Charlotte Real Estate- 1st Quarter Home Prices Lose Ground
April 20th, 2008 Categories: Buy A Charlotte Home
Charlotte Home Prices Fell 2.3% in the First Quarter of 2008 versus First Quarter 2007, as Unit sales dropped more than 28%.
The national housing recession-depression which began in some parts of the country in the 4th quarter of 2005, expanded through 2006, compounded by the sub-prime mortgage mess in 2007, has reached Charlotte- first through a major slowdown in unit sales which began last summer, followed grudgingly by lower Cost Per Square foot Sold prices in 2008, as compared to the same period in 2007. See previous reports- Case Shiller 2007 -Charlotte Appreciation and similar one from earlier in 2007
But before you panic, consider this:
Case Shiller’s monthly index of home prices- the industry’s best regarded measure of the top twenty markets in the US, began declining in July 2006, 18 months ago… but in 2006, Charlotte was in the top three in appreciation, and, in 2007, led the nation, first of twenty, according to Case Shiller, at 2.3%, while 17 other cities lost ground for the year.
Charlotte’s 28% decline in home sales in this first quarter of 2008, just takes us back to slightly more than what was sold in 2004, with 5,685 units sold. Have a look at the table below, 7 years of data where the # of sales is expressed in hundreds (41.07=4,107) And the sales $/sf represents The Average SOLD Cost PER SQUARE FOOT- not the median price index reported by NAR which does not account for more or less large home buyers.
| Year | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | change 07 to 08 |
| # of Sales | 41.07 | 44.58 | 43.5 | 53.29 | 62.67 | 75.45 | 79.74 | 56.85 | -28.71 |
| $/sf | 92.39 | 92.23 | 92.21 | 94.82 | 97.76 | 102.21 | 110 | 107.84 | -1.96 |
| 5 year | price change | 13.73 |
Note the flat Sold cost per sf in 2001, 2002 and in 2003. We survived that quite well, and I believe we’ll look back on this period with the same view.
I then looked at the stats by price range, and divided the sales by those under $1M and those over 2M, here is that table of Homes Sold Under $1,000,000
| Under 1M Solds | |||||||||
| Year | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |
| #Units in 100’s | 40.86 | 44.36 | 43.34 | 52.87 | 62.31 | 74.67 | 78.83 | 56.09 | -28.85 |
| AversageCost | 90.23 | 90.22 | 90.38 | 91.12 | 95.23 | 97.75 | 105.05 | 102.18 | -2.74 |
| Per Sf |
In the over 1 M category,
| Over 1M Solds | |||||||||
| Year | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | LY Change |
| #Units | 21 | 22 | 16 | 42 | 36 | 80 | 93 | 77 | -17.2 |
| AversageCost | 234.15 | 224.97 | 248.14 | 245.14 | 251.67 | 253.35 | 276.29 | 261.8 | -5.24 |
| Per Sf |
Several Observations:
1. If its not obvious, this is NOT a Flipper market, and it never has been. Thats a good thing, that means our home prices are reflecting value, not speculation. Charlotte is a great place to live, and your home investment is safe. The 7 year stats demonstrate that in all categories.
2. Note the dramatic increase in over 1M sales in 2006 and then 2007- I believe this is a reflection of the sub-prime lending practices that made these homes all too affordable… many may be facing a reset, but lets hope they got their rates locked in for at least 5 years.
3. Too much inventory is creating downward pressure on prices. In every category, inventories are high. Absorption rates are misleading at this time of year as many homes have just come on the market in the spring selling season, nevertheless, there is not other reason for falling prices here.
4. These stats are averages, and useful when comparing year to year, but utterly useless in predicting a particular sales price of a particular home in a particular neighborhood. Each house, community, and area have their own characteristics, and what ever the average is that I report, rest assured that there were areas much better and much worse. Before any offer is made, a high quality Buyer Agent will do price research on the given home, which is the only way to determine the expected sales price, and offer price.
There is one other important factor- Charlotte is one of the most affordable cities in America to live in- but this is especially true because of the size and diversity of the under $1M home here. Once above $1M, the affordability index is not nearly as obvious.
If you’d like to sell your home, what should you do?
First, be sure you need to sell it this year- if it is just a “want to” I’d wait! If its already on the market, consider a withdrawal.
If you have to move, there is a buyer for your home if you get it in top condition and price it appropriately. That is the good news of the numbers above- homes are selling, just not as many as we are used to, but buyers are out there. Also- things may have changed since the last time you sold a home. Today, if a home is priced 5% high, it may be shown only 10% of the time as if it was priced correctly. I mean this, buyers are shopping ruthlessly on line deciding every day what to see, and what not to see. If you aren’t getting showings, then re-examine your price before blaming the market.
And if you are a buyer, it is a strong buyers market. Credit is a bit tougher, but assuming you qualify, have a good job and a down payment, we can get a great deal on a home!
Moving To Charlotte? Considering a Move? Like to Search Charlotte Homes? Please don’t hesitate to call me direct if I can help at 704-351-1519
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Well, I think everyone as expecting it, so lets see how far it falls.