it as a way to kind of incubate businesses and to make a little money as side hustles.
Terry: All right. Well, I want to end this week with an update to something that we were talking about last week, and that is holiday travel and a potential record-breaking day for Charlotte Douglas this Thanksgiving. Did that, in fact, happen?
Mecia: It did not. The airport was saying before Thanksgiving that it thought that the Sunday after Thanksgiving might be its busiest-ever travel day with more than 40,000 local travelers. The actual numbers came in at about 39,000, which is good enough for the third-highest ever. But it was a little bit below the projections, even though, as we know, there were a lot of people traveling, just not as many as the airport thought.
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