Wednesday, March 27, 2013

Things Are Moving Fast

There are currently 72 properties under contract in downtown Charlotte.  Of those under contract, 58% were on the market for less than 90 days, actually  the average time on market for those 41 properties isd 32 days!

The balance of the units undercontract, excluding new construction units which will show inflated dates that have no bearing on market time as much as build time have been on the market for an aveage of 284 days.

Several reasons could account for that disparity.  First, units that have been on the market for some time may be priced incorrectly.  Hoping that the market will raise to the price you want sometimes works, but most often, it leads to a property looking stale on the market.

Second, the units averaging 32 days have an average price of $218.5, the longer market time is averaging $372.5.  This speaks well for entry level units and one bedroom properties.  While higher price points are beginning to move, it is clearly a slower movement.

We are moving into exciting times for sure.

Tuesday, March 26, 2013

More Insight On Density

Go Here for an interesting article about the value of homes located near transit stops.  It is a clear example that the Transit Corridor concept that Charlotte has adopted is the right solution for a growing city.

In the days of cheap gas and lots built out on former farm land with features such as a fenced in yard and a bonus room over the garage, no one worried about how long it took to get to work.  Then things became congested.  Commute times began to increase, gas prices went up, miles per gallon did not, parking rates increased.  Services became sketchy in some of the remote suburbs.  All was not well.

People tend to vote with their wallets, and with their feet.  Closer in became more desirable, to heck with that bonus room.  Some people would look around them as they drove to work and all saw the same thing.  All the other cars moving slowly or stopped in traffic had just one driver, and most of them were going to the same place.  Why use a car for that?

Places in the northeast, most notably New York City and Boston, grew up around strong transit systems.  Just try to imagine those cities today without their "A" Train, or Blue Line, etc.  It can't be done.

So, Charlotte, a city built for the auto, and the people living here, are now learning that Transit Corridors are the desirable way to move forward, and the resulting increased property value is the proof.

Wednesday, March 20, 2013

Density Rules

Go Here to read an article in PlanCharlotte concerning population growth in the Carolinas.  If you read through the entire article, you will find that while Charlotte is growing, it is not the fastest % of growth.

Several factors contribute to that, most notably, with a large population, percentage of increase, even with large numbers, will be low.

More importantly, the article points out that the center of the metropolitan area is growning faster than suburban locations.  Density is a fact of life!

Developers are finding it harder to find land to develop in the urban core, and when they do, they seek height.

Transportation spokes are also becoming increasingly important.  Taking the LYNX Blue Line south to 485 will take you through a canyon of apartment developments springing up all along the line.  The BLE (Blue Line Extension) which will head northeast up to UNCC will also spur that type of growth.  Already there are over 600 apartments that have been announced to be constructed within 1/4 mile of the East 36 Street station, and that line will not be active for 4 more years.

Look forward to continucd growth in the urban core.

Tuesday, March 19, 2013

Not Enough Inventory!

This is another installment of the Franklin American Mortgage Company Real Estate Report.  I find this report to be an excellent view of current market conditions, along with an insiteful view of why things are happening the way they do.


Not Enough Homes For Sale?
Who would have thought that we could be entering the home selling season with a headline which says there are not enough homes for sale? After all, analysts had warned that the shadow inventory of homes held by banks would weigh down the markets for years to come. Where did these millions of homes go? Many were foreclosed upon. Others were sold by short sale rather than going through the foreclosure process as foreign and domestic investors bought millions of bargains. Also, many others were modified to help homeowners to remain in their homes as the economy has gotten stronger and provided more jobs for those who were unemployed. This stronger economy has meant that fewer home loans have moved into default in the past few years as well. On the other hand, there are still many homes waiting to be foreclosed upon.
How could we have a shortage of inventory at this juncture? Investor demand along with population growth and rising household formulation have all combined to remove excess inventory. Combine these factors with the fact that those who owe more than their homes are worth are reticent to sell. Even those who were foreclosed upon are starting to purchase again or need single family homes to rent. The question is not why is the inventory down, but will the lower inventory slow down the real estate market in the coming year? You can't have rising home sales with not enough homes for sale. We think that two factors will increase inventory in the coming year. Rising home prices will encourage more home owners to list their homes. And builders can create inventory by building more homes. Increased building activity is expected to help pump up the economy in the coming year. If real estate demand continues to rise, expect banks to accelerate the process to get rid of homes in their inventory. In other words, we are expecting the low inventory 'problem' to be self-correcting during the year -- unless new demand outstrips this additional supply.

Fifty percent of Americans say they expect the housing market to improve in 2013, while 16 percent say they expect it to get worse, according to a Bloomberg National Poll of 1,003 adults. What’s more, the majority of the Americans surveyed said they have big hopes that the improvement in the housing market will also help give a boost to the overall economy. “Prices are very steadily, slowly, starting to creep back up,” Eric Matheny—an attorney from Fort Lauderdale, Fla., who recently purchased a new home—told Bloomberg. “The housing market is a major part of the economy, so it says something about the strength of the economy.” More Americans are expressing optimism about the trajectory of home prices too. Twenty-seven percent expect their home values to rise while 16 percent said they expect their home’s value to fall. In the previous survey, 20 percent predicted that their home’s value would rise while 20 percent had said they expected values to fall. Source: Bloomberg
Single family home tenants are 18 percent more likely than apartment tenants to stay in their current homes five years or longer, suggesting that demand for single family homes, the fastest growing rental category, will be more stable than multifamily demand, according to a new national opinion survey released by ORC International for Premier Property Management. Twenty-six percent of single family tenant plans to stay in place five years or more, compared to one out of five apartment dwellers (22 percent). Founded in 1938, ORC International is a leading global market research firm and since 2007 has conducted the CNN|ORC International poll. One factor contributing to single family stability could be high marks renters give the quality of single family property management. Some 80 percent of tenants in single family rentals said their property management was good or excellent compared to only 63 percent of apartment renters One out of four apartment dwellers (26%) rated their management as only adequate. “With the emergence of the single family rental option, American families have a new housing choice that brings them the aspects of associated with owning their own homes important to families such as living space, privacy, safe neighborhoods and the sense of community. Single family rentals can be found in virtually every community today and more and more families are choosing single family rentals either as a temporary stop on the road to becoming homeowners or as a permanent solution to their housing needs,” said Chris Clothier, director of sales & marketing and partner of Premier Property Management. Over half, 52 percent, of renters, including 60 percent of single family renters and 44 percent of apartment dwellers, said they anticipate becoming homeowners in the next five years. Families with three or more members (64 percent) and children under 13 (69 percent) were more likely to become homeowners than the 43 percent who don’t plan to become owners. Clothier said near term interest in becoming homeowners among single family tenants reflects the new roles single family rentals are fulfilling as a stepping stone to homeownership for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosures but who plan to buy again when they can afford to do so. Source: ORC

The IRS no longer mails reminder letters to taxpayers who have to repay the First-Time Homebuyer Credit. To help taxpayers who must repay the credit, the IRS website has a user-friendly look-up tool. Here are four reminders about repaying the credit and using the tool:
  • Who needs to repay the credit? If you bought a home in 2008 and claimed the First-Time Homebuyer Credit, the credit is similar to a no-interest loan. You normally must repay the credit in 15 equal annual installments. You should have started to repay the credit with your 2010 tax return. You are usually not required to pay back the credit for a main home you bought after 2008. However, you may have to repay the entire credit if you sold the home or stopped using it as your main home within 36 months from the date of purchase. This rule also applies to homes bought in 2008.
  • How to use the tool. You can find the First-Time Homebuyer Credit Lookup tool at under the ‘Tools’ menu. You will need your Social Security number, date of birth and complete address to use the tool. If you claimed the credit on a joint return, each spouse should use the tool to get their share of the account information. That’s because the law treats each spouse as having claimed half of the credit for repayment purposes.
  • What the tool does. The tool provides important account information to help you report the repayment on your tax return. It shows the original amount of the credit, annual repayment amounts, total amount paid and the remaining balance. You can print your account page to share with your tax preparer and to keep for your records.
  • How to repay the credit. To repay the First-Time Homebuyer Credit, add the amount you have to repay to any other tax you owe on your federal tax return. This could result in additional tax owed or a reduced refund. You report the repayment on line 59b on Form 1040, U.S. Individual Income Tax Return. If you are repaying the credit because the home stopped being your main home, you must attach Form 5405, Repayment of the First-Time Homebuyer Credit, to your tax return. Source: IRS

Thursday, March 7, 2013

A Heated Market Returns

The Avenue Condominium
A funny thing happened as I was preparing for my weekly wine tasting at The Dunhill.  I was producing my brochure and evaluating the current increase in sales in the downtown market.  It started as a curiosity, then became glaringly apparent that The Avenue has become the hottest property in downtown Charlotte.  Since January 29, 2013, 17 properties have either sold, or have gone under contract! 


Furthermore, sales are within 3% of the asking price, and within 13% of the original sale price back in the heat of the real estate market in 2007.  Prices are stabilizing in The Avenue and will begin to rise over the next several weeks.

Other downtown properties will also begin to show this type of change as well.  Often when I show properties, my client will comment on the number of lock boxes on hand.  Other condo developments are all showing few properties.  Fifth & Poplar has 1; Courtside has 1; TradeMark has 5.  Currently, at The Avenue, there are 12 properties available for sale, and 5 for rent.  This represents about 4% of the total number of units available, 10% is considered the norm.

I have said it before, supply and demand is the only law that is absolute, and we will soon see the effects of this law in full swing.