Charlotte, NC Housing Stats- 2009

In a previous post, I provided a chart comparing the housing recessions since the early ‘70’s. I find the national reporting to be problematic by comparing statistics from a time period from year to year and from the previous analysis period. This provides either a very false sense of hope or is a dramatic let down. Regional statistics can be conveyed to emphasis any viewpoint.

My suggestion is not to compare statistics since this recession is unique and can’t and should not be compared with any other recession. Thus, look for trends up or down which should guide you on real estate matters. My approach is to provide is to give you trends and interesting comparisons. These comparisons provide “food for thought” and not conclusions. The market activity data sources are the Charlotte MLS and Charlotte Realtor®.

Residential Closings

Over the past 7-months, the number of closings has been relatively constant at 2,000 closings per month. This would indicate stabilization in the demand. Which in my opinion, speculative buying has been moderated and with low interest rates, those wanting to buy are still on the fence. By the way, mortgage interest rates have come down since a June ’09 high in the mid 5% to about 4.7%.

Note: when interest rates head south, buyers wait for it to go lower. If you agree that interest rates have to start moving up in the first quarter 2010, then you will see fence sitters get into the market.

Residential Closing Price

I do not read too much into the average closing price statistic since the market is primarily lower priced homes. However, I do find the comparison from November 2009 to 2008 interesting.

Avg. Closing Price November 2008 $193,035
Avg. Closing Price November 2009 $195,244

The closing price chart illustrates ups and downs from month to month. In my opinion, I would conclude that we have hit bottom in prices and we are just bouncing along the bottom.

Supply

The Charlotte region’s supply of homes on the in November 2009 was over 23,000. Approximately 30% of the homes on the market are listed below $150,000. With an oversupply of homes on the market with a significant number of lower priced available, with the federal tax credit available for first time homebuyers and low interest rates, WHY have we not seen an increase in sales? Could it be job security? Could it be consumer confidence?
Or because we are looking only at a snapshot of statistics and the trend will be upward in sales and a decrease in inventory because:

1. The federal tax credit program was extended late last year and did not take hold during the holiday season. We will see a surge in buying this spring.
2. The holiday season is typically slow for real estate sales even in a good economy.
3. Companies in November and December typically freeze spending and put new hires on hold. Companies then start to implement their 2010 business plans and budgets in January - which may include an increase in head count.


Days on the Market (DOM)

From month to month the entire year, the days on the market varied only slightly from 112 to 116 days. This is a narrow band of time which should indicate some stability in the market. As a buyer, this is important in evaluating the sales price of a home. There are many factors that cause a house to sell quickly or stay on the market for a long time. The two most important considerations in using DOM to compare homes: (a) Price – the lower the price the better chance of selling and (b) there are not enough buyers to see the available inventory so buyers will gravitate to the homes priced to sell!

Bottom line: A house with characteristics better than the competition but priced lower than the competition will sell faster than the competition. Use this approach if you want to sell a house or if you are in the market to buy a house.

Other interesting statistics from the CMLS and the NAR Research Division:

· 45% of recent homebuyers were first-time buyers

· The typical home purchased in 2009 was 1,900 square feet & built in 1989

· 75% of the homebuyers purchased detached single family homes

· 88% of homebuyers used the internet to search for homes


Conclusions
Call an expert and they will be wrong about the economy and the housing industry. Everyone has an opinion – some good and some bad. You have to interpret the information to fit your situation. But since this is a forum to voice opinions – here is mine for 2010:

· The housing market will surge in the first quarter of 2010
· Interest rates will start to climb in the second quarter causing more buyers to enter the market

· Prices have stabilized and will start to increase as inflation sets in

· The housing industry will bounce along the bottom for the first half of 2010. For the second half, we are either in excellent shape as a country or we are in serious trouble – stay tuned for future guessing on my part – my crystal ball is in the shop.