September Market Report, Prices Rising!

The average cost per square foot (cpsf) rose 6% in September as compared with the average cpsf in August 2006 on single Family homes in the greater Charlotte Area*, and unit sales were off again. Here are the numbers:
Average Cost /SF Rose from 110.46 to 117.14, 6.05% increase.
Units Sold Fell from 2537 (2006) to 2068, 18.49% decrease
Expired Listings Rose from 439 to 692, a 57% increase, but numerically, less than half the lost sales.

*The counties and area covered are Mecklenburg,Union,Iredell,Cabarrus,Gaston, Lincoln, Stanley, Lake Wylie and Lake Norman (whole)

I also looked at the 3 month period 7/1/2007 to 9/30/2007 versus the same period in 2006-- the three month numbers should give us a better trend line, and indeed the lost number of sales is lower, as is the appreciation.

3 Months Ending September 30
The Average Cost/sf rose from 114.25 to 119.63, an increase of 4.71%
The Units Sold fell from a high of 9013 (2006) to 7848, and 12.93% decrease
Expired Listings rose 49%, again the increased number of expireds is about 50% of the lost sales.

Conclusions? Overall, the market is obviously slower, but as price gains remain steady, I'll have to repeat that the value fundamentals in our market are still steady, rock steady. A 13% decrease in sales is significant, but we know that 7-10% of the buyers are out due to the extinction of sub prime lending, and we know that many folks can't sell their home in the northeast, in the west or Florida. So the result is that with 13% fewer buyers, our prices rose. Excellent!

Now most of you know I don't care for our bogus Days on Market stat, but the Absorption rate is another matter, and based on 4170 Active listings, we have less than 9 weeks of inventory based on September sales. Very Good!

I expect to hear the New Home sales are worse. They were quite late in reacting to the national slowdown that began 2 years ago, so their inventories are high. Once again, if you are buying new, only buy an inventory- at a discount!

I'll be doing area reports in the next several days.

Thinking of Buying New In Charlotte?

Thinking about buying new construction in Charlotte? I've got one suggestion....
Buy Inventory! Buy Inventory. And buy inventory at a discount.

Please. There is a lot on the market and builders are dealing on inventory or spec, not build from scratch.

And check with your Buyer Agent-- there may be an Agent bonus that your Agent would be willing to share with you.

Zip Code and area reports are coming in the next couple days... be prepared for gnashing of teeth.

Transparent real estate is Better real estate.

Getting back to blogging

Sorry its been so long since my last post... a family trip to Europe, a very busy real estate year, a move myself, and a son's graduation here in Charlotte's kept me away. But I return with new confidence and determination to write thoughtful posts here about the many great things happening here in Charlotte--or occasionally from... Greece perhaps? The Acropolis at night was breathtaking.

I'll be introducing several new categories or threads here. I'll be blogging on the important communities and developments in and around Charlotte. At last count we were the 9th largest new home market in the US and we have all the national builders here, plus some excellent regional ones as well. Over time we'll look at the various developments, builders and communities with an eye towards helping you find a happy home for yourself. It's corny and a cliche all in one, but happiness is what we are all looking for- and for most of us we find that in community with one another. (Uni-bomber and other terrorists excluded!)

I'll also be blogging about fun things to do in the greater Charlotte area. Just today I went white water rafting at the U.S. National Whitewater Center here in Charlotte. You may have seen it on the Discovery Channel last week , but it's a man made wonder, just 15 minutes from Uptown Charlotte. I got a 2 hour work out, got dunked in the 80 degree drinking water, and all in all had a great time with my family. What a great addition to the Charlotte area.

I'll also be occasionally posting about local politics here. We need to invest in our future, we need more schools, more roads and transit, and we need more political courage to move this city forward. this fall we need to pass the school bond, and keep the transit tax. It may be time to petition the County and state for a road bond to complete some needed improvements. But we are growing at between 60-80,000 people per year. We've got to build more schools and roads, just to not fall further behind!

The Palisades

From time to time I'll write about the extraordinary in Charlotte--

It's fitting my first community post is about Lake Wylie and The Palisades in Charlotte, North Carolina.The whole Southwest Charlotte corridor is bursting with growth- and I find myself being drawn more and more to the water. After relaxing aboard a 28' cabin cruiser in May off and on for a week with friends on the Severn River in Annapolis, I reached a state of mind not equalled since I was a child on the beach. Getting on the water, or getting closer feels just right. So imagine my surprise living in land-locked Charlotte to discover the resort style living available at The Palisades!

Maybe you live in the Washington DC suburbs, NY City, Boston or some other big city suburb; can you imagine a resort community on rolling hills, less than 30 minutes to downtown, or in our case Uptown...with home prices from the 400's? You are just 5 minutes to the lake, 5 minutes to the first hole of a Jack Nicklaus course, 25 minutes to watch the NFL Carolina Panthers on Sunday, and a 30-35 minute daily commute the center of town, the Bank of America Tower. On foot, by bike, or golf cart, you are just minutes to swimming, golf, tennis, an equestrian center or soccer fields. As an Audubon Community, they've artfully preserved green space and natural habitats so you are likely to see deer, the occasional fox, and the plentiful hawk. And you'll see your neighbors too! This isn't a retirement community, though retirees live here. It's an active, amenity rich environment, filled with both nature and modern conveniences... Live in Charlotte, have all the benefits of a major modern city in the South, go to professional sports, the performing arts, world-class shopping- and almost be on vacation at the same time--I am not kidding. Once shopping inside the community is complete, it will be a self-contained walking community where people will know their neighbors.

Prices start in the 400's, custom homes in the 800's-- a total of 21 custom and production builders are here. There are 11 distinct neighborhoods today, with another 5 openning this fall. Homearama visited here in 2005, and will return in the fall of 2008 at The Ranch, a collection of 1+ acre tracts with luxurious custom homes.

In my next Community post I'll write about the Palisades Boat Club- a unique boating experience on Lake Wylie. I'll also write about the country club, the Tim Wilkinson Tennis and Swim Club and the exciting over 30 event this September which will feature Jim Courier, Pete Sampras and Mats Wilander. Plus all the new shopping that has come to Southwest Charlotte in the last year. For more information about The Palisades visit http://www.thepalisades.info. For more information about, lot sales, home sales, new, custom or resale, e-mail me, terry (at) terrymcdonaldre.com, or call me at 704-351-1519. To see a slide show I photographed, visit here. I am a licensed broker and represent Buyers in NC and SC, someone who believes in Palisades personally, and helps folks find the right home and community for them without prejudice. All opinions expressed are my own, all facts and figures are relayed to the best of my knowledge but are not guaranteed or are they an endorsement of any development.

The Problem With Builders, Part II

As you know, I do love to sell new Charlotte homes-- they account for about half of the Charlotte real estate market-- as I said in Part I, I have a strong preference for Inventory homes or spec homes, sold at a discount. And we are always looking for great Charlotte communities, communities with pools and other amenities. What I am interested in is value. Around here, those best values are found in quality communities, in near to completion Inventory or Spec homes, as builders frequently make deals on these homes. They discount these because their profit is literally running out of the house, like sand in an hour glass, profit they can never get back.

Building from scratch, it is easy to "over-option" the house at the design center- "The granite is great, tile is better, and hardwoods on the first floor all make sense. The only time to upgrade lighting is now, isn't it? And we need the 3rd floor. The extra bath? Yes we need that too." I hear this all the time. It is not uncommon for upgrades to add 50, 60 or $70,000 to the price of the home. But the builder isn't telling you one important item: the builders lender will finance you but the next lender may not. Said another way, the options are here for your enjoyment, don't count on them for resale. In the worst case, you buy a home, lose your job and need to sell. If you paid retail, and you have a lot of options, your home may not sell or appraise for what you paid for it. What's worse? Many builder's business model requires them to sell options.

Only one builder acknowledges this publicly, it is in the form of a statement made part of the contract. Read this carefully to understand its full meaning:

"When you purchase options in your home, you should purchase them with the understanding that ,while the option may add functionality or enjoyment to you, they may not influence the appraised value of the home. Our policy on options is straight forward; our business model does not depend on option profits." (Italics mine)

The above builder who must remain nameless, includes most of the common options, making option purchases truly "optional." His communities appreciate very, very well, and this is one of the reasons.

Happy Buying!