Slowdown Or DownTurn? The Truth in Charlotte’s Housing Market
February 2nd, 2008 Categories: Buy A Charlotte Home
Reading Wednesday’s front page Charlotte Observer headline, I couldn’t help but think how wrong they got it.
“Slump Catches Up to Charlotte” blares the headline, with a picture of the area counties and number like -20% -24%, or -41% Sounds horrible, doesn’t it? You need to read the smaller print to realize they are measuring the decline in new home building permits. Not home prices, the true measure of a market’s health. Unfortunately, every essential element of this front page above the fold Observer article either missed the point or was at best a half-truth.
Clearly the decline in permits is a sign that the new home construction industry is in difficult times and is going to contract, but Charlotte new homebuilders have been building inventory UP For Years- they had to come to their senses and cut back, and they probably in hindsight were 6-9 months late, so they had to move in a hurry. I don’t mean to make light of the many families dependent on the new home industry to make their living- this contraction will hurt them, and building 25-40% less new homes is not good for our local economy- but it is a home-building industry problem, not the “The Slump Catches up with Charlotte,” it is not a real estate market-valuation issue, which is the cause of the national downturn in real estate prices. Nationally the US has lost one half trillion dollars in equity-thankfully for those of us who live in Charlotte, Seattle, Austin- and a few others, our city’s have not participated in this great decline.
The report goes on to quote Chuck Graham, a local real estate expert, about the “malaise of the nation reaching Charlotte…” Now I like Chuck and his research, but Chuck’s expertise and client base, comes primarily from the new home industry. They’ve been hurting for sometime here as sales began tailing off in new homes in the 2nd quarter of 2007- and the writing has been on the wall long before the 4th quarter.
So what should have the headline read? Something like this:
Charlotte home prices rose 4.3% for 2007, Slowing in 4th quarter
Subtitle: Despite a slumping new home market, and a 24% 4th quarter drop in homes sold, and the national down turn in real estate,
Charlotte is leading the nation’s major housing markets in home appreciation.
The Charlotte real estate market remains strong despite weaker demand, and home price appreciation may be slowing. (It is only one quarter where one company recorded the prices going up only 1%– most cities would have been happy if it had been 1 % for the year, but of course ours was 4.3%)
The Observer writer then quotes Mark Vittner, Chief economist for Wachovia, an acknowledged housing expert, talking about the housing market not being back to normal until 2012… what is misleading here is Mr Vittner was talking about the national housing market- not Charlotte. Here is a virtually identical quote from Mr Vittner, in discussions with Home Depot, on the national housing market:
“The housing market is still stuck in neutral and no one should expect to hit bottom until the middle of this year at the earliest. So says Mark Vittner, senior economist at Wachovia. He tells John Wordock Home Depot’s latest concerns about housing are on the mark and there’s still “further room to decline.”
The only reason I could tell it was Not the Charlotte market is because I’d read so many of his quotes.
Last but not least, the Observer has wanted to write this doom and gloom story for months. This reporter contacted me 3 months ago, and once I established what her basic headline was, I tried to persuade her that her story wasn’t the headline. I outlined my arguments above with my own headlines- and since that time this argument has been validated by Forbes.com and ABC news- having done just this story…
What Story? The story that despite everything-all the bad national housing news, the sub-prime mess, falling consumer confidence, anemic job growth, and the country maybe slipping into recession, that Charlotte home values were still going up, faster than any major city in the US.
So after I explained my arguments to her, backed with evidence, she quietly told me her editor was the one who wrote headlines and this is what the editor wanted, and promised it to be front page… it was at that point I declined to comment further.
Slowed, but not down… in this time of economic uncertainty, words and headlines matter. A slowdown could turn into a downturn here if folks lose confidence in our home values. The actual housing news is bad enough- we have too many foreclosures and a credit crunch at the same time, and the new home industry faces a deep if temporary decline- the challenges are real, but we need real reporting, not fear laced laced charts, headlines and stories from the major newspaper in town. Objective journalism demands it. Community responsibility demands it. And we in the industry must demand it of our local paper, business and community leaders.
Related Posts
Charlotte #1 in Appreciation in Top Twenty Real Estate Markets says Standard and Poor’s Case-Shiller
ABC News Report On Charlotte’s Continuing Popularity- Despite the National downturn in housing
Forbes.com Declares Charlotte 3rd Most Undervalued Market
A related post- South Charlotte Homes For Sale and Appreciation Report.Like to Search for Charlotte Homes
Terry McDonald is a Charlotte Real Estate Broker, former builder and blogger.
Sensationalism sells! Every city around the country is facing the negativity of the news media as it pertains to real estate. You have provided Charlotte a sound voice with facts to back it up.
Of course you are right Paula- bad news gets the headline- but in this case, they seem to have gone out of their way– I guess to prove they aren’t biased in favor of Charlotte?
As realtors we are really charged with presenting an alternative, “hands on” view of the housing industry. You have provided a great service for your clients and anyone interested in Charlotte real estate. All of need to be doing this, day in, day out. “And the truth shall set you free!”
Terry, it sounds like you have done your homework. The Charlotte real estate martket is great shape compared to almost anywhere is the U.S. So, unless someone wants to live abroad, Charlotte has to be on the short list! The media loves bad news, and if there isn’t any, they just make some up!
Thanks Michael– its all about the pre-disposition– the deciding in advance of the story line and headline that kills me.
Right on Olan.