Sunday, January 23, 2011

Fear, Uncertainty, And Doubt!

While news reports are a valuable source of information, they can often lead to making assumptions that are not accurate.  Two examples come to mind.  Last year as the economy began to show signs of making significant progress towards recovery, talk of a likely "double-dip" recession was reported everywhere.   The effects of this is difficult to measure, but the undeniable result is that many companies delayed hiring, or capital spending in an attempt to defend against such a "double-dip".

The second example appeared in the Charlotte Observer on Sunday, 1/23/2011.  The headline read "Over half of 2010 sales were troubled mortgages".  The related documents do lead to a surface map that then shows the location and extent of the problems, but the initial impact of the headline can lead potential buyers to expect bigger price drops, and sellers to also make hasty decisions.

I have analysed the past 12 months sales activity for downtown Charlotte and have found that of the 147 sales recorded in MLS only 51 were classified as financially "distressed".   That is just under 35%, and many of those can be related to contracts that closed during the peak of the market. 

There is increased activity in this market, potential buyers are feeling more comfortable with the general direction of our economy.  To be sure there are "financially distressed properties" available, and will likely be more, but the recovery process needs to have these properties addressed and sold, and faulty information can result in a longer time for that to take place.

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