Charlotte 2 Year Price Increase 2nd in the Nation

Everyone likes to have their work validated, even indirectly. A new website for the investment industry uses my market reporting methodology-- the change in Sold Average Square Foot Price-- as their means to compare price appreciation in local housing markets. Charlotte ranks 2nd in growth nationally according to Radar Logic,11.3%, growth in the Sold Average Cost per square foot. (cps)Radar Logic is a tech company serving the investment banking industry.

For some time I've had issues with the Carolina MLS's regular reporting and the Charlotte Observer's regular coverage of the monthly median price index. It offers little in statistical meaning because it doesn't adjust for changes in average square foot of homes sold, so if one month people buy homes that average 50 sf larger than the year before, there is no meaningful comparison of price. That's why our market reports vary from theirs; our numbers here and for our clients are always based on the average cost per square foot of the sold property. SOLD COST PER SQUARE FOOT! And it isn't hard to figure, it's a mathematical process called division.

Here is the Radar Logic view, "The price per square foot metric provides a powerful tool to analyze housing markets because it significantly reduces the influence of property sizes on overall housing prices that can skew results."

Couldn't say it any better.

Top Ten Reasons To Vote For Mecklenburg County School Bonds

So lets lay it out here--our schools are heavily overcrowded, and the older schools need repair, these facts are not really in dispute, most of the dispute centers on "who" should get "what" plus a few folks who would like to defund the public schools for a variety of reasons including something that happened way back in 1957. In truth we need about 1.4B in new schools to meet enrollment needs in the next five -seven years. This 516B is just the first installment. So I'd like you to see the whole picture, and get behind the larger 1.4B number.

Do you know that temporary trailers house more than 25,000 students? did you know that 20% of the "temporary classrooms" are more than 30 years old?

Each of us will have our own most important reason, but I think one or more will appeal to you. The reasons divide on two broad fronts: economics and staying true to our American ideals.
See what you think. Not registered? You must register by October 12 to vote.
Oh, and you better grab a cup of coffee, it's a long post.

Top Ten Reasons to VOTE YES NOV 6 for the School Bond

1. It is a compromise, but a fair one.
It is only the first installment towards resolving all the building needs of this large school system. Many very real needs won't be met with this bond-- so some citizens must look beyond their immediate needs, and trust that we will do the next two installments, so that those needs are met and everyone benefits. It is a new day, we have the votes, don't let them divide us.

2.Today's children are tomorrows leaders, citizens or criminals.
It is much cheaper to educate than imprison-- average annual CMS cost per student per year, $5800, Average College Tuition $10,000, average prison inmate cost $24,000 per year. It's the economics!

3. The #1 Reason business give for relocating here-a highly skilled and trained workforce.
Did you know that by 2014, 80% of all factory jobs will require post-secondary education, factory jobs! We want more business in Charlotte, we need more quality schools, note the business council and Chamber of Commerce are 100% behind these bonds. Or we could be like those Northern cities where when kids graduate there are no jobs so they move elsewhere.
It's the economics!

4. Test scores rose 13% in Superintendent Gorman's first year.
Scores rose 13% for students performing at grade level, and he recognizes it's only a start, there is still a long way to go. And there is. Still, a good Return On Investment for one year.

5. It's an investment in the city of Charlotte's future.
The most successful government program ever? The GI Bill that made college education affordable to the Greatest Generation-- Investments in Education are PROVEN, they WORK, we just need to remember our own history. Like to make the state of North Carolina great? Provide great educations for the children- that simple.

6. Pay me now or pay, me later said the old television commercial.
I said this before but it bears repeating: 1/2 of all prison inmates are high school drop outs.

7. Doesn't your child deserve the best you and (we) your community can offer?
Isn't that what parenting is about? Can you imagine any parent feels that different about their kids? Then why is it so difficult to see that everyone in this county (and country) deserves the same? Because it is expensive? Because it is hard? While buildings aren't sufficient for a great education, they are a very necessary part of the education matrix. I don't think its to much to ask, roofs that don't leak, facilities that are safe, science labs in all high schools, music and arts funding and a football stadium. No, Americans can and have overcome harder more expensive things in the past. Every child deserves a quality education, taught by good teachers. That is not too much to demand.

8.It is who we are, a nation committed to all of its citizens. Ben Franklin and Thomas Jefferson knew that to run a democratic republic, the public must be educated, and public education was born. This is no time to turn our back on their wise council.

9.Our children are part of the future of our nation-- and if you believe that this country is great, you have to put your money where your mouth is... and that goes to the federal level as well- a month's spending in Iraq would pay for half the new schools needed across the whole country.

10. Some say the schools are run so poorly that it's throwing good money after bad. This is just wrong- go into the schools and see for yourself. Or, "My child's graduated, or goes to private school, why do should I pay?" Because this country has been dedicated to providing public education since its inception 230 years ago. No, these arguments are selfishness disguised by thin excuses, the real attitude? "I've got mine, who cares about everybody else?" These are not the values that have made this country great, and thankfully they are not close to a majority view here either, just a loud minority.

Only those who think this city's best days are behind her, don't want to invest in Charlotte's future. I believe Charlotte and North Carolina's best days are in the future. And by all means lets keep them accountable, keep them looking for ways to cut costs and be more efficient. Keep the pressure on, but these are capital investments and require the cheapest financing available- give them the funds and tools to do the job. As for me, I'll happily stand with Franklin and Jefferson in the commitment to public education- it is absolute necessity to a functioning democracy.

And as we teach our children the ideals of our founders, we find ourselves recommitting to those same principles ... something else of value.

Let's defeat this BIG Time, 2 or 3 to 1.

VOTE FOR CHARLOTTE'S FUTURE. Vote For The School Bond November 6. Vote FOR the land acquisition. Vote AGAINST transit repeal.

Another Bad MLS Stat- % Sale to %List

Recently I wrote about how our DOM is basically a bogus stat, one that is dangerously missing key information. Another stat we Realtors like to bandy about is the % Sales To %List Price Ratio... you know the one, here in Charlotte it is typically cited as 97-98.5%.

Often Sellers ask what your rate is, trying to compare you to this mythical average, (I'll prove the mythical part in a minute) when they are comparing Agents seeking Listings.

In fact our local MLS board proudly reported in September that the % Sale to List price was essentially unchanged from a year ago, therefore our market was perfectly healthy.

I feel better already. All I can say is we have a very wise group of sellers and even smarter Realtors who must price every property almost perfectly, don't you think? I can see the skeptical look on your face ...

Of course the title gives this away, but yes, the %Sale to % List stat is bogus too, for almost exactly the same reason as the DOM stat doesn't work for consumers-- it only reflects the last List price, not the first, exactly as the DOM stat only is taken from the last Listing date, not the first.

To make this easy lets say I list your home for $1,000,000. According to the MLS you can expect to get say 97% or $970,000 which you think is great because the house is only worth 500K. So lets agree the %Sale to % List is not a very accurate predictor of sales price, OK?

But then after a month, after we've received no showings and several anonymous notes asking if we always drink or smoke something before Listing, we lower the price to $500,000- the real market value and showings begin and your home is wonderful and we soon get a sale for full price, $500,000, which is also fair market value.

I just sold your home for 100% of List... 500,ooo Sales Price is 1005 of List price, the last List price anyway. Are you beginning to see the problem here? It is related to DOM this way, the MLS only reports your last List price, making there be no penalty for people starting high... other states, the original number always appears on the MLS sheet, so buyers, and their Agents know at a glance the Original price, and current price.

Yes, my agent readers will tell me we can look it up and provide that information to our Buyer client, and that is true. Just like looking up the actual DOM, I'll get a history of the Listing price at the same location-- but again why do we post our information this way?

Once again they report the price this way to protect the Seller and the Listing Agent-- by not putting the original Listing Price in, there is no penalty for pricing a Listing ridiculously high, to the seller or Agent.

What's going on? They are still hoping for the stupid buyer... you know the mythical "just fell off the turnip truck Beverly Hillbilly type" Well guys in the age of the Internet and Buyers Agency those days are gone.

I insist all of my Buyer Agents report the actual Days on Market, and the Original Price, on every property a client has significant interest in... it is just made harder by a delibarately opaque MLS.

And you've just got to love the liability switch-- by reporting DOM only on the Agent copy, the MLS never tells a client DOM, or original List price, only the Buyer Agent does, giving the MLS their "Get Out Of Jail Free" card if the buyer Agent neglects to provide this information- it dumps liability on the Agent if its ever a problem. Gotta love that!

Not.

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.

Realty Place- Deception, Collusion, And Fraud?

For some time I've waited for the "other shoe" to drop-- the real estate Broker/Agent role in the high number of foreclosures and "upside down" neighborhoods built by Beazer and financed with sub prime lending...

I can't speak for the industry, but I can speak for myself, reading "Homebuyers in the Dark" and "Promises Upfront, Deals on the Side" by Observer reporters Applebaum and St. Onge, in my opinion three words descibes the Realty Place concept and their agents: Deception, Collusion, Fraud...A possible fourth, Conspiracy would be harder to prove, but I think there needs to be an investigation, state SBI, are you listening?

Key facts uncovered by their excellent reporting:

From 2002-2005, Beazer Homes paid Realty Place 2.2M in commissions including 700K in bonuses, on 420 transactions averaging 3.9% of sales price, a full 1.2% higher than the national average. Of 50 purchasers interviewd, not one said they were told of the bonus by builder or agent.

From the Observer statisticians, "Most of the increase in foreclosures in Mecklenburg County are accounted for by the increase of "starter home" foreclosures." And, of the "Beazer Homes sold by Realty Place in 2002, 1/3 are in foreclosure". Wow, the national average for foreclosures is 3%.

Lets look at where the foreclosures are on the Observer map here. Anyone want to bet that there were a high number of minority purchasers as well? So it seems clear that the "Heinemann Innovation" was to bring sales techniques formerly confined to low class sales companies (sell the payment to undereducated people has been the practice of some home improvement companies, timeshare guys and some of the early Land (swampland) sellers)and prey on a new class of unsuspecting, unfortunately all too gullible first time home buyers. And hide behind statements like, "We disclosed everything," and "I can't be sure we trained to tell every buyer there was a bonus," the owners have produced a wall of what they think is plausible deniability.

As they say in Texas, "That dog won't hunt."

Key Questions: Realty Place was known for its horrible "split"- the percentage paid to the Agent doing the work. Of that 2.2M paid to Realty Place, how much went to brokers/owners Heineman, Jordan and Boschele?

Also- why would Beazer pay 3.9%, over 1.2% higher than the national average to Realty Place? Why would they do that-what were they getting in return? And who were the biggest beneficiaries of that extra 1.2% and what did they give Beazer? And did you note the customer who was taken only to Eastwood and Beazer, and once Eastwood was out, they only looked at Beazer? When there are at least 10 other builders building in this price range, only Beazer? Is it possible the other builders only paid the industry standard 2.5%?

The answers to these and other interesting questions lie in the records of Realty Place where every HUD must be kept for a minimum of 7 years. The HUD is a highly detailed record of the transactions, the precise records an investigation would collect. Every lending transaction would appear here as well- anyone want to bet that the loan costs are at least 1.2% higher than the national average? Legal fees, title fees and insurance too? It's the HUD-the one place that will diagram the tangled web of relationships that will prove collusion, quite probably deception, and maybe fraud and conspiracy too.

So I think if an investigator reviewing the HUD Statements, and looking at the books to see precisely the income streams and how the owners of Realty Place made their living-
this thing will unravel and we'll see some perp walks.

Let's hope for that investigation and see where it takes us.

Buyer Agent Bonuses and Other Mistakes

Yes I've accepted them in the past. No, I can't accept them in the future. Why? Well you have to ask, who am I representing? I'm representing Buyers. If a Seller is paying me a bonus, what is he paying a bonus for? In other words, what's his motivation? And if its OK to accept a small bonus, when is that bonus too big? I wrote this post about a $50,000 Buyer Agent bonus last month that just put me over the edge. Then the article in today's Observer. Thought they could be abused, and they were.

Now let me point out right away I have never sold a home because of a bonus. I never wanted to hear a customer say you sold me this home because of the bonus. In almost every case I disclosed the bonus. But not every case. And it did adjust the playing field once-- a Centex home with a 10K bonus worked its way onto the View list. I remember selecting it for the View list along with about 10 others, out of 30 or so...

The buyers bought this house, not at my suggestion, but inspite of a lot of things. The bonus was nice, I could justify it because Centex dropped the price to my buyer by 35K or so-- but still, how much do my customers have to pay for my services?
And they did pay for the enire commision, within the sales price of the home, didn't they? Anyone doubt I could have negotiated a 10k price reduction giving up the bonus?

So- if there is a Buyer Agent Bonus what will we do? Pay it to our buyers, either in reduced sales price or rebate. There can be no other answer- because even a small bonus may distort the playing field.

We either represent the Buyer's interests alone, or we represent someone else. I choose the Buyer.

Against the Transit Tax Repeal

Oh let me count the ways! Let's start with these facts I think most of us could agree on: Charlotte is growing at an extremely high rate, congestion is high here by any measure, and that growth will continue for the foreseeable future. Therefore,

The tax, .5 cents added to our sales tax, is good policy because:

1. Roughly 2/3's of the annual $68Million in revenue has supported expanding the Charlotte bus service, rapidly addressing short term needs, and 1/3 supports light rail, long term needs.

2. The sales tax is a regional tax, in other words commuters from Iredell, Union County, Cabarrus, York, Gaston-- everyone coming in to Charlotte and purchasing goods here helps pay the tax, in other words, those who benefit from our economy need to be involved in improving Charlotte infrastructure. If the tax is repealed? Ask the pro-repeal guys, it will fall on the shoulders of Charlotte and Mecklenburg County to pay for it through property taxes. This is an easy economic question for city of Charlotte voters.

3. It allows the city to guide its development and reconstruction. It is inescapable that the "transportation policy" is a "land use policy" in disguise, as a detractor points out. Yup sure is- just like a highway plan! Real estate agents in North Carolina have long known that if you want to invest in land, the first stop you should make is Raleigh to see where the roads will be in 15-20 years! Likewise, when choosing transit corridors, there are by definition "winners" (those owning property on or near the corridors) and Losers ( those owning property along competitive avenues) which accounts for some of the cut with a knife screams of "conspiracy" by Transit detractors.

4. It is something we can do. It will not solve the area's congestion by itself, not by a long shot,
but as most know, federal funds for mass transit have dried up and highway policy is set in Raleigh.

5. Suppiorting the tax doesn't keep us from fighting for more roads for the Charlotte region. WE NEED TO! I am a supporter of Republican's Phil Berger and Paul Stam's advocacy that the transportation fund stop being looted, raided, or plundered -your choice of words for a state taking transportation tax revenues to pay for other measures, of a $1.5B road bond for NC being placed on the November ballot, and addressing the archaic way the trust fund allocates highway spending without regard to growth, congestion or highway miles traveled. Berger and Stam also call on Governor Easley and the Democratically controlled state house to take transportation and infrastructure seriously which means NOT cutting the funding by 41M as the current budget does. If education was a winner in the state budget, transportation was a loser.

The critics have been against transit from the start, the cost over runs just gave them the cover to get this on the ballot. Just a note, the price of transit projects is very hard to predict accurately, and if you lived in Seattle you'd think our cost over run small. Many of the tranist critic are the same critics who told you we could get more schools by voting against the last school bond, how did that work out for you? Many of the arguments are the same too. "It cost too much", or "I'm not getting enough for my community" or "We're over-taxed", or "My voters won't ride it." All of these arguments can be translated simply into this reality, "I am not getting what I want."

The sales tax spreads the cost of transit improvements over the greater Charlotte community, and is decidedly more fair than raising my Charlotte property taxes. Most believe a family of four pays roughly $59 more for the sales tax-- and to get similar revenues from our Charlotte property taxes? $160 per year per property owner to fund the $68M the tax produces.

We, the citizens of Charlotte who believe in Charlotte's future, need to take the lead. We need to take the lead on transit, highways, public safety and all the policy's needed to keep this city the great and the wonderful place it is-- for families, for business, and for the state. We need to support forward looking politicians- and communicate that support through our votes and presence to those who believe in the future of Charlotte and this state, and NOT those that believe the city's best days are behind them. I include Mayor McGrory in this forward-thinking group, he has led the way on transit and taken political heat for it. We need to push our State representatives to do what is necessary to provide roads for the 21st Century for North Carolina and Charlotte.

And the .5 cent tax benefits every Charlotte resident because for every person taken off the highway... that makes my drive (and those who have to or prefer to drive) around town a little better.

Vote for Charlotte's Future, Vote NO on the repeal, and lets beat it 3 to 1.

Charlotte Home Prices, The Real Deal On August Prices

Prices are UP, volume is DOWN, reflecting both the underlying strength of Charlotte fundamentals and the affects of the national downturn/recession in housing. This is a look at 13 "bell-weather zip codes" for the greater Charlotte area, from Waxhaw to Mooresville. You might want to get a coffee, this is a long post.

Each zip has the number sold in 2006, and 2007, and the % decrease/increase from 2006.
Each zip has the increase or decrease of average Cost per SF in the % increase/Decrease.
The ATS Ratio is the average Asking To Sold price, for example a 131 ATS means Listing prices 31% higher, on average, than the average solds. Inventory is expressed as the number of months inventory based on the pendings for that month (an admittedly skewed number in August)

		AUGUST 2007
	Area o f	2006	2007	inc/dec	inc/dec	2007	2007
Zip Code	Charlotte	Units Sold	Units Sold	Units %	CPSF %	ATS	Inv (MO)
28173	Weddingon-Wax	142	105	-26	0.82	115.27	3.62
28227	Mint Hill	81	79	-2.47	0.85	114.37	2.05
28226	S Charlotte	65	49	-24.6	1.29	133.18	1.81
28277	S Charlotte	154	144	-6.49	1.77	105.21	2.8
28037	Denver	36	41	13.89	1.91	110	3
28078	Huntersville	119	122	2.52	1.99	106.96	3.23
28269	North Charlotte	194	137	-29.4	2.34	103.3	2.14
28270	S Charlotte	73	51	-30%	4.36	107.68	2.71
28105	Matthews	82	65	-20.73	7.54	109.75	2.03
28209 & 11	SouthPark	77	54	-30	11.26	106.7	3.57
28031	Cornelius	56	56	0	13.88	137.9	3.4
28104	Matthes-Weddi	79	50	-36.7	14.9	97.94	2.34
28036	Davidson	31	16	-48.4	15.93	107.9	2.36

All data is derived from the Charlotte MLS based on single family homes only, but is not provided by the MLS.
These zip codes account for 38% of the 7 County region the Carolina MLS reports on single family homes sold in August of 2007.

Some thoughts

There are 13 zip codes in good to very good condition, despite many fewer buyers. I found c couple if zip codes in negative territory and they will be the subject of future posts.
5 of the 6 double digit ATS, Ask to Selling ratios, were the bottom 5 appreciating region- the meaning? If the underlying value isn't perceived to be there, asking price has little influence on final sales price. Question, could the unrealistically high Listing Prices be driving the Sold prices down? I think so...
So there has been a sizable drop in sales volume this year... the commission checks will be smaller -wah! But is that bad for the real estate market? Well it is when it forces prices down, there's no doubt about it... and that is the result (natural result) nationally of the slowdown, falling prices. But not here.

Despite everything that's been thrown at residential real estate, at Charlotte real estate -- a nationwide slowdown that began in the 4th quarter of 2004, increased through out '05 and gaining momentum in'06 with daily "bubble" stories in national news in the media , the sub-prime debacle which has taken conservatively 10% of the buyers out of the market, and the fact our market is dependent on relocators and the slowdown around the country has kept people who want to move to Charlotte from coming, because their homes won't sell...

Despite all that, prices rose on single family homes for the entire Charlotte MLS area 5.1%- based on the average cost per square foot for sold homes versus August 2006. Wow.

It's as if we are defying a natural law like gravity, because everywhere, everywhere
there has been this kind of drop in units sold, prices have fallen. (I put this out here knowing some of you will check around the country-- be sure and tell me if you find ANYwhere else with similar numbers.) The natural result of a 20% reduction in demand is falling prices.

So why are the Charlotte cost per square foots up?

The reason? The reason is Charlotte's underlying value, our fundamentals, are granite-like. A robust local economy driven by the financial sector, low unemployment, good paying jobs, and generally good government. If we were a stock Warren Buffet would love us! We have a mild climate that folks from around the country are discovering. We still are not heavily taxed.

And much of our real estate is still undervalued.

As the real estate industry has grown more transparent-- the market has grown more national and international, people look at Charlotte homes online from around the world and still say, "That's a good deal." And they are right.

Then people come and visit and find it's prettier than they expected, the city is cleaner, the parks nicer, the people nicer... and they know value when they see it.

And that value radiates outwards.

For those of you reading from afar, you might want to know about Days on Market-- a stat that is meaningless here because it only counts the last listing. Thats right the MLS just covers the last listing agreement- for example you list with Agent A for 6 months, and then fire him and call me. I sign you up and put you in the MLS and presto you are a "new" listing, you've now been on the market one day. I sell it the following week, and your Days on market is 8. See why I can't use their numbers? In its place, I use "month's inventory" based on pending sales repeating (a stretch or worse for August) but still it is the best indicator we have. Inventory by zip codes ranged from a low of 1.8 in 28277, averaged just under 3. In general, times on the market have risen, it is hard to say how much. Good homes in good neighborhoods have moved reasonably quickly this year.

What's it all mean? I'll be breaking it down more in coming posts.

August Market Report- 28031

Cornelius, NC, Lake Norman's capital city, still growing strong on the lower lake.

Average	2006	2007	% Inc/dec
Cost per SF	$151.12	$172.09	13.88
# Solds	56	56	0.00
Aug-07	Average Sales Price		$445,380
ATS	Index		137.9
Months Inventory			3.4

Again I think it is fundamentals at work here, same Lake Norman as Mooresville, but 25-30 minutes closer to Charlotte, in Meckenburg vs Iredell County and frankly better infrastructure to go with it (I can hear the howl now) and just better planning-kudos to city of Cornelius.
Their Realtors and sellers are a little wild in their Asking prices with ATS (Asking to Selling) index of 138-- but it doesn't seem to have affected sales or appreciation does it? This demonstrates the transparency of the resale market-- underlying value is what counts! Despite out of line asking prices (37% high!) sales continue with high appreciation rates, but no where near Asking. Why? Because buyers can tell the real value when they go there, and then online they can see what the homes should be selling for- and that is what they are offering. And then sellers come back to the real world too.

A genuine Days on Market stat would be telling here, as would a MLS sheet that showed price drops.

All data is derived from the Carolina MLS, but is not provided by the MLS

August Market Report- 28078

Huntersville, NC consistently ranks as a top place to live in the country, and it reports solid fundamentals in August. I think its convenience and relative value, what do you think?

Average	2006	2007	% Inc/dec
Cost per SF	$112.13	$114.36	1.99
# Solds	119	122	2.52
Aug-07	Average Sales Price		$296,653
ATS Index			106.96
Months Inventory			3.23

August to August up 2%, sold volume up 2.52, more evidence of a developing national market for real estate as actual sales volume- units- doesn't correspond to sold prices. Rather, I think our area appreciation is based more on competition from other cities-- and because of Hutnersville's popularity in recent years, it has reached a "national" value perhaps for this kind of suburban residential real estate? What do you think? A healthy ATS (Asking To Selling ratio) of 107% and inventory at 3.23 months indicates its continuing popularity. Here is a great photo link to introduce you to Huntersville.

August Market Report- 28105

Matthews NC continues its strong presence in the Charlotte market. Convenience ++ Check out the average Sales Price

Averge	2006	2007	% Inc/dec
Cost Per SF	101.92	109.6	7.54
# Solds	82	65	-20.73
Aug-07	Average Sales Price		$250,535
ATS Index		109.75
Months Inventory		2

Once again fewer buyers-- which around the country (and in almost any other market) decreases prices-- not so here, as the average price went up 7.54%, even while unit volume dropped 20%! Matthews has the small town feel a lot of folks are looking for- and it's affordable. See one of my great slide shows, including Matthews Alive, here
All data is derived from the Carolina MLS, but is not provided by the MLS

August Market Report- 28209 and 28211

The SouthPark area is well known for its convenience, shopping, quality homes and value.

Average	2006	2007	% Inc/dec
Cost Per SF	198.34	220.68	11.26
# Solds	77	54	-29.87
Average Sales Price		$564,046
ATS Index		106.68
Months Inventory		3.57

It is a well deserved reputation. Despite 30% fewer buyers in the market, instead of price decline, prices are up11.26%. Wow. Clearly this is an area newcomers and old timers alike truly love. And the sellers and agents are doing a good job of keeping it real with an ATS of 106%. Inventory at 3.5 reflects the far fewer buyers in this market in August 2007.
See recent pictures of the SouthPark here.

August Market Report- 28277

Zip Code 28277, is a popular South Charlotte zip.

Average	2006	2007	% Inc/dec
CPSF	133.96	136.33	1.77
# Solds	154	144	-6.49
ATS Index		105.21
Months Inventory		2.80

Where CPSF is the Average Cost per SF of sold homes. So the ATS (Asking to Selling) is a manageable 105%, Inventory 2.8 month supply, prices up and even the number of solds, is only down slightly.

All numbers are derived from CMLS data, not provided by CMLS

Charlotte Prices By Zip and Getting Rid of Meaningless Stats

The fundamentals within our market- our property valuations- are rock solid. Price appreciation, the main measure of strength, is up 5.1% in single families. Yet there are pockets that haven't done nearly so well, a few have lost ground, and we have 10 - 20% fewer buyers in the market, slowing the growth here for the first time in a decade, you'll see that in the coming zip code posts.

I'm changing format from some of my past market reports, hopefully getting to more meaningful information. We'll still have price appreciation, and units sold, but I'm leaving out Days On Market and %Sold To List numbers, because they just don't make much sense. In fact they are almost meaningless the way our MLS reports them.

I'd like to introduce two new indexes I've created to help get a handle on these two issues. The first is my ATS,(rhymes with Cats, or Fats, but not a_s!) or Asking to Selling, which is a measure of the average Listed cost per square foot, versus the he average Sold cost per square foot for the same period, same neighborhood. For example, in August, zip code 28270 has an ATS of 107.68, and that means Listed homes on the market in August were Listed at average prices per sf 107.68% of the average of solds for the same zip, same time... make sense? Said another way, the listing price is running 7.68% above the actual average sold price, now do you get it? You will see some ATS at around 100, others up to 130. Any guess as to which homes are selling better?

The second index attempts to answer how long the average property will stay on the market. I base this on Pending sales, versus Actives, those on the market. It is expressed in Months Inventory, obviously the smaller the number the better. This index will give you an idea of how many months inventory there is on hand if sales remain at current levels... I know, I know, fall sales will be lower, but still, it may be the best measure we can get out of the available statistics. Some people would add the Pending and Sold to determine Inventory, but to me that counts the Pending sale twice.

So why doesn't the MLS Days on Market count? Simple, when the listing expires without selling, if it is re-listed a day later... Presto- like magic its a new listing and Days on Market is One (1) again. How about our vaunted 97% sales to list average? That's bogus too-- it has no relation to the original list price of the property, it is 97% of the last listed price- that could be thousands, or 10's of thousands off the original price. Insert Days on Market and Sales as a % Sold? Here:
I'll explain more in another post-- why these numbers aren't just meaningless, they're frequently deceptive and dangerous in the wrong hands. The Zip Code reports are on the way, the good,the bad and the ugly- a couple very ugly.

The Real Deal on 2nd Quarter Charlotte Home Prices

Yes I know, Charlotte Home prices are up-- up 7% says the Charlotte Observer today. National real estate powerhouse Zillow , ranked Charlotte third best in the country with prices up 9%--so is that it? Well no, not exactly... not wanting to rain on anybody's parade-- how is Charlotte real estate really doing?

The Observer just asks what the average sales price of a home was-- with no comparison by size, area distribution, or type. (single family, townhouse or condo) I think it is impossible to say how much property has appreciated in 2007 from those numbers. And Zillow? Check their last post on my site, Response from Zillow, to see if you can figure out how they compute their Zestimates, both regionally and nationally. I don't think I get it yet.

So how did I figure the 2nd quarter results you see below? Easy, I computed average square foot price of homes in the area, over the three months of April through June 30, and compared it to the same area, in the same three months in 2006. Its simple division, and the Average Square Foot price of Sold homes increased 4.73% on 7.58% fewer sales.

Here then are the 2nd quarter numbers:

	Charlotte Metro Area, 2nd Quareter 2007
	2006	2007	Inc/Dec %
Solds
Units Sold	14084	13017	-7.58
Average Cost Per SF	110.77	116.01	4.73
Average Days on Market	83	77	-7.23
Expired Listings	1922	2439	26.90

The obvious is that the average cost per sq foot rose 4.73% in the 2nd quarter of 2007 compared to the same period in 2006. But the number of units fell 7.6%, and look at the "Expireds"-- expired listings, those that didn't sell and expired, are up more than 25%.

So then if the number of sales is off less than 8% , but the prices are up 4.73%, that's good, isn't it? In today's market, across the country it is good. While Zillow and I disagree about how good Charlotte is doing, we are in agreement that Charlotte is making it through the national housing decline very well.

There you have the three different methodologies, no prize for guessing which I favor. I like mine because it is based on actual sales, totally objective numbers, that when taken in the aggregate, and averaged based on the heated square feet of a home, should be a representative sample and the leading indicator of how well Charlotte is appreciating. Also, they are easily verified by anyone with access to the MLS.

In the past I've done market reports by zip code, but I'm changing that and I'm working on a list of "bell weather" neighborhoods to keep you posted on-- and taken together, they will provide a unique "value index" not unlike the Dow Jones.

So why can't I just shut up and be happy with Zillows 9% or the Observer's 7%? Isn't that great?As a Realtor, wouldn't I want those numbers to be true? Yes I would and we are doing well, just not that well, and next week I may be sitting in your house, trying to estimate the value of your home to put it on the market. I'm sure you will have seen some of these headlines... and I want your home to sell at the best price, in the shortest time. One thing is certain, transparent real estate is here to stay and only the homes priced right will sell.

I'll post further on these 2nd quarter results as time allows.

tm

A Response From Zillow

Update- Zillow announced yesterday that Charlotte MSA prices were up 9% over last year, 3rd best in the nation... which would be great if true, however my research, easily done with our MLS, indicates otherwise.

Zillow responded in another forum to my question on how these numbers were created:

Hi, it's David from Zillow;

Terry -

Zillow is a database of all homes not just those that are currently on the market and so we calculate Zestimate values for all of the homes in our database. With this database we can report the value trends of all homes not just those that recently sold. The beauty of this approach is that it is not skewed by a change in the mix of homes that are selling - a common problem for the traditional approach of reporting value trends using only an analysis of recent sales

I think I understand that David, but I have two questions:
Your national and local MSA numbers are then the addition of all of your Zestimates, which were created from the extrapolations from actual comparable property sales, correct? Essentially additions of estimates based on comparable sales, right? Then if I took ALL the sales over a longer period of time, and compared them to the same time and place last year, our numbers should be similar shouldn't they? Well they aren't, they are way off.

Your President has stated that as much as 38% of your Zestimates are more than 10% off, why isn't your margin of error compounded in a fast moving market where prices could be going up or down relatively quickly. I'm not a statistician, but it seems that margin of error must go up in these conditons.

While our numbers and yours do correspond in some regards- for example our more expensive homes have taken the hardest hit- your data indicated the medium to large home have taken a harder hit, a pretty similar picture, there is still a huge variance in our actual results from the MLS which while not 100% complete is a good representative sample of non-builder sales.

I've recently done research on two of the top three leading zips, with appreciation based on average square foot prices from the MLS, reports showing them for the 3 month period ending July 31. In one zip code, there was price appreciation 50% below yours, and in the other? Double digit depreciation! The zip codes in question, 28277 appreciated 4.5%, and 28278 depreciated 11.97%--over May, June and July- quite a difference to Zillow's +9%, the actual reports are below for your review.

Why is this important? Because I am sure one of our local papers will pick up the Zillow press release and report it, probably uncritically, and I'll have to face a seller next week who thinks his property has gone up 9% when it might have fallen 10% from last year.

David, I'd like to be able to use your numbers--really I would if I had a sense they were atleast roughly accurate. They are impressive by their sheer volume and I know that a lot of big-time crunching has been done, but I just can't not explain the difference between our methods or why your addition of estimates would be a better measure of my market than the actual data, as long as there are sufficient transactions to be meaningful statistically. Here are my zip code Market Reports
Market Report 28277- July 2007
Market Report 28278- July 2007

Don't get me wrong, I know Charlotte has fared much much better than most of the country, but the headlines need to be right. Your comments are appreciated. terry

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Charlotte 3rd Fastest Appreciating City 2nd Qtr 2007

In statistics released today, Zillow, the national web based housing valuator, ranked the Charlotte-Gastonia-Rock Hill MSA 3rd in the nation with a net 9% increase in total housing market value in a year to year comparison through the 2nd quarter of 2007.

This just smacks us in the face doesn't it? And begs the question, how did they figure it? The key may still be year to year- our numbers showed sales being off, but appreciation in the 2-4% area, see our recent Market Updates. I'll be working to get to the bottom of it. I crave good data, and if accurate, it is a goldmine! IF!

I'll have more later.