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Charlotte Real Estate Market Report 2008 A Look Forward to 2009

January 23rd, 2009 Listed Under: Charlotte Homes for Sale, FAQs About Charlotte

Charlotte NC

We have a new President but the US economic news is, not surprisingly, still grim. The nation’s housing is in its 2nd year of pain, falling prices, increasing foreclosures, sub-prime and the Alt A fiasco still unwinding- and more recently,  disturbing increase of unemployed workers. The new President and Congress are likely to  pass a massive economic stimulus- historic in size, up to 1 Trillion Dollars designed to put Americans back to work.   These are momentous times in the US, what does this mean for  Charlotte, NC?  What does it mean

 to home buyers and sellers in Charlotte NC? 

Last night cruising through some cable channels I came across the entertaining Jim (Bet the house on Wachovia) Cramer on the Chris Matthews show, and he breathlessly told Matthews that nationally home prices “had to fall another 20%.”  Well No Jim- perhaps in 4 states prices need to fall by another 20%,

but in 66% of the 381 major US Markets, prices have a “Low” or “Minimal” chance of falling prices in the next 2 years, according to the just released  US Market Index by PMI.

Trying to simplify the story into sound bites,  Jim, like almost all the other national news outlets are screwing up the housing story.  Why? Because there is no one “housing market” there are hundreds of markets in the US.  PMI measures 381 MSA’s each quarter. First a look back at 2008, then I’ll jump in to the PMI Market Risk Report by PMI, the company who puts their money where their mouth is.

Charlotte Real Estate Market Report 2008

In the 15 County area covered by the Carolina Multiple Listing Service (CMLS) there were:

In calender year 2008, there were 24,003 Single Family Homes Sold, at a median price of $227,397 on 2,111 SF for an average SOLD Cost per sf of $108.

In  calender year 2007, there were 34,063 Single Family Homes sold, at a median price of $239,967, on the same 2,111 sf, for an average SOLD Cost per sf of $113.

So for the year 2008, the number of “Greater Charlotte area” home sales declined 30%, and average SOLD cost per sf declined 4.67%.

Averages hide a lot, and my team does specific research for clients which are the most accurate, but here are a few of the major local County reports on their home prices and sales, 2008 versus 2007:

Mecklenburg County: Home sales were off 30%, home prices (SOLDCost/SF) down 3.2%

Union County: Home sales were down 32%, home prices down 5.2%

Cabarrus County: home sales were down 29%, Home prices were down 2.3%

Iredell County: Home sales were off 28%, Home prices off 3.2%

Sales were consistently off  by atleast 28-30%, so contraction is the word that best describes our market as 2008 home sales are around 2003 levels.  Two well regarded firms recently merged, many of the multiple office companies are closing offices, real estate as an industry is growing smaller. It is tough on the less experienced Realtor,and extremely tough on the new home builder with inventory. Jobs have been lost, some firms won’t survive. These are hard times in the realty business no doubt about it. But Home Prices? What the consumer really cares about? These are much better.

 Charlotte Real Estate in 2009, Measuring Risk

Do I have a crystal ball? No. Do I have some data? Yes. What kind of data? The kind that big companies lending money today bet on- the PMI US Market Risk Analysis.  From the giant of the industry, PMI, Private Mortgage Insurance website:

PMIs proprietary U.S. Market Risk Index measures the likelihood of lower home price in two years for each of the nations 381 metropolitan statistical areas and divisions (MSAs). The Risk Index uses economic, housing, and mortgage market factors (including home price appreciation, employment, affordability, excess housing supply, interest rates, and foreclosure activity) to determine these probabilities.

On January 14, PMI-US produced its latest Market Risk analysis for 381 MSA’s in the US.  The PMI US Market Risk Analysis is the most complete study of market risk in the US and is used widely to compute risk by PMI and a variety of other companies. It divides the markets into 5 categories of risk of lower prices: Hi Risk, Elevated, Moderate, Low and Minimal.  As I mentioned,  PMI-US puts their money where their mouth is- they base their PMI mortgage insurance rates on their MSA Market risk analysis.

To my earlier point about Jim Cramer (who I like- he’s fun to watch) and the other so called expert Talking Heads on our television sets, as you peak at the map below, you see the high risk markets in red are concentrated,  26% of the 381 markets have a “High or Elevated” market risk., of these 60% reside in-just four states: California, Nevada, Florida and Arizona. The other 40% are spread among our industrial areas and other areas where unemployment is highest.

But 66% of the 381 markets have only a “minimal or low” risk of price decline in the next 2 years.US Housing market Risk map PMI

Once again, Charlotte is ranked low in the “minimal”  risk of home price decrease over the next 2 years. In fact,  at a 2.2% chance, Charlotte is in the bottom third of the Minimal (o-10%) Risk Group.

Only 6 markets of 381 have “less” risk of price loss… so if you live in the 374 markets above Charlotte, you have a higher, in some cases much higher risk of price loss.

I won’t pretend that all is rosy here in Charlotte , I’m not the NAR of Charlotte- as the rest of the country’s real estate has gone south.  We have a much smaller real estate market, and home prices for Charlotte are an average- averages hide a lot, as some home prices in some areas went  down by nearly double digits, even as some rose slightly.

Market wide we face the same larger economic issues- the credit fiasco, the drop in Wall Street, rising unemployment,  and the crisis in consumer confidence, these all affect our market just like every other  market in the US.

We also have a surplus on higher priced homes here in Charlotte- the over $750K category is flush. As you move closer to the city the prices are stronger, and inventory’s lower. There are going to be some great deals here.  The city is actively attracting and recruiting business relocations, and the city expects to add jobs in 2009. If you look closely at the PMI results, you will see that Charlotte’s affordability ratio is increasing. This is both an anchor to  today’s housing prices- and a sign as we increase affordability, home prices will again grow in the future with increases in employment.   Sorry Jim, no 20% price drop here, and, I’m still researching the exact number, but in atleast 50 other MSA’s in the US.

Two recent reports for 2008 place Charlotte in the  top “move to” cities in the US.  Relocation.com ranks Charlotte as the third most popular city-#1 in the South,  and Allied Moving’s annual report shows North Carolina as again the 4th most popular “move to” state. There is another list, on “Where Charlotte Ranks” from our Chamber.

Why have home prices held up here so stoutly throughout? Will it continue? The answer is yes and yes, and for a complete explanation why, you’ll have to wait for my next post. I cover many of the reasons here in this post from  2008.

My next post will be on the value fundamentals of Charlotte- and so many other markets, Austin, Dallas, Seattle- and more, why the prices are holding steady or declining just marginally.

No, Charlotte is not like Las Vegas or Miami, and the other side of the coin is… neither is our housing market!

Charlotte remains a desirable  city to move to, Charlotte real estate is eminently affordable, and when combined with historic low interest rates makes buying a home in Charlotte a  smart buy, as long as you buy a home for the long term, and buy it smartly.   tm

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Moving to the Charlotte Area?  South Charlotte, Waxhaw, Lake Norman, Fort Mill Perhaps? Your first Charlotte home?

I am a Charlotte real estate broker specializing in relocations, 2nd homes and first time home buyers–buying and sellingTerry McDonald Charlotte Real estate real estate of all kinds- and will represent only you. My team works with Buyers and Sellers every day from Ballantyne to Lake Norman -and Fort Mill SC too. We work with all relocation companies. My team and I know the homes, the communities, and the new home builders. We know what’s hot, what’s not, and where the deals are. I represented Buyers in the largest foreclosure sale in Charlotte in 2008.  And I helped a handful of first time home buyers. I was the Top Agent in 2008 in our 800 + Agent firm, and won an award for customer satisfaction in 2008. We are flexible and at your service.

We are working to help you “buy smart” in Charlotte, and to make your relocation  easier and less stressful.

If it’s between the hours of 8 AM to 8 PM, EDT, please don’ t hesitate to call me direct at 704-351-1519. Terry

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Terry McDonald
I'm the owner/team leader of The McDonald Group at Wilkinson and Associates ERA Powered real estate brokers here in Charlotte NC. A transplanted Washinghtonian, my family and I came from the NYC area in 1993.
Terry McDonald
Terry McDonald

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  1. Julie LaTerra

    GREAT article Terry! Charlotte was the last one out and will be the first back in. Great facts and statistics you gave.

  2. Bill Newsome

    On the money Terry! We need more pushback against the media– Charlotte- and as you point out, so many other markets around the US, are Not like Florida and California. Good work, thanks for taking the time on this. Consumers are being confused.
    I’ve seen traffic increase since the first of the year, have you?

  3. Ian

    I think some of us, maybe most of us, I don’t know have had those fleeting, random tidbits of thoughts floating around telling us our market isn’t as bad as ‘eveywhere else’ but we’ve never been able to collate them into any order which makes sense?
    What you have done is added a tremendous amount of clarity to what our housing market situation really is. The fog is lifting and hopefully anybody reading your article should now see the way forward.
    If I could pass one city ordinance right here right now your article would be required reading for every out of town buyer prior to purchase.
    Great article.

  4. Scott

    Looks good and very interesting for everyone to read. There is so much good news out there and its great to see it.

  5. Linda

    Thanks Terry- great article! Appreciate you always being on top of your game with the latest facts!

  6. Terry

    Thanks Linda, I like to stay in the “reality-based’ world!
    Scott, with so much economic upheaval and many people in our business out of work, I can’t say the business is good… isn’t. But, for consumers, we are getting a great selection of homes at prices you and I haven’t seen for years…THAT is good.
    Ian- yes people new to Charlotte come to town and they think.. what I’d think if I lived in their town- “real estate is like at home.” This is OK if they are from the 2/3’s of the country where real estate didn’t go crazy up and then crazy down– its more difficult for somebody from Miami.
    Bill- agreed, just PUSHBACK and try and tell the whole story wherever you can
    Julia- Thanks Julia, I think you are right. Charlotte skipped the last several recessions, and our prices appreciated through the first two quarters of 2008. That was all due to our strong local economy, affordability and most of Charlotte never had that “bubble like” growth. No “Bubble” no “Bubble pop”- but it is why we need a housing stimulus NOW. There is no local reason for the minor price adjustments in the 3/4th quarter-just weaker demand eroding prices…the right Stimulus would stop that.

  7. John Horne

    Terry,

    I have high hopes for 2009, I think our lives and our markets are what we make of them. I also, don’t believe things are as bad as the media is making it out to be. I have a regularly priced lising in the $300,000 plus range that is selling only after 8 days on the market. Overall, people are going to move to Charlotte, it is a great place to live, and I have been here all my life 37 years, I cannot imagine being anywhere else!!– All I can say is GO CHARLOTTE!!

  8. Cher Lemos

    Wow Terry~ Excellent write…I agree with Julie. I also think that we need more positive and less negative in the media…

  9. Ken

    Terry – EXCELLENT analysis and your thoughts/opinions are well taken! The media has to better understand how their stories impact lives, communities, consumer confidence and NOT just ratings!! We have much to be proud of in “little ole” Charlotte. See you soon!!

  10. Terry

    John- there are buyers here. I’ve had 6 new ones and one phone call since Saturday!But we are back to 2004 sales numbers– that’s OK, I did all right in 2004!
    Cher- there is real pain out there–check out those RED states, there is virtually no market there unless it IS a foreclosure. So there is a crisis in this country in housing and it is worth reporting. Just don’t report it lazy. Short sound bites bury us- the 2/3 of the market doing not so bad, under a mountain of buyer angst brought on by poorly researched, poorly reported news stories.

  11. Charlotte Homes

    Terry ! Excellent analysis. 2009 is going well for me as a real estate agent and i have high hopes for 2009.

  12. Jen

    Terry – Thanks for the overview of Charlotte. Very helpful, unfortunately I’m coming from a yellow area (MN) – not so good on the outlook. Hope that my house hasn’t lost too much value.

  13. John Horne, Broker-in-Charge

    Terry- I am so excited about the first time home buyer program you are now offering to the many people out there looking to fulfill their dream of owning their own home. First Time Home Buyers could not ask for a better team to aid them in their efforts in not only searching for the perfect fit for their budget, but also in making a sound buying decision. This first time home buyer program you have developed is setting the stage for how Real Estate Professionals across the United States should service their clients. I normally don’t publicly endorse programs, but in this case, I find that it is so important for first time home buyers to work with someone who actually cares about the outcome and I could give no higher recommendation than Team McDonald at Wilkinson and Associates.

  14. Nigel Brookes

    Terry, Great article! I think you’re absolutley right. I have been selling real estate since 2001 and the Charlotte market is affordable for everyone. We did see a slight decrease in prices around the region, but the areas near downtown have held strong.

    Stay Motivated!

    Nigel Brookes, Realtor

  15. GrowingBricks

    GrowingBricks…

    […]Charlotte Real Estate Market Report 2008 A Look Forward to 2009 | Charlotte Community Neighborhoods Homes For Saleh[…]…

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The McDonald Group
Wilkinson and Associates ERA Powered
8604 Cliff Cameron Dr ST 110
Charlotte NC 28269
704-390-6221 Cell
704-393-0048 Office
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