Charlotte Housing Market Status

The housing market in Charlotte has changed overnight! The dynamics between the buyer & seller are changing as well. Interest rates hovering around 3.5% or lower are not energizing the market. WHY?

Over 67% of the households in the US can afford a home priced below $250,000.

Using this threshold in assessing the Charlotte market, I have analyzed the market using the MLS system for data.

There are remarkable changes in the market from the 1st quarter 2009 to October 2012!

Families have been mobile since the federal highway system was constructed.


Families move every 7 years.
Family formations are at an all time low.
This Presidential election has paralyzed the real estate market.

Now is a great time to sell and buy --- a more balanced market before becoming a sellers market.


Number of Homes on the Market

Home Price Range                    1st Qt 2009                  1st Qt 2012                   3rd Qt 2012

$175,000 - $250,000                 6,458                            4,743                              2,208

$100,000 - $175,000                 8,008                            6,727                              2,824

$0 - $100,000                           5,392                            6,058                               2,441


Average Price of Homes

Home Price Range                    1st Qt 2009                1st Qt 2012                    3rd Qt 2012

$175,000 - $250,000                $209,000                   $209,000                        $212,008

$100,000 - $175,000                $138,000                   $139,618                        $142,796

$0 - $100,000                            $60,000                     $55,000                          $75,240

The Cost of Water

Water will be (is) more valuable to our families than gas and it will cost more! The cost trends are remarkable and silently taking more and more of the household monthly budget. The trend will only continue since water is also a supply issue. More importantly is the capability of local jurisdictions to maintain their water supply and distribution systems. What are the priorities of your local municipality --- parks, new government buildings or expanding water supplies and maintaining distribution systems?

% change in the cost of water since 2000 – a few selected cities (source USA TODAY)

Los Angeles 67.1%
Denver 78%
Des Moines 78.1%
Oklahoma City 77.2%
Atlanta 233.1%
Charlotte 112.2%
Tampa 117%
NY City 151.1%
Boston 119.3%

Comparing Utility Costs for an average residential home have been changed to current dollars and adjusted for inflation from 2000 to 2012. The source of this data is from the Bureau of Statistics and research by USA TODAY.

Natural Gas 12%              Electricity 7%              Heating Oil 100%             WATER 34%

   

GDP REPORT

4th quarter 2009                                    5.6%

1st quarter 2010                                    2.7%
2nd quarter 2010                                   1.7%

3rd quarter 2010                                                           2.6%

4th quarter 2010                                    3.1%

1st quarter 2011                                    0.4%
2nd quarter 2011                                   1.3%
3rd quarter 2011                                   1.8%
4rd quarter 2011                                   3.0%

1st Quarter 2012                                   1.9%
2nd Quarter 2012                                  1.3%

3rd quarter 2012                Advance Estimate                  2.0%

Are You Better Off Today than you Were in 2010?

As housing goes …. So goes the economy!

WAKE UP AMERICA!

Dream - Vision - Goal

LinkedIn Tip of the Week

As you may know, I have been striving to assist professionals in their effective use of LinkedIn as an important social networking tool. All of my approaches require an excellent profile foundation in which you are target marketing professionals and driving them to your profile. You are finding these professionals in groups. By selecting groups of like-minded professionals, you have the unique opportunity to provide a call to action once your profile is visited by your target market.

A call to action should be included in your summary which asks the reader to move closer to connecting with you or at the very least, contact you. Examples of what you may include in your summary or in other areas of your profile may include the following call to actions:

• Download an informational document – such as your resume

• Watch a video

• Go to your website

• Listen to a podcast

• Read a product review

• Request a quote

• Read your blog – highlighting a professional point of view

• Highlight a group discussion post

• Identify one of your valued contacts as an important LinkedIn connection

Please go to my profile and summary and view my call to action. www.linkedin.com/in/davidejohnsonpe

Charlotte Housing Market

The Charlotte region housing inventory on the market is substantially down & the depth of buyers remains steady. Buyers are chasing after fewer homes & this is a good thing! At least FOR SELLERS!

The results are multiple offers for well priced and maintained homes. Prices are on the rise! As a seller, you can impact the first impression by thinking like a buyer --- what do they see first from the street; from the car parked in your driveway; from approaching your front door; and from the view as your front door is opened. Sellers should think like a buyer and improve the areas in which will affect your first impression including at night. With daylight savings time upon us, the early evening hours just after work are critical. Strategically located outdoor lights can make a difference.

Let’s walk from the street to your front door. What do you see that needs maintained, fixed or changed?
Most of the following are easy to remedy.

• Yard maintained? Trees and shrubs trimmed? New mulch in planters?

• Does the driveway have any cracks that need repair?

• What about your garage door; visibility and condition? Repair or replace?

• The service walk to your front door in good shape? Power washing can make a difference; trim grass; plant flowers.

• Your front porch is your area to make buyers feel comfortable and welcome. Can you furnish? Does it need paint, cleaning, etc?

• At least windows in the front if not the entire house, should be washed inside and out. Remove the screens so the window view is not impaired.

• Your front door is the focal point of your home. Does it need painted or need new hardware?

• And last, when you open your front door ---- what do you see? This first view is critical for a buyer’s first impression. Sellers should stand in your front doorway and take in the view. Improve the view by painting, refurbishing, rearranging, cleaning, or changing floor materials.

Now is a great time to sell your home especially if you have been waiting for the market to return. The market has stabilized and prices are on the rise. With the inventory low, take advantage of more buyers chasing fewer homes!

Inflation

From a previous post

Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.

Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply.

However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.

………………………………with the Fed having an open window in their printing press vault and when banks reduce their reserves, we will be faced with…………..

Prices of goods and services are rising. Inflation is here because we know it every time we go to the store. A home builder just raised prices!

Regardless of the election outcome in November, we haven’t seen the second shoe come down! We have to vote in November – let our voice be heard. One candidate will stem the tide while the other candidate will ride the wave. Pray for the best and plan for the worst – yet to come! I am not being pessimistic but realistic.

Mortgage Interest Rrates

Rates – will continue to remain at or near all time lows as managed and disclosed by the Fed!


- rationale for low rates is still there and given the lack of significant employment growth and the continuing issues in Europe this only adds to the continued confidence in low rates

- Based on what the Fed said they will hold rates at or near 0% thru 2015

- Fed purchase of $40b in MBS per month with no end mentioned - The Fed is unwilling to let rates rise until it is very clear the housing market is on its way to a real recovery – refinances also help to put more cash in consumer’s pockets

- Bond market is a safe haven - Better investment alternative than other government’s bonds

- Banks continue to hoard Treasuries in anticipation of rules that will raise the amount of liquid assets they are required to hold – tied to Basel III

It is clear to me however, the Fed can raise the rate a point and they can still consider the rate has being a low rate. This would raise mortgage interest rates. In the short term, this will move buyers off the fence and will buy. In the longer term, unless there is sustained growth, this move will dampen but not kill the recovery. This period in our history is critical for the next moves in our economic future will either make us again or break us for generations. I am not sure if the next President will have much influence on the economic picture in the short term. The answer for the future will be which path we select.

Not Just Numbers

$16,187,000,000,000 +   National Debt

                                  

           7,000,000,000  +  Total world population

Other numbers to remember:

20,000,000     Local, state, federal government employees

22,000,000     Total unemployed

47,000,000     Food stamp recipients

Excess Reserves

-          This is the amount of money that banks must keep on hand due to capital requirements, nervousness in the market and the inability to lend safely.

-          Traditional amount has been an average of $2billion

-          On 9/11the reserves went up but came down a week later

-          NOW the reserves are at $1.48 TRILLION from a high of $1.6 TRILLION

No wonder banks are not lending.  

-          As the excess reserves decrease, this will signal inflation and a stronger economy. Inflation will signal higher interest rates --- how high will be the unknown.

-          The St. Louis Fed has great charts and graphs illustrating all of the key issues.

Consumer Confidence

The third data fact worth watching is the Consumer Confidence Index reported monthly.

The Consumer Confidence Index, or CCI, is a monthly release from the Conference Board. It dates back to 1967. The CCI is designed to assess the overall confidence, relative financial health and spending power of the US average consumer.

- Lowest level was in Sept ’08 at 25 when Lehman and Bear Stearns went out

- Looking for a Consumer Confidence index between 90-100

 

It is widely known that the US economy is driven by the consumer (70%) rather than anything we manufacture! The following chart shows the CCI for the previous recessions. It would seem that consumers continue to view this economic climate similar to a recession.

I will confess that the 1980 - 1982 recession was extremely difficult for the housing industry and the worst economic period I personally faced until NOW. Pray for the best and plan for the worst.

Watch the Trend of the GDP

The next thing to watch is the TREND of the GDP. I post the results each month as it is released by the Bureau of Labor Statistics (BSI). This is the best way to assess how the economy is doing. The problem is that the statistics are a quarter behind reality. As an example, at the end of October, BSI will release the first estimate for the 3rd quarter.

The 2nd quarter GDP was 1.3%. This is trending down from 2011.

- 2012 original estimate was between 2% - 2.5% but estimates have been moved to 1.8%

- Economy will continue to move forward although at a slow pace due to overall lack of demand

- A series of mini financial crisis will impact this number

- Fiscal Cliff – increased taxes and decreased government spending – tax increases in social security, Bush tax cuts expire and AMT patch = $330b out of the consumers pocket which equals 2% of overall GDP. This alone would put us back into recession.

- Accounting for the changes in the tax code in 2013, GDP is predicted at 1.9% Q1, 1.5% Q2, 1.6% Q3 and 1.6% Q4

- The real estate business is one of the best leading indicators - we are usually ahead of the curve in terms of what is happening in the economy – up 29% in sales and 26% in closings YTD

Although real estate has been doing better over the past 4-6 months, in my opinion, this is a false sense of a recovery. It is a supply issue – resales and new homes. For several years, it has been a buyer’s market. We are shifting very quickly to a seller’s market which may result in seller’s accepting house sale contingencies, again.

Remember, as housing goes so goes the economy. To have a thriving economy, we need to have housing starts be at the 1,200,000 level per year.

Housing Starts                          2008                      560,000

                                                2009                      581,000

                                                2010                      539,000

                                                2011                      697,000

                                                2012                      720,000 forecast

                                                2013                      850,000 forecast

Source: NAHB   This represents 6-yrs of pent-up demand. Because of the lack of supply and the increase in demand, prices will start to rise in the 4th quarter of 2012. As prices rise, it would not be out of the question for interest rates to rise. Yes, the Fed said that they would keep rates low through 2015. But moving the mortgage interest rates higher to say 4.5% --- the rates would still be at historic lows. This will of course dampen any housing recovery and your buying power will decrease.

Low inventory, high demand, increase in prices, higher cost of money, lack of a labor force and material shortages will dampen any housing recovery. Housing is still upside down but now for different reasons.

Focus on the Issues

It is now time to focus on the issues that impact you, me, all of US. To stay informed on how the economy is really doing and not listen to the talking heads, this week I will present those issues which we should watch on a weekly and monthly basis.

Look for the Employment Numbers that are published on a monthly basis. Look at actual numbers of people hired not at the % - due to the number of people coming off unemployment. Forget about the unemployment rate. The percentage is relative to the data used.

What to look for in an improving economy:

- 180k-200k new jobs on a national level need to be added each month --- Remember that about 90,000 jobs per month have to be added just to keep up with population

- From the Bureau of Labor Statistics --- Since the beginning of the year (2012), job growth has averaged 146,000 per month, compared with an average gain of 153,000 in 2011. The trend is down.

- Since reaching an employment trough in February 2010, the private sector has added 4.7 million jobs!!!!!

Except the economy LOST 8,700,000 jobs from 12/07 – 2/10

- To put this number into perspective, divide 4,700,000 jobs added by 32 months = 146,875 jobs added per month (avg). This is below what is needed for an improving economy. I am not an economist --- do your own homework.

As you know, I believe as housing goes so goes the economy. So I want to relate each benchmark to housing – the best that I can.

- From the Bureau of Labor Statistics:

- Construction employment was essentially unchanged in September (+5,000) for the fourth consecutive month.

- Since February 2010, employment in the construction industry has shown essentially no net change. (this is a broad industry but would include housing construction).

Based on the above analysis, the economy is NOT improving and may very well be heading toward that fiscal cliff at the end of this year. If the politicians don’t do something, we will head into another recession if not something worse. Remember, many Americans are hanging on by their finger nails waiting for the economy to improve. If we head into another recession, we will be entering into a period of unsettling times.

Pray for the best and plan for the worst.

The Vice President - One Class Act!

Proverbs 29:9
If a wise man goes to court with a fool, the fool rages and scoffs, and there is no peace.

WAKE UP AMERICA!

Charlotte Home Sales over the Last 3-yrs

It is clear to me that home prices in Charlotte and on the rise due to the lack of inventory (blog post on October 3 rd) and the increase in homes closed. If buyers and sellers are also waiting until the election is decided to make a move they may change the typically slow holiday months for real estate into an active selling season. Or, if they wait until the new year, it could be a balanced market again --- buyers and sellers without a clear negotiating advantage.

I heard yesterday that a local regional builder is raising their prices on ALL of their models at the end of this month. A bold move. Although I don't know the reason for the increase in prices but my guess is labor and material prices are on the rise! Or they are riding the price movement of resales --- a risky move. However, it may cause buyers to jump of the fence and buy. Still a risky move.

Housing Market Gaining Strength??

Home Prices Rise Again, This Time on the Low End

Matt York/Associated Press

A new home in Phoenix. Recently, the biggest price gains appear to have been among the least expensive homes.

By SHAILA DEWAN and NELSON D. SCHWARTZ

Published: September 25, 2012

The housing market continues to gather strength, and the biggest gains in price now appear to be among the least expensive homes, whose values fell the most in the downturn and have weighed against any would-be recovery.

Over all, the Standard & Poor’s Case-Shiller index showed an annual gain of 1.2 percent in the price of single-family homes across 20 cities in July, according to data released Tuesday. In addition, all 20 cities showed price increases from the previous month, the third monthly gain in a row, supporting the idea that the nation’s housing market has bottomed out and, some analysts said, contributing to an unexpected bump in consumer confidence.

Luxury homes lost less value in the housing crisis and began to rebound more quickly, but lower-price homes are catching up, rising slightly faster in value than homes in the middle and upper tiers, according to an analysis of the Case-Shiller data by Patrick Newport and Michelle Valverde of IHS Global Insight, a private research firm in Lexington, Mass.

The typical lower-price home rose at an annualized rate of 1 percent from June to July on a seasonally adjusted basis. The middle tier posted a one-month gain of 0.4 percent, and the highest tier inched up by 0.1 percent.

In the last three months, Mr. Newport said, the lowest tier has been rising in value more than twice as fast as the other two categories. For the least expensive homes, “prices just shot up too fast on the way up and then went down more sharply,” he said. “We’re seeing the correction from that.”

Lake Norman, NC

Source: Picture from City Data

Did You Know........................................

Lake Norman was built from 1959-1964

The area of the lake at full pond elevation is 32,510 acres

Length --- 33.6 miles

Width   --- 9 miles

Shore Length-------520 miles

Maximum Depth------110 feet

Average Depth-----33.5

Capacity-------3.4 trillion gallons of water

Why wouldn't you want to live along this fantastic lake and enjoy the sunsets.

Presidential Election Prompts Home Buyers to Wait-and-See

Daily Real Estate News
Tuesday, September 25, 2012

A quarter of Americans say they want to put off purchasing a home until they know who the next president will be, according to a poll conducted on behalf of MortgageMarvel.com of more than 2,500 adults.

“It’s understandable that a considerable number of people say the upcoming election would give them pause for thought,” says Rick Allen, chief operating officer of Mortgage Marvel. “There has been speculation that tax policies could change depending upon who wins. Some have even indicated that the longstanding deduction for mortgage interest could be eliminated. It appears that mortgage interest rates will remain low for the foreseeable future, so there’s no pressure on people to act before rates rise. In such an environment, I can see that cautious people would take a wait-and-see attitude before making a home purchase.”

On a regional basis, people in the South had the highest percentage of those who said they’d delay buying a home because of the uncertainty surrounding the presidential election. Meanwhile, Americans in the West had the largest percentage of people who said the upcoming election has no effect on their home purchase decisions.

Source: “Study Shows 25 Percent of Americans Would Delay Home Purchase Until After Election,” RISMedia (Sept. 24, 2012)

What is your Quote?

What does this picture say to you?

Obama said after the debate ..... " I am President and I did very well in last night's debate..........now it is time for dinner"

Charlotte Lack Of Inventory

Why the lack of homes listed for sale?
Fear
Economic stagnation
Political upheaval

People are paralyzed because their personal circumstances have been worn down over the past 4 years. Every recession in the past has experienced a quick recovery --- not this time. In fact, it is entirely possible that we will enter a double dip recession. No wonder people entrench where they are and hope to ride out the turmoil. Plan for the worst and pray for the best.


What is your answer as to why inventory of homes for sales is decreasing?

Charlotte Home Prices

We will watch the median sales price as the inventory of available homes remains low. I expect the median price continue to rise.

Charlotte Real Estate Market

The lack of inventory and the increase in closed sales is a problem for buyers but great news for sellers! Home prices are rising due to this phenomena. It is clear to me that the Charlotte market lags the national trends but in this case, the local market has changed quickly and the local market will continue to shift to a sellers market. I would expect the election, holiday months and winter continue to effect the real estate market. 

Remember, the Fed has stated that interest rates will remain low through 2015! However, what is their definition of "low". Interest rates will start to rise and counteract inflation. What happens to your buying power if interest rates are increased by 1%???