Business

Outlook: Boom continues for CLT, suburbs; but coronavirus looms large

Feb. 29. By Erica Batten. Over the past decade, Charlotte has been among the top 10 fastest-growing metropolitan areas nationwide. It looks like that will continue, with 500,000 new residents forecast in the next 10 years.

But Wells Fargo Senior Economist Mark Vitner and Allen Tate CEO Pat Riley say the supply of single-family homes struggles to keep up with demand.

VITNER

“Charlotte may be the fastest-growing metro area in the country; this ramped up over the last year,” said Vitner. The value of Charlotte’s residential building permits remains among the highest in the nation.

Vitner estimates that 150 people are moving to the Charlotte MSA every day.

Not surprisingly, the incoming population is young and college-educated. Vitner said the addition of a Major League Soccer team aligns perfectly with Charlotte’s vibe. And home prices—at just 1.8 times the average income—means the Queen City is affordable compared to similar metro areas.

“We’re a place young people want to move to,” said Vitner.

RILEY

Where the young people come, the parents follow, said Riley. Retirees prefer Charlotte’s South Carolina suburbs and submarkets within city limits. And, in many cases, they’re sharing the housing. Riley said that 30% of young people are still living at home.

But with interest rates at historic lows, rents at record highs, and two-thirds of millennial renters determined to buy a home, that trend may soon change.

“Home ownership is not an interest rate issue anymore. It’s an affordability issue,” said Riley.

A recent Wells Fargo report said that household formation is outpacing home building, meaning there are too few homes in markets—like Charlotte—with rapid job and population growth. Already, the city’s new homes are 23 percent more expensive than they were a year ago.

While the surge of multi-family home building has slowed, apartment development is shifting away from lifestyle and luxury units in a few metro areas toward more affordable units in suburban areas.

Vitner predicts an “urbanization” of suburban areas over the next decade.

Charlotte recently reclaimed the rank as the United States’s second largest banking city. It is home to Truist, the newly-formed merger of BB&T and SunTrust, along with being a key employment base for Wells Fargo, Ally Financial and Dimensional Fund Advisors.

A Wells Fargo report noted that Charlotte is also growing as a tech hub, citing recent Microsoft and Lowe’s global technology center expansions. Charlotte has the nation’s highest growth of office rent, particularly in SouthPark, Ballantyne, along with the university and airport areas.

A tight labor market has spurred another means of economic mobility. In September, average hourly wages for the bottom two-fifths of earners were up 4.4 percent over the previous year.

Wells Fargo economists acknowledge that the gig economy—Uber drivers and online job search forums—has altered how laborers engage with the market, meaning that the historically low unemployment rate can co-exist with low inflation.

Employment in North Carolina grew at 2 percent over the past year, making the Tar Heel State a standout in the Southeast. Only Florida’s employment grew faster.

But will the coronavirus affect the local economy negatively? Companies across the country are cutting back on face-to-face meetings, pulling out of trade shows and offering more work-from-home options as the disease continues to spread around the world.

CLARK

The coronavirus is affecting the supply chain, with so much manufacturing taking place in China. Many companies are cancelling trips, especially to China, Italy and South Korea.

According to NC Rep. Christy Clark, there have been no confirmed cases of coronavirus in the state, making flu still the biggest risk for Charlotteans. There have been 115 flu deaths in North Carolina this season.

The NC Dept. of Health & Human Services is working with local health departments and clinicians to evaluate any potential cases and coordinate care and testing as needed.

The World Health Organization declared coronavirus a global health emergency one month ago. The respiratory illness, first identified in Wuhan, China, has resulted in thousands of Chinese cases.

In the United States, 59 cases of coronavirus have been verified by the CDC.

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