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Thread summary:

Home prices down in Charlotte North Carolina, region wide figures, upscale Lake Norman neighborhood, Charlotte’s regional median home sale prices, market recovery, government assistance

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Old 08-26-2008, 06:29 PM
 
1,163 posts, read 1,960,216 times
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Quote:
Originally Posted by Tober138 View Post
But you also got some tax breaks and built up some equity in the house. If you had been renting, with a rent payment equivalent to your mortgage payment, I'm betting you would have lost a lot more money over the course of those 11 years.
Tax breaks never saved me more than 20% of the interest I paid in one year. Everyone's tax bracket and overall situation is a little different, but I basically got just under $2,000 extra tax refund for every $10,000 I paid in interest. This is really easy to figure out with Turbo Tax or other tax programs. Just enter all your info and look at the refund. Then take out your mortgage interest and find out what the refund would be if you had no mortgage. I bet it's not that significant. People think they get most of the interest back, but they don't!

Keep in mind, you have to insure and maintain a home. I was paying about $1000/year in homeowners insurance. I pay about $150 in renter's insurance. I spent far more per year on maintenance. Plus, when you own a home, you are tempted to make improvements that cost a lot!

Also keep in mind that rent is less than a mortgage payment would be for many people.

And don't forget inflation when talking about equity or home values! Inflation for July was 5.6%! (July Inflation Is a Real Scorcher)

If this inflation value holds, a $300K home would have to be worth $394K in 5 years just to maintain its value! Even if inflation settles back to 3%, the home would have to be worth $347k just to break even. That doesn't include interest paid, maintenance, insurance, PMI if your lender requires it, etc. Your home has to appreciate closer to 8% or 10% per year to actually gain value.

In reality, Charlotte's 1% drop in value is actually a 6.6% drop if inflation is factored in.
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Old 09-16-2008, 11:50 PM
 
14 posts, read 22,998 times
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Quote:
I have the right to Market your home for sale, for however long it takes to sell, with an agreed upon commission of 7%
7%??? Is that what Realtors are getting in Charlotte?

When I sold in DC I paid the Selling Realtor 1%.

When I bought the next house, I called a few Realtors until I found one who would split her commission with me.

The first Realtor I called got furious when I told him I wanted 1/2 his buyer's commission. He told me, "I'm a family man." I asked him what the heck that had to do with the price of tea in China.

People are asking me if I give my clients guarantees?

Of course not, but then I don't have a conflict of interest with any case I take, and I don't make comments like, "the market is bottoming. Great time to buy. Housing is a great investment. Mortgage debt is good debt."

I view my job very simply.

It's my job to advise the client what the risks are to all possible choices.

I say, "Choice A will likely lead to this, choice B will likely lead to this, and choice C will likely lead to this."

I have zero interest in what the Client chooses.

For example, if the Client asks about litigating a patent, I'll give them my assessment of the pros and cons to doing so, the dangers to the client, and so on.

If I tell the client, "choice Q is very risky and choice Z is not," I don't care whether the client chooses Q or Z - I care only that Q and Z have been properly assessed and properly presented to the client.

You see?

But Realtors, on the other hand, will never tell a client that it's an awful time to buy a house. In DC, when the bubble had clearly burst, and every Realtor knew by looking at the stats that a big drop off was coming, how many do you think advised that bubbly young couple coming in to "wait a year to see how far down the market goes."????

Maybe a handful. Most likely not one.

My point is, if you're a Realtor, then you either are always pitching that NOW is a great time to buy, or you're sometimes shooting yourself in the foot

It's the classic admonition that, "[SIZE=2]It is difficult to get a man to understand something when his job depends on not understanding it[/SIZE]."

The best advice I ever got about buying a house . . .

There are 4 parties involved: You work for yourself. The other 3 work for the deal.

First thing my Real Estate Lawyer told me when I went to sell my first house, and I quote, verbatim, "don't tell your Realtor anything that you don't want the other side to know."

But back to real estate.

Did you hear that KABOOM over the weekend?

That was the U.S. financial system exploding.

LIBOR went up 3% in one day. IN ONE DAY!!!!

LIBOR is the London Interbank Rate. This means that the credit markets are so bad banks don't even want to lend to each other.

The housing market is dead. Credit is dead. Chance of prices coming down in nominal terms? 99.99%. Chances of prices coming down in real terms? 100%.
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Old 09-17-2008, 12:50 AM
 
14 posts, read 22,998 times
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Here is a graph I worked up from the data supplied at the Charlotte Realtor site. A very interesting graph indeed.
Notes:
1. It's bizarre that asking price has gotten so far out of whack with sales price. Price expectations are off the charts, and the spread between new listing asking price (pink) and the sales prices in the same month (blue) are almost 60k apart. This means that sellers are coming in with tremendously unrealistic expectations.

2. The two previous spring/summer sales price peaks are clearly visible at about 240 and 250. This year's peak, just past, is about 232. Clearly the overall peak of the Charlotte housing market was last summer, and peak prices this summer are down about 20 grand versus peak prices last summer, or about an 8% drop.

3. Interestingly, the "list price" of sold homes (not shown) is substantially less than what you'd expect based upon the "new list price" in the data. I'd guess this means that either Sellers are coming down hugely in price and the "list price" of sold homes is the final price before an offer is accepted, not the original list price.
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Old 09-17-2008, 01:01 AM
 
14 posts, read 22,998 times
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And here's a followup graph showing inventory. The graph speaks volumes.

Very basic economics 101. Supply and demand, supply and demand, supply and demand.
Notes:
1. Only 21 months of data were available.
2. Inventory increase in the last 24 months looks to be almost 33%. In the last 12 months it's about 17%.
3. When inventory increases that dramatically, prices are going to fall unless there has been a dramatic change in the demand in the market, which is not the case.
4. Average days on market (not shown) is now almost double what it was in April 07.
5. Conclusion? Pretty easy folks - all signs point one direction.
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Old 09-17-2008, 03:25 AM
 
1,163 posts, read 1,960,216 times
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PO, excellent work. I give you an A. This is going to get much, much more "interesting." Those of us with lots of cash are going to have some unique opportunities in the next couple years. Those with lots of debt... well, I don't want to think about it before breakfast.
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Old 09-17-2008, 06:57 AM
 
54 posts, read 149,600 times
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Quote:
7%??? Is that what Realtors are getting in Charlotte?
Nope...the commission is negotiated between the client and the Realtor so while the agreed upon commission might be 5, 6 or 7% no Realtor gets that. Why people still think that's what they make is beyond me.

The commission is split between the Realtor who sells the property and the Realtor representing the buyers. So a six percent commission has now become three. It is then split again between the company the Realtor works for and the respective broker so the 3 percent has now become 1.5 or 2. Out of that comes State and Federal taxes, health insurance etc and the cost of marketing the property.

Seeing as you enjoy math so much why don't you play round with those numbers and see what the average agent makes off the average home.

BTW the average real estate agent makes 38K per annum.

Here's something else to consider. If you represent me in court and you lose are you going to refund me my fee and retainer? Didn't think so. Assuming the property doesn't sell (happens about 20% of the time), are you going to refund me the money I've spent marketing it? Didn't think so either.

Quote:
But Realtors, on the other hand, will never tell a client that it's an awful time to buy a house.
My point is, if you're a Realtor, then you either are always pitching that NOW is a great time to buy, or you're sometimes shooting yourself in the foot
Is that ALL Realtors is it? Nothing like a generalization. Can we safely assume then that all lawyers are bottom feeding pond scum or are there good lawyers, average lawyers and ambulance chasers? I think you'll find like all professions there is the same spread amongst Realtors. Yes some are unethical...just as some lawyers are. Others, like myself, pride ourselves on adhering to a code of ethics and doing the right thing by our clients.

Quote:
First thing my Real Estate Lawyer told me when I went to sell my first house, and I quote, verbatim, "don't tell your Realtor anything that you don't want the other side to know."
That is complete drivel. If the conflict of interest exists that you say exists then if I tell the other side something I'm only harming myself in the transaction am I not? Are you sure you're actually an attorney? I certainly hope not a criminal one where you have to think on your feet.

Yes, you are absolutely right...it's a terrible time to buy...and a terrible time to sell...maybe we should all wait till the interest rates go up to 18% like they were under Carter and buy then...that makes way more sense.
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Old 09-17-2008, 08:04 AM
 
Location: State of Being
35,885 posts, read 67,004,073 times
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POCashmere . . . you rock. I am into data and research and I am very impressed w/ what you have shared. And it totally reflects what I have been thinking.

May I add . . . I have a two year real estate degree - earned it after I got my BS. Have not had an active RE license in 20 years. However, I am fascinated w/ markets . . . and I agree w/ everything you said as far as "advice" about buying (and selling) a home.

There are realtors out there who are confidential and keep their own counsel . . . and I know they exist here, b/c I know them personally. But out of the hundreds of licensed real estate agents in this city . . . I only trust a handful to truly represent my best interests . . . regardless of what contracts have been signed. Why? A seller's agent can provide a lot of info w/o feeling he/she is breaking a confidence or violating their fiduciary relationship w/ the client they represent. There is a lot of coded language that goes on in the industry b/n realtors. And anyone who wants to get insulted - I again state - there are realtors I trust. You can weed them out - they will demonstrate that they have your best interest at heart by giving you tough advice.

I would like to add . . . interest rates WILL indeed be going up. But the prices of homes will continue to fall. It is all an adjustment. Unique properties in select very desirable locations will hold their value better than most homes out there in the burbs, where the competition is fierce (dozens of houses that are similar, vying for the same handful of buyers).

Is it a good time to buy? It is always a good time to buy if you find a home you are satisfied with and want to stay in for the longterm. The bottom line is - if you can secure a mortgage that works w/ your budget and involves no risk (other than keeping your job) then it is always a good time to buy, even if values go down or interest rates go up. As long as you can afford the purchase and you want a home for your family, then a qualified buyer can find a property in any market. May not be as big or as new as one had anticipated . . . but even when interest rates were at 13% . . . people bought houses - and refinanced later when the rates went down. The key is to quit looking at one's principal residence as an investment towards building wealth - and rather - as an investment to PAY OFF so one has the security of owning a home. People quit thinking that way in the 90s . . . wh/ is one reason we are in the mess we are right now w/ the mortgage market.

Last edited by brokensky; 09-17-2008 at 08:10 AM.. Reason: typo
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Old 09-17-2008, 09:58 AM
 
11 posts, read 26,141 times
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POCashmere great job!!!! you are absolutely right ,The times for the famous location location location are over..... We have been looking for a house since last year and we are still waiting.... we put an agressive offer on last december and the seller laughed and even our realtor didn't want to make the offer.. and guess what . The house is still in the market and the listing price is at the same value as our agressive offer. who's laughing now???. Today I think that our offer wasn't agressive at all...
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Old 09-17-2008, 10:30 AM
 
14 posts, read 22,998 times
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Quote:
Originally Posted by Ninor View Post
Seeing as you enjoy math so much why don't you play round with those numbers and see what the average agent makes off the average home. BTW the average real estate agent makes 38K per annum.
I apologize if I came across as a jerk in that email - I wrote it late and I actually tried to go back and edit it to tone it down after I had posted the graphs, but there seems to be a time limit on editing (I actually like that feature).

The real estate agents I have known have all been very hard workers and are, in my opinion, mostly fairly compensated. They have also seemed to be nice people.

The 38k number is not particularly helpful to me because it's unclear whether that's full time agents, etcetera.

In any event, I don't like the % commission protocol. REAs should be compensated by time, not by %. Our DC house sold on the first day for about 700k. Standard commission would have been 42 grand. That's not reasonable.

Quote:
Here's something else to consider. If you represent me in court and you lose are you going to refund me my fee and retainer? Didn't think so.
Not sure what you're suggesting here.

Quote:
Assuming the property doesn't sell (happens about 20% of the time), are you going to refund me the money I've spent marketing it? Didn't think so either.
As I stated, I'd prefer a system where I pay a REA based on their time rather than on a commission.

It doesn't seem reasonable to me for a Realtor to bust his/her butt selling a 100k home and only make 50% of what they would selling a 200k home that took the same effort to sell.


Quote:
Is that ALL Realtors is it? Nothing like a generalization.
Point me to three published articles on line by three different Realtors in any of the bubble markets that have gone down 20-40% where the Realtor has publicly noted that it was not a good time to buy and buyers should wait it out and I'll retract the statement and send you a gift certificate to your favorite restaurant.

Quote:
Can we safely assume then that all lawyers are bottom feeding pond scum or are there good lawyers, average lawyers and ambulance chasers?
I think your best move would be to assume all lawyers are bottom feeders until they prove otherwise.
My experience with lawyers is that 95% of them are what I call, "serial billers." They bill without conscience, and they bill excessively.
I also despise the price-fixing scheme of 33% cut for lawyers on slip/fall/medimal cases.


Quote:
I think you'll find like all professions there is the same spread amongst Realtors. Yes some are unethical...just as some lawyers are. Others, like myself, pride ourselves on adhering to a code of ethics and doing the right thing by our clients.
Actually, I think most lawyers are ethical - mostly because getting disbarred is really a bad thing, and ethical breaches will get you fired.

If you want to do the right thing by your clients who are buying, then print out this entire thread and highlight my posts, and particularly the graphs and comments.

Then you would be doing the right thing, because you would be giving them full disclosure of the stress in the Charlotte housing market.

Or you can just let them think that NAR's David Lehrah's drum beat of "we think prices are going up" on the national news is truthful information.


Quote:
That is complete drivel. If the conflict of interest exists that you say exists then if I tell the other side something I'm only harming myself in the transaction am I not?
Bottom line, Realtors don't get paid unless the deal is done. So every time a Realtor is working with a Buyer, there is a conflict of interest. This is why it would make a ton of sense for buyer's Realtors to get paid by the hour. As it is now, a buyer's Realtor has every motivation to get the buyer into the first house the buyer shows interest in.

The rest is just human nature.

Quote:
Are you sure you're actually an attorney? I certainly hope not a criminal one where you have to think on your feet.
Patent lawyer. I do alright on my feet.
Quote:
Yes, you are absolutely right...it's a terrible time to buy...and a terrible time to sell...maybe we should all wait till the interest rates go up to 18% like they were under Carter and buy then...that makes way more sense.
It's a terrible time to buy. Period. Scaring people by telling them interest rates might go back up to 18% is not in their best interest.

Interest rates might go back up to 18%, but now would still be a terrible time to buy. Interest rates going up to 18% would just make it a worse time to buy in the future.

People need to learn to do without. "Creative financing" is what pushed this country over the edge financially.

If we had stuck with the 20% down standard, we never would have gotten into this mess.
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Old 09-17-2008, 10:46 AM
 
Location: Huntersville
1,521 posts, read 4,476,002 times
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Pay me by the hour! I'll take it. As much time and effort that goes into buying/selling a home I could do a lot better with an hourly wage.

I'm $1000 per hour btw! and thinking of going up my time is priceless.

Realtors live by a code of ethics too! I worked just as hard to get my license as the next guy and do not want to get it taken away over something stoopid!

I give as much information that I can to my clients with in the Laws of Real Estate. I am a consultant but the final decision is yours.
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