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Old 12-28-2007, 11:09 PM
 
92 posts, read 287,052 times
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I don't think flippers have much influence here in Charlotte. While some are turning a profit, I think this area is thriving more on giving the middle class on the east coast to actually live middle class. As long as the areas below us and above us keep elevating home prices so only the 200,000 salary range can afford a modest home...people will keep coming here so they can actually have a nice life on anywhere from 50,000 to 200,000 and up per year....

That's why I don't think home prices will drop here. Charlotte presents new life, good living, affordable living, more quality out of life....why would prices drop when that's on the table???
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Old 12-29-2007, 05:05 AM
 
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Quote:
Originally Posted by lyn2shoes View Post
I don't think flippers have much influence here in Charlotte.
For the sake of clarity (and this isn't directed at you specifically, lyn), I think I should return to what I wrote, instead of what folks seem to be thinking I wrote:
Quote:
Originally Posted by Glaetzer View Post
Just a guess, but the factor which drives up prices is scarcity. If development kept pace with demand, then there would be just enough homes at any given moment, keeping home prices from spiraling up.

Likewise, if there aren't the cadre of investors and flippers (who really lay waste to the stability of a home market), the Charlotte would have been spared that inflationary pressure. Remember, home sales to those who flip in a few months drive up home values artificially; the communities hardest hit in deflation are most often rife with those flippers.
Thus, I didn't write that the area was full of flippers, but just the opposite.

It appears that for several years, whether through careful planning or just dumb luck, that just enough homes were on the market at any given time to accommodate the folks who were looking for a home, through a combination of resales available and new developments.

Obviously, if an area is suddenly overdeveloped, then there are too many homes available and prices (for new homes and resales) stagnate or even drop. When there aren't enough homes available, the prices rise.

The reason the home prices in Charlotte seem to rosy in this report is that there was no run-up in prices to begin with, and therefore no great distance to fall. Other areas experienced a boom at some point and when the housing supply didn't keep pace the prices rose to insupportable levels. It is only a matter of time in those cases before the prices correct themselves. No such correction was needed, apparently, in Charlotte.

The purpose in mentioning flippers was only to say that this isn't apparently a big deal here--not that it doesn't happen, but only that it doesn't happen in significant amounts to become an inflationary pressure. I have seen what happens in markets in Southern California and Las Vegas (for example) when speculators move in and begin to roil the market with lots of sales in a short period of time, the endgame for them being not a house to live in but a short-term investment to cash in a few months later at an expected profit.

An upside to Charlotte, then, has been stability. While some city planners or politicians will seek to take credit for this, it has most likely been nothing more than a happy coincidence. For whatever reason, it has meant that there hasn't been as much blood spilled in Charlotte's housing prices as in most other major metro areas.
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Old 12-29-2007, 05:23 AM
 
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BTW, here is a cautionary tale for those who are thinking about buying into a new development:

Late last Spring in Garden Grove, CA, a development of new townhomes (I recall there were about 40 or so) were about 40% sold when the air went out of the market and the remaining inventory stayed unsold. These units went for about $800K apiece (they would be maybe $175K to $200K here, if that forms a mental picture).

When sales had effectively stopped for a month or two, the developers cut prices on the remaining units by approximately $120,000.

While this was happening, some of the new buyers were just moving into their new homes; some hadn't even moved in yet. However, the value of their homes had effectively taken a hit of $120,000, and with so many zero-down and interest-only loans being issued then, just about all of those purchasers were upside-down in their loans before the first few payments were made.

There is absolutely nothing illegal about what the developers did. Whenever one buys anything (a home happens to be about the largest example anyone experiences), the price is one which both parties agree is reasonable for the item being purchased--if not, then no transaction occurs. In this case, the seller re-evaluated what was "reasonable" to them, and cut the prices on their remaining inventory.

I suspect some of the developments around here will go through the same drama over the Winter and Spring, though perhaps not with the same fantastic cuts as in the above example. Even still, if one buys a home in a development and pays $X and the developer then reduces the price of the remaining, comparable models by 5%, 10%, 20%, the home one purchased loses a commensurate amount of value.

A re-sale home might (emphasis on the word might) be less vulnerable to such a sudden and immediate hit on equity value.
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Old 12-29-2007, 06:48 AM
NCN
 
Location: NC/SC Border Patrol
21,135 posts, read 21,846,323 times
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Quote:
Originally Posted by lyn2shoes View Post
barchetta....I have to bet a Coke...I was corrected by my family repeatedly for calling cola, "soda" growing up...I think they said soda has ice cream in it or something...

P.S. Coupon, I'll get my value out of this conversation when I'm drinking a nice cold Coke....
You are in North Carolina, so your coke should be a Pepsi, since it was invented in New Bern. LOL We used to have "pop" in the mountains of North Carolina. I don't drink Coke products, unless they make Cheerwine.

Just realized I am off topic. I like the people who fix up a house and flip it. I think that helps an area keep looking good. I like older homes, but I don't like to redo a home. I will leave that to the flippers. I think they help keep prices up.

I really feel sorry for someone who buys a home for an investment. A home should be bought to live in and enjoy.
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Old 12-29-2007, 07:08 AM
 
Location: Wouldn't you like to know?
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Quote:
Originally Posted by lyn2shoes View Post
That's why I don't think home prices will drop here. Charlotte presents new life, good living, affordable living, more quality out of life....why would prices drop when that's on the table???
For several reasons....

1. Buyers cannot get approved for "jumbo" loans anymore and the ones who are getting approved are taking much, much, longer to get approved.

2. Charlotte depends on transplants moving in for growth. For the past 1-2 years, people up north and out west have had trouble selling their homes there. If they can't sell there, they in most cases can't close on their homes here (leaving the builder stuck). This problem is accelerating and its pretty much evident in the overwhelming majority of developments in the metro region.

3. Supply and Demand. Have you checked how many resales and unoccupied homes there are in this area? There are TONS of homes available. If a buyer has cash w/no contingency, they are treated like gold rightfully so. DOM are increasing everywhere. Builders are laying off employees left and right because they can't generate cash for the banks so they have to lay people off or sell the homes at extreme discounts. And I haven't even mentioned the increasing foreclosure rate.

4. Buyer mentality. Many buyers are saying, "why should I buy now when I know prices will come down in 3-6 months?" Its psychologically 180 degree difference from 1 1/2 - 2 yrs ago.

All in all, this is HEALTHY for the region to cleanse things out. Charlotte is experiencing what's going on everywhere else, it was just "late to the party" because it follows what happens to transplants from other parts of the country.
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Old 12-29-2007, 07:29 AM
 
63 posts, read 165,012 times
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Quote:
Originally Posted by North Carolina Native View Post
I really feel sorry for someone who buys a home for an investment. A home should be bought to live in and enjoy.
Thank you, yes. A home should keep the rain off your head and your family safe. It might enjoy some appreciation (slightly outpace inflation), but sadly we are finding many Americans used their home AS their retirement vehicle. The market adjustments we are seeing across the country are akin to a Wall St crash wiping out 401k funds.

In the pantheon of "flippers", there are those who buy an eyesore, spend time and money in refurbishing the property, and place it back on the market. I don't have a problem with that, and, yes, it does add value to the other homes in the neighborhood.

The flipper of today (which I was referring to earlier) has simply become someone who buys a home in a hot market, does nothing or next to nothing to the property, then places it back on the market a few months later at a higher price, in order to reap a decent profit. It is a higher risk/higher return investment option than a 6-month CD.

This is a fundamental misuse of housing, and while it may raise neighboring property values (through rising comps), it does so artificially--nothing has been improved, as it was in the first example. The latter serves to overheat the market, while the former takes advantage of an opportunity and applies further investments (time, knowledge, manpower) to improve the property honestly. The latter is a factor in the creation of a price bubble, while the former is not.

Just wanted to be clear on this.
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Old 12-29-2007, 07:46 AM
 
63 posts, read 165,012 times
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Quote:
Originally Posted by CouponJack View Post
For several reasons....

1. Buyers cannot get approved for "jumbo" loans anymore and the ones who are getting approved are taking much, much, longer to get approved.
Absolutely right, and this point can't be minimized.

When this episode in our financial history is scrutinized, I believe we will see rampant fraud on the part of loan officers and lenders, in cahoots with appraisers and others. It was said in the height of the home-selling in various parts of the country that "if you can fog a mirror, you can get a loan", and that, eventually, even fogging the mirror was no longer required. Too much money was being paid in commissions and special added spiffs by lenders to loan officers and mortgage brokers to keep them from doing whatever it took to close the loan, no matter how financially inappropriate that loan might have been.

Home buyers were issued loans for the worst of reasons, with investors increasing their portfolios of properties secured with junk loans, first-time homebuyers with no down payment or adequate savings reserves obtaining mortgages, and homebuyers obtaining properties they realistically couldn't afford without some "miracle loan" with zero-down, interest-only or a buydown rate with a balloon payment due in 3-5 years. All it takes is one or two rate upward adjustments in some cases and the mortgage holder is no longer able to service that debt.

So it is correct to say that the fact jumbo and other type loans are harder to get does have a depressing effect upon home sales in general. But it may well be a restoration of sanity to lending practices run amok in the past several years.
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Old 12-29-2007, 04:17 PM
 
1,588 posts, read 3,556,034 times
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Quote:
Originally Posted by lyn2shoes View Post
Quit being so negative folks...Charlotte is appreciating because people are moving here like gnats to a cows as*. I don't see it slowing or falling in value at all.. barchetta, I'll bet you a coke it keeps appreciating or holds steady beyond the year mark...are you a gambler...huh...are ya??? yum, yum, an icy cold coke is on the line....
There are several cities / metro areas that are experiencing more growth than Charlotte and their markets are no longer seeing appreciation. This has more to do with the fact that Charlotte always lags behind every other market. The condo boom in Charlotte started almost 10 years after most cities were well underway.
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