Kingdom Realty

Sales of previously-owned homes jumped 9.4% in September after falling for the first time in four months in August, said the National Association of Realtors. Year over year, sales of existing homes were up 9.2% in September.

“Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” said Lawrence Yun, NAR chief economist.

Early information from a NAR report to be released next month suggests first-time homebuyers accounted for more than 45% of home sales in the past year.

Prices still falling. Yun said the market is still underperforming as home values continue to decline.

The median price of homes sold in September was $174,900, falling 8.5% from a year earlier. The drop in prices has been led by an influx of distressed properties, which accounted for 29% of sales in September and include foreclosures and short sales.

Where the homes are selling. Regionally, the strongest market was the West, where sales climbed 13% to an annualized rate of 1.3 million. That was 5.7% higher than last year’s rate. The median price of homes sold during the month was $219,000, down 15% from last year.

In the Midwest, sales were up by 9.6% to a pace of 1.25 million, which was 7.8% higher year-over year. Prices there have dipped 1% since 2008 to a median of $147,600.

Sales in the South were up 9% from August and 10.8% from last September to a rate of 2.6 million. Prices have dropped 7.6% to $153,500 in the past 12 months.

The Northeast reported a modest rise, with existing sales up 4.4% from August to a rate of 950,000. That was 11.8% from a year ago. The median price there was $234,700, down 7.6% from last year.

Think your earnest money is safe?
The buyers at 210 Trade thought so when they plunked down their earnest money deposits for a shiny new to-be-constructed condo downtown. Deposits were made from eager buyers for amount ranging from a few thousand dollars all the way up to $80,000. The critical mistake some of them made was that they did not ensure their money was stored in escrow. Now the developer is out of money, filing for bankruptcy and the buyers are very unlikely to see a penny of their deposits back.

Now some potential homeowners are leery of making deposits for yet-to-be contructed homes or condos. To avoid this fear, stipulate your deposit be held in escrow by an attorney or by your agent’s realty company, not by the developer. It is also important to have your Realtor or an attorney craft language in the purchase & sales contract that can let you get your deposit back easily if the developer fails to meet construction deadlines.

The market value of Charlotte, NC homes  rose by 0.6% in July compared with June, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s.  “Wow”, you say, “0.6%…that’s….underwhelming”.  Well in the case of a $200,000 home, then officially that is $120.  Annualized, you just made $1,440.  The good news is that house values in Charlotte did go up.  There are many cities in the U.S. which are feeling the continued effects of a price ‘free-fall’.

The better news to remember is the Charlotte in the headlines over the past year for its lack of free-fall.  Imagine yourself for a second in Miami or Phoenix.  At first, you are happy…because it is nice & warm in those cities right now, whereas it is 40 degrees and raining at the moment.  Now think about your property being worth 68.6% of what you paid for it a year ago.  The price changes in each some hard-hit cities over the past year, based on the Case-Shiller data for July include: Las Vegas, down 31.4%; Phoenix, down 28.5%; Detroit, down 24.6%; Miami, down 21.2%; Tampa, Fla., down 18.4%; San Francisco, down 17.9%.  Charlotte, in comparison is down only 9% over the past year.  Now take a look at your stock portfolio.  Yes, we have seen some recent gains in the past 6 months.  But most things in your portfolio are still off by about 30% from this time last year, aren’t they?

The answer is that before the bubble burst last year, real estate in the Charlotte area was generally undervalued.  Cost of living is low and the medium home price is lower than average.  Charlotte was passed over by many national investors for more exciting cities.  These investors got what they asked for…plenty of excitement!  Almost like a roller coaster, really…shaped like a downward spiral.

In Charlotte, we have the theme park Carowinds, and they have a ride which I believe is called Drop Zone.  This ride brings you up to the very top, lets you sit there for a few seconds, feet dangling in the air.  Then, all of a sudden, it feels like the bottom falls out and you are free-falling right next to  your neighbors, relatives and friends.  Many real investors outside of Charlotte are feeling like they have experienced the Drop Zone over the past year.  As a fellow real estate investor, I have been pained by this 9% drop.  But 31% in a year?!  I feel fortunate that my investments have not been playing on the Drop Zone.

If you bought in Miami at the height of the market, you paid on average $380,000 for a house. This same house today in Miami is worth on average $216,000. In Charlotte at the height, you paid on average $167,000 for a house. Today, that home is worth on average $158,000. The summary: (1) The initial buy-in was significantly lower in Charlotte, (2) The short-term value decrease in Charlotte is relatively slight in terms of dollars and percentage, and (3) The current value is still significantly lower in comparison. THE THIRD POINT IS THE MOST IMPORTANT POINT…the current value represents today’s buy-in price.
Time to buy some affordable, reasonable, well-valued real estate! Buy in Charlotte!