Millennials and fintech make investing in Charlotte real estate a solid bet

At the end of 2021, data from Realtor.com pegged Charlotte, North Carolina as number 15 among the nation’s hottest markets for 2022; at the same time, Zillow placed it at number 5 on its top markets list for 2022, and the Charlotte real estate market has delivered on those predictions.

Real estate experts have high expectations for the city’s future. A recent report on trends in real estate, written by the consulting firm PwC and the Urban Land Institute and based on the insights of more than 1,600 professionals, praised Charlotte as a “magnet” among “18-hour cities,” so named for having a downtown that is active outside of the working hours of 9 to 5. 

The PwC report rated it number 6 in the country for overall real estate prospects and number 7 in the country for homebuilding prospects, making it a promising market for real estate investors. 

In the short term, there is an apparent slump, when comparing 2022 numbers to the anomalous numbers in 2021. Mortgage rates are now above 6 percent from their recent historical lows of around 3 percent, and markets are slowing in the short term. Home closings and pending contracts dropped year-over-year for an 11th straight month in November, according to a report from the Canopy Realtor Association. 

But listing and sale prices are up year-over-year:

The long view for the Charlotte real estate market sees demand increasing. 

The Charlotte Regional Business Alliance predicts the city will grow by some 50 percent in the next 30 years, to about 4.5 million, by 2030. As it is, officials say 100 people are moving to the city every day, and they are all looking for housing. 

A favorable tax climate, and big city amenities

In the decade before the pandemic, a favorable corporate tax environment was already drawing companies to Charlotte, with their workers following, making investment properties a solid bet. Those employees have found “reasonable” real estate taxes, and state taxes that are “middle of the pack,” according to U.S. News and World Report. 

They are finding amenities associated with bigger cities. There’s a good airport, NBA and NFL teams to root for, and several top-notch museums, and, unlike most other Southern cities, they experience all four seasons. 

Aside from the expected barbecue and “meat and three” joints, Charlotte has the full panoply of international cuisine, including Asian, Latin, Italian, Ethiopian, French, New American, etc. 

Locals rave about restaurants like River’s Edge, with its “breathtaking” river views; Haberdish, which updates Southern classics; and Amélie's French Bakery & Café, where they can enjoy “eclectic” decor and pastries inspired by Gallic classics. 

Housing costs are in line with smaller markets. And the growth hasn’t caused some of the problems it can often bring, like the major traffic that plagues other cities. 

Renters play a big role in the Charlotte real estate market

In Charlotte, renter-occupied households make up 35 percent of the single-family housing stock, so there is plenty of demand for rental properties, creating opportunities for real estate investors. The city’s demographics are attractive as well.

Charlotte is the number one city in the country attracting millennials, because it’s one of the largest drivers for financial services. 

Charlotte is the country’s second-largest financial center; Bank of America and Wells Fargo are among the city’s top employers. 

Companies that would previously have been based in Manhattan are now moving bankers who are in years one to five of their careers to Charlotte because of the city’s affordability. 

Millennials are the population most likely to be renters, and demand has pushed up the prices of rental properties. Those junior bankers find their money goes much further than in places that previously held a monopoly on the financial industry. 

“You can pay half the price you pay in New York or New Jersey to get a home twice the size,” says Yongqiang Chu, director of the Childress Klein Center for Real Estate at the Belk College of Business at the University of North Carolina at Charlotte. “So the quality of life is much higher.” The prominence of financial institutions in Charlotte translates into reliable returns, and low vacancy rates, for property owners. 

In environments of rising interest rates and high inflation, cities with healthy financial markets make strong real estate markets, because banks do very well in that climate. 

Being such a prominent center of finance, says Chu, “Fintech locating here makes a lot of sense. This will have a big impact on the local business environment.”

All the same, future growth is not expected to be at stratospheric levels, but rather at the steady pace that ensures growth without major corrections to come.

Cities like Charlotte, Raleigh, and Atlanta offer very balanced returns for investors. 

Tech sector lagged, but is picking up

It’s true that more rapid development of the tech industry (which has driven prices in places like Austin through the roof) may be hampered because the higher education offerings of the Charlotte region, notable as they are, suffer a bit by comparison with the area a couple of hours’ drive to the east. 

There, the “Research Triangle,” made up of the tri-city Raleigh-Durham-Chapel Hill area, is home to North Carolina State University, Duke University, and the University of North Carolina respectively. 

Chu puts the city’s failure to attract Amazon headquarters a few years back, despite what local honchos called an “aggressive” bid, partly down to the lackluster tech qualifications among the area’s college graduates. 

All the same, employment in the technology sector is growing in Charlotte, with Amazon opening a third fulfillment center here soon, promising hundreds of jobs. With fintech following big finance to Charlotte, the region’s tech talent labor pool grew by nearly a third between 2016 and 2020 — the fifth-largest increase among the top U.S. markets, according to commercial real estate services firm CBRE.

Biotech manufacturer Hydromer recently moved its corporate headquarters to the metro area. And the city is supported by a diverse economy that includes seven Fortune 500 companies: besides Bank of America, there’s Honeywell, Nucor, Lowe’s, Duke Energy, Sonic Automotive, and Brighthouse Financial.

What’s more, Charlotte is likely to become only more appealing as the city implements its comprehensive plan, which states: “All Charlotte households will have access to essential amenities, goods, and services within a comfortable, tree-shaded 10-minute walk, bike, or transit trip by 2040.” 

One local magazine points out that a handful of districts, including Eastover, Commonwealth, and the Arboretum, are well on their way to being “10-minute neighborhoods.”

Gold, railroads and civil rights progress

America’s first gold rush started here in 1799; some locals still pan for gold in area streams. The city touts itself as a prime example of the “New South,” and played an early role in the Civil Rights movement.

Initially settled by the Catawba Native Americans, Charlotte is organized around the Nations Path, a major Native American trading route, rather than the North-South orientation of most colonial-era cities. (Its “uptown,” as a result, is named not for its placement, but rather for its elevation.) 

The so-called Queen City was named for the wife of King George III before the Revolution, but it rose up against England even before the Declaration of Independence. One British general described it as “a hornet’s nest of rebellion,” and it still proudly bears the nickname “the hornet’s nest” (lending a name to its NBA team, the Hornets).

Its first boom was as a post-Civil War cotton processing center, and its second happened with the foundation of a major railroad in 1852, around the time that regional leaders started to talk of a “New South.” 

Colleges were founded to serve the city, including the historically black Johnson C. Smith University, Queens College and Davidson College, later joined by UNC Charlotte. (With over 30 institutions of higher education in the city or within 50 miles, it is today one of the biggest school districts in the Southeast.) Its third growth spurt came with a military base during World War I. 

In contrast with North Carolina’s history as a Confederate state in the Civil War, in the 1960s Charlotte was the site of the one of the largest sit-ins in the South, organized by Smith University students. In 1963 — a year before the 1964 Civil Rights Act was passed — the mayor welcomed demands for integration while other cities were responding with fire hoses and police dogs. 

A banking center, and home to a diverse population 

Charlotte’s role as a financial center dates back to the 1970s. In the 1990s, Bank of America became the first coast-to-coast bank when a local financier bought it and moved to the Queen City, making it second only to New York as a banking town, a ranking it has maintained ever since.

A major Latino influx started in the 1990s, diversifying Charlotte along with smaller communities of Vietnamese, Chinese, Italians and others. In the decade starting in 2004, the metro area was the fastest-growing in the U.S., hitting a million residents. 

With a population of about 2.7 million, the Charlotte metropolitan area is now the 22nd-most-populous in the U.S. For recreation, those millions enjoy North and South Carolina’s sandy beaches and the nearby Smoky Mountains. The city’s sports offerings include NASCAR races on the organization’s longest track as well as the NFL’s Carolina Panthers (along with the NBA’s Hornets). 

Cultural offerings range from the NASCAR Hall of Fame to the Bechtler Museum of Modern Art, housed in a building designed by postmodern star Mario Botta and — an unusual one — the Museum of the Alphabet, studying thousands of years’ worth of writing systems.

Charlotte’s relative affordability, along with its high quality of life, and its broad and hardy economic base, create a solid foundation for a healthy Charlotte real estate market, so expectations are that it will continue to entice residents, and real estate investors who will cater to them.

10 best neighborhoods to invest in Charlotte

‍Addison De Mallie, Mynd's Charlotte-based investment location manager, picked out 10 neighborhoods that are most promising for investors, some within the city limits, some outside the city proper.

The best neighborhoods within city limits

“All these neighborhoods are suburban and are short commutes both to industrial areas of the city and for office workers,” says De Mallie.

Those who know Charlotte neighborhoods, says De Mallie, have heard of places like South End, NoDa, and Plaza Midwood. But don't expect to be able to invest there now, he warns.

“That's where the millennials want to be, but the problem is there's not much rental inventory to be had there right now,” he says. “The first build-to-rent community was sold just recently. In five years, those neighborhoods will be hot.”

The four neighborhoods De Mallie suggests investors look at within city limits right now are all suburban areas that are “basically their own little cities at this point, each with easy access to major roadways.” Most are inside I-485, which loops around the city.

1. Mallard Creek

"Mallard Creek has residential housing, retail shopping centers including one of Charlotte's only Trader Joe's, and a major office park with major corporate tenants Wells Fargo, TIAA-CREF and Centene," says De Mallie.

Near the campus of the University of North Carolina at Charlotte, this neighborhood has a good school system, anchored by Mallard Creek High School, home of the highly competitive Mallard Creek Mavericks high school football team.

2. Eastland

Seven and a half miles from uptown Charlotte, Eastland is named for the Eastland Mall, which opened in 1975 with a million square feet of space and was the heart of the neighborhood, but it closed in 2010 with the downturn of the area and was torn down in 2013.

But officials have been waiting for the right plan to rehabilitate Eastland, and now they've settled on one. In November 2020, the city council approved a a mixed-use project featuring retail and office space, sports fields, housing and park space.

“The Carolina Panthers Major League Soccer team is coming to Charlotte,” says De Mallie, “and the old mall site will be home to the team's headquarters and a practice site.”

3. Olde Whitehall

Known to locals simply as Whitehall, this neighborhood straddles I-485 and has easy access to Interstate 77. “It's just to the north of the biggest industrial area in the market,” says De Mallie, “with warehouses and distribution centers, and a lot of the workforce lives there.”

It's just a short drive from Whitehall to Carowinds, a major amusement park featuring Blackbeard's Revenge, a six-story-high water slide complex; the Fury 325, a “giga coaster” that ascends to 325 feet; and, for the young ones to take flight, the Kiddy Hawk roller coaster.

4. Steele Creek

Though it had long since been annexed by Charlotte, much of Steele Creek, in western Charlotte, remained farmland until the 2000s, when suburban sprawl took over. Infrastructure improvements have since spurred tremendous growth.

“Steele Creek is close to the US National Whitewater Center, an Olympic training facility for kayakers where there is great whitewater rafting and mountain bike trails,” says De Mallie. What's more, the 1,300-acre facility also hosts outdoor concerts, festivals, and races.

Best areas near Charlotte for investors

As the city expands outward, there has been new housing construction to meet demand, says De Mallie. So, in outlying areas, there will be many houses to invest in that are less than 20 years old, which presents fewer costs in repairs and upkeep.

“Many of these areas are blue-collar towns with decent median incomes,” he said.

5. Mooresville

Just 30 miles to the north of the center of the city, the town of Mooresville has seen speedy growth as Charlotte has expanded, its population rising from about 33,000 in 2010 to just over 50,000 last year.

With the history of textile mills in the Charlotte region, there are small mill neighborhoods in the town's downtown that are “the coolest neighborhoods now,” says De Mallie. The economy in areas like Mooresville and Gastonia collapsed as mills went overseas in the 1990s, but they are “coming back in a big way.”

“Mooresville has an old-school downtown, and it's on Lake Norman,” he says. “It's where a lot of the NASCAR drivers live. You'll see multimillion-dollar homes, but there are also quite a lot of nice, rentable houses.”

6. Gastonia

Charlotte was once the textile industry capital of the Southern Piedmont region. Gastonia was home to textile mills, and the mill neighborhoods in Gastonia, as in Mooresville, are attracting a lot of attention these days. Gastonia is growing slowly but steadily, with a current population of about 80,000, up from almost 72,000 a decade ago.

“All the outlying areas are getting redeveloped,” says De Mallie, “but in Gastonia it hasn't happened yet, so that's where the $90,000 homes are.” These may offer a higher return, he says, but also points out that they may need more work and bring more operating expenses.

Gastonia is home to the brand-new Fuse District Stadium, built at a cost of nearly $22 million to host the Gastonia Honey Hunters, the Atlantic League's newest minor league team. Opening day was in May.

“This will be a huge entertainment district,” says De Mallie.

7. Harrisburg

Situated just outside the I-485 loop, about 20 miles from the city center and just minutes from the University of North Carolina, Harrisburg has grown considerably over the last decade, from about 11,500 in the 2010 Census to just under 19,000 now.

This might be an ideal home for NASCAR fans: it's just 3 miles from Charlotte Motor Speedway, where, in 2019, driver Mike Salinas hit 327 mph on the zMAX Dragway.

8. Denver

Though it's still very small, this town just west of Lake Norman and about 30 miles north of downtown Charlotte has grown to about 3,300 from 2,300 a decade ago.

“It's the last side of Lake Norman to be developed, so density is going to increase a lot there,” says De Mallie. “It's probably one of the last places that is getting necessities like new grocery stores and a giant shopping center.”

9. Mint Hill

Another town that has grown slightly via urban sprawl, Mint Hill, just 15 miles east of center city, has seen its population increase from about 22,700 in the 2010 Census to 26,450 in the most recent. Mint Hill residents can join the Pine Lake Country Club, where they play golf and tennis, or hike in the 281-acre Stevens Creek Nature Preserve.

“Mint Hill has a long-standing blue-collar community who have been there for decades,” says De Mallie.

10. Indian Trail

“Indian Trail is another more rural working-class area that has been populated with urban sprawl and growth,” says De Mallie. “What used to be farmland is now suburbs populated by commuters.”

Indeed, a town that had just 1,942 residents in 1990 is now home to more than 40,000.

About 17 miles southeast of the city center, just outside the I-485 loop, Indian Trail boasts a Fourth of July parade that is one of the biggest in the metropolitan area.