Housing Affordability

"Houses haven't been this affordable since appliances came in Harvest Gold or Avacado Green" states an article in the Kiplinger Housing Forecast, read the full article here.  There is evidence of this all over Charlotte as well.

Two projects in Charlotte that are making significant waves are 28th Ro in NoDa, and Seigle Point just outside the I-277 loop on Tenth Street.  28th Ro has closed on 32 units in the past month and only has a few left, and a similar history is available at Seigle Point.  In both cases it was a situation where adjusting the price point found an available willing market.

Soon to return to the market will be The Garrison located on North Graham Street inside the I-277 loop.  this building was designed to reflect the industrial past of Charlotte, and has huge "warehouse windows" with unparalleled views of the city.  My belief is that once they come on the market in early January, they will quickly disappear.

This leads me back to the Kiplinger article.  We have all had to reset our financial vision of the future.  Many who gambled on the seemingly neverending increase on property values have learned a valuable lesson; if something looks too good to be true, it probably is.

As we clean out our financial obligations and reset our goals, we will once again begin to grow.

Construction Activity Increases

This article In US News cites 10 cities where construction activity is returning to normal, and Charlotte is # 8 on that list.  It shows that we are up 23% in the area of multifamily (rental) housing.  Rentals remain very strong.  Here is a sampling of trailing 12 months at a few downtown condominiums:

• Avenue       33 leased average days on market 52
• Courtside    19 leased average days on market 36
• 5th&Poplar 26 leased average days on market 41
• Gateway      29 leased average days on market 51
• TradeMark  24 leased average days on market 31

This popularity in rentals is fueling developers to build more rentals.  Centro City Works is in the process of finalizing plans to begin construction in February on a rental building near the East/West LYNX Light Rail Station in the South End. 

Two other developments that have either finalized or received their building permits will place new apartment developments in downtown Charlotte, one on the corner of MLK Jr. Blvd and South Graham Streets across from the proposed construction site of the Charlotte Knights baseball stadium, and another at the intersection of West Fourth and Johnson & Wales Way in the Third Ward near the Doubletree Hotel.

Another potential site will occur when the former State Office Building on the corner of Graham and Trade Streets is torn down.  The building has been crumbling for the past 10 years at least, and an apartment/condo development was originally announced for that space.

Throw in the relocation of the Amtrak Station and MultiModal Terminal on South Graham and a picture of intense construction will change the character of the near Third Ward forever.

All this activity will help raise property values in the entire downtown area.

Renters Can Solve The Housing Crisis

Really, renters can start the home ownership recovery!  In this article, a case is made that people who would most likely be buying a home are waiting for unemployment to come down, and the government to act responsibly before buying.

It also points to the fact that investors are sitting on a lot of cash, and purchasing financially distressed properties at a highly discounted price can lead to a stable cash flow for a protracted period of time. 

The catch is that current FHA, Fannie Mae and Freddie Mac require huge downpayments and a substantial waiting period for purchases.

I have written several articles in this blog that point to the increase in renters in the downtown Charlotte market during 2011.  The thrust of my blog is to focus on the trend to embrace the urban lifestyle, and renters can embrace that as much as owners can, and embrace it they are.

Getting back to the article linked above, the implication is that if investors are allowed to help clear out the foreclosure and shadow inventory issues in the private market, the government (you and me) will not be stuck with carrying that burden.

I have been more active over the past 90 days than I have since 2007!  A large portion of that activity is coming from people seeking to rent.  As we search for properties, I am finding that rental rates are increasing, time on market is decreasing, and landlords are not negotiating on their rates.

Supply and Demand reigns again.

The Death Of The Fringe Suburbs

The New York Times Opinion Page published this article on Saturday, November 25, 2011 discussing the move towards density.  It builds a case that cites the car dependent fringe suburbs as the primary cause for the mortgage meltdown leading to the recession.  Perhaps an over simplification, but I believe that it does address the root of the problem.

More space, bigger houses, more opportunity to buy products to put in all those rooms all went hand in hand with easy money and low downpayments to encourage people to take on more than what was prudent.

But my point is not to look to the past to uncover issues, but to look forward and try to find trends to be on the front side of them.  Most all of my posts deal with things that will affect property values in my market, downtown Charlotte.  Energy prices, downsizing, walkability, new companies relocating, strong infrastructure, easy transportation, all these trends contribute to wanting to relocate to the central core of the city, and that is the downtown area and it's Four Wards.

Please follow the link and read the entire article.  I toyed with the idea of just reprinting it here, but thought that the link would accomplish the same thing, and it would be easier for me to add my $0.02 to the debate.

Further Signs Of Downtown Demand

The Demand for living in downtown Charlotte has never been higher than it is now.  An article in the MultiHousingNews points to Charlotte's urban core as the key growth area, read the full article here.

"Of course, the hottest submarkets continue to be downtown, inside the 277 loop. “Much of the critical mass of Charlotte’s employment is driven by banking and energy,” notes Llewellyn. “The employment centers never really decentralized from downtown, so the central business district is going to be the number-one submarket.”

This is substantiating what I have been seeing over the past 18 months.  In my business, I find that I am getting more calls for rentals than in the past.  The reasons are largely the same; not sure of the economy; don't have a down payment; wish to see what living downtown is like; etc.

The developer market is turning towards producing more rental units to try to stay up with the demand, again the article cites absorbsion rates as being out of skew.  David Furman is reportedly ready to break ground for an apartment development along the LYNX Blue Line in the South End.

The other trend I see is that rents are rising as interest rates and condo prices are falling, in some cases to be more attractive than rentals. This cycle of condos/rentals/condos/rentals continues to go on.  As things stabilize, indications are that a return to purchasing will drive up prices in a condo market that is adding little to the inventory mix.  As this happens, property values in the downtown market will rise again.

The law of Supply and Demand lives on!

Public Meeting On The StreetCar Project

The Charlotte StreetCar Project has completed 65%  of the design work, and expects to have 100% completion within the next 3 - 4 weeks.  This will allow the project to move forward, though the actual start date for most of the in street construction will not begin until after the DNC in September of 2012.

Go Here to their site for more information as to the facts and overview of the project.  But in a nutshell, this phase of the project will run from the Transportation Mall down East Trade / Elizabeth Street to Presbyterian Hospital, turn left to East Fifth Street, and then return.  This overall segment will be 1.5 miles.   A 1/2 mile segment of this has already been completed through the CCCP Campus and up to the Hospital.

The overall cost for this project is around $35 million, and many complain that it is a waste! 

My belief is that it is forward thinking.  We have seen fluctuations in the price of gas, and every time it reaches $4 a gallon, ridership increases on all forms of public transportation.  Switching to electric powered vehicles or hybrids will help, but not enough.  When we reach the breaking point for gasoline prices, it will be too late to start an intelligent transit system.

Additionally, the hard rail system that the StreetCar will be part of will be permanent.   It will spur development along its route.  Myers Park was created as a street car suburb as was Dilworth.  No homes were more than 3 blocks to a transit stop.  Those communities became, and still remain, important.  Look also at the development created along the LYNX Blue Line running through the South End.

This important connection for West Charlotte to meet with East Charlotte will take riders to the Government Center, the central business community, transportation links, Presbyterian Hospital, Central Piedmont Community College, Johnson & Wales University, Johnson C. Smith University and the Mecklenburg County Courthouse.  It will be a huge connector.

This will be a great addition to a growning city.

Finally, The Courtyard Is Back!

It seemed like forever, the noise, the dust the workers all scurrying around removing tiles, dirt, trees, shrubs and the green as well.  It started because the parking garage in under the TransAmerica building, which is also under the 400 North Church Condominiums, was leaking! 

The original seal was allowing water to enter into the garage, and in addition to causing some damage to the finish of cars, could cause significant damage to the structure itself.  Water is one of those non stoppable forces that can have a significant impact.

All areas over the parking garage had to be empties and resealed, including all the planters.  It seems unlikely that this year will feature the trees being strung with lights for the holidays.

The repair work took about 10 months, and cost the buildings owner several million dollars to repair.  Watching some of the work be done, I will be surprised if any moisture will ever penetrate the barriers that were laid down.

Living Without A Car

How can someone live without a car in the city?  MSNBC has pulled this article from 24/7 Wall Street that ranks the 10 best cities to live car free.  Check this article, but don't be surprised to not find Charlotte on the list, at least not yet.

I am car-less and I live in downtown Charlotte.  This is a lifestyle that I choose to live, and will tell you that many of the points made in the article are valid.  As a realtor, it always draws interesting looks from people when they find I do not have a car.  Being a realtor generally means that you drive a big shiny black car if you are successful.

My experience in showing property in downtown Charlotte is that it is easier to walk to listings than it is to try to find a place to park.   Additionally, walking through a neighborhood like the Fourth Ward in downtown Charlotte allows you to explain more about the neighborhood, and to actually get a feel for what life is like there.

The point of the article is that to live car-less, you need to have the items and services that you need close at hand, I have that in downtown.  It talks about having a strong public transportation system, and Charlotte does have a strong system, though sporatic at times.  As a frequent user of the LYNX Light Rail Line, I can tell you that it is well used all hours. I eagerly await the extension to UNCC. 

Charlotte Area Transit System, CATS, has an app for either iPhone or Android which will allow you to find out when a bus or train will be at a particular stop.  Generally, schedules are kept.  This allows you to further plan your time.

Being car-less also encourages you to batch together errands.  From time to time I will rent a car, and when I do I accomplish a number of tasks that would be more difficult on public transportation, going to Costco's, multiple appointments in different areas of the city in a short period of time, etc.

Eliminating a car from your overhead can reduce your expenses significantly.  Think maintenance, gas, insurance, parking, carpayments or depreciation, replacement, etc.  Add those things up.  It saved me over $10,000 annually.

Put your own numbers in and see how it compares!

Continued Demand For Downtown Property

The accompanying chart illustrates the breakdown
of condo's that have, or are in the process of, changing hands, and the total number is 471 through the end of October.  To be sure, the majority of the units are being  rented by individual owners who choose not to sell due to market conditions.

While that fact exists, the fact that the demand to live downtown is stronger than it has ever been.  Financially distressed properties in downtown are hovering around 16 units.  Many of them are still on the market, or have returned to the market because of lender underwriting issues.  One of the main considerations of underwriters is the number of owner occupants in a development, another is the amount of homeowners delinquent on their HOA dues.

Investors who can buy with cash, or mostly cash are getting the best deals in this market.  Investor activity has increased significantly.  The ability to look at a property as an investment and not have an emotional attachment to it clarifies their ability to act firmly on what they consider a fair price. 

More Signs Of A Rebound In Housing

Actually, not so much signs of an Upturn as signs that we have passed bottom.  This link in a real estate publication cites several cities that have seen an increase in property values, and many more that have seen a lessening of property value declines.

Several things contribute to this, all related to supply and demand.  I have chronicled here that sellers are either shelving plans to sell, or turning to the rental market to put people in their properties.  Charlotte will have its best year for downtown property changing hands this year through either sale or rental.

Interest rates are incredibly low, have been for a while, and show no serious signs of creeping up.  Lenders are being penalized for their past actions of loose credit, and chastised in today's market for being too tight!

I have seen many instances where multiple offers are being submitted on available properties.  This usually is the start of a bidding, war at least on those properties. 

Conventional wisdom states that the most important thing in real estate is Locatoin, Location, Location.  A friend of mine in the industry has a different perspective, and that is Motivation, Motivation, Motivation!

I believe in the latter.