Market Economics? Should I sell/rent?

[Jeff Lever]

The real estate market here in NC, specifically the N. Charlotte area, has been going absolutely nuts for the last few years. Wondering when the train ride will end...or if we should just ride it until the rails fall off. 

I'm doing major renovations to a 3/2 1500sf rental we've had for the last 6 years. I'm guessing we'll throw about $15k into it for new windows/flooring/paint/landscaping/etc. It was actually my first house that I bought back in '05 for $140k. The RE sites are saying it's now worth $315-335k which is shocking if not unbelievable. Of course, there's a 2/1 800sf shack on .44 acre that just sold for $325k about 200 yards up the road. If you look at zillow, almost every house in the area is going over asking price and avg time on market is < 30 days. 

The rental history has been stellar - vacant only 2 months out of the last 6 years at $1400/mo. We've had the house listed for $2100/month and believe it's likely to get $2k/month. Our mortgage on it is about $1200/month for P/I/T/I. The property also has a significant amount of equity in it at the moment - despite us refi'ing last year. Balance on it is about $160k. 

If we decided to sell it, we'd probably bump our budget to $25k to really make it shine. If the shack up the road really did sell for $325k, I'd be surprised if we couldn't get at least $400k. The sale price says $325, but it's tough to tell if it wasn't part of a larger RE deal. 

Now for the real curve ball. Simonini homes is building a 180 home neighborhood directly behind the house which used to be nothing but beautiful farm land. Unfortunately, they'll be stacked on top of each other with lot sizes of only .15-.25/acre, but the good news is they'll be on the expensive side. At the end of last year, they were saying ~$700k/home and w/ the way the market has been performing, I'd be surprised if that wasn't $800k. My rental is on a country road w/ a 45mph speed limit that will be just in front of it. I have no clue what effect the neighborhood will have on the value of my home. Those homes are really a different price point, so I don't think they'd be direct competition. The bad part is the entire 95 acres will be a dust hole for the next 2 years starting Q1/2022. 

What would you guys do? Rent it for $2k-$2.1k and ride out the dust bowl hoping the RE market continues to soar? Sell while the market is hot and before the fed starts raising interest rates?

Overall, none of this makes any sense to me. I never thought the house would see a $300k valuation, now that's on the low side! Add that to the fact that we have the gov't printing money at a breakneck pace spurring inflation, so naturally - the stock market and RE markets are soaring, and then the really odd aspect - the USD index is... rising?! It's happened in the past, but the RE/stock market correlation to the USD index has usually been inverted. 

What's the straw that's going to break the camels back? When the gov't end the mortgage/rent subsidies? When Biden's new tax scheme takes a big wet bite out of everyone's bottom line? When the feds bump the interest rates? Something else?