Charlotte, NC Housing Market

[smfj]

My boyfriend was offered a transfer to the Charlotte, NC office of his company, so we’ve decided to head back there this spring (we both went to college there; I was born and raised there).
One thing I’m having a hard time digging up is information on real estate (at least, a conservative perspective). While the market looks good on paper ($153,000 median home price, which is around 2.5x median family income, I believe), and the apreciation has been under 4% during the run-up, some interesting things have caught my eye as a long-time Piggington. First, the somewhat high foreclosure rate (higher than San Diego), but mostly, the influx of downtown condominium projects where one-bedroom condos can run twice that median home price. Sound familiar?
I’ve followed NC a little bit during the boom and there’s some crazy things happening there (for example, $1 million condos on the intercoastal waterway!), but Charlotte certainly is a thriving place…
Anyway, having gotten over my initial emotional reaction (“oh-I’m-going-to-buy-a-place-because-I-really-want-to-and-I-can-and-even-if-it-loses-4%-hey-that’s-only-a-few-thousand-dollars”), I’ve come back down to earth and decided to feel the market out for a while, but I figured I’d seek advice from Piggingtons on two things: (1) any advice on what to keep in mind as I try to gauge the market (other than the basics)? and (2) anyone happen to know of any good resources out there on the Charlotte market, or the downtown condo craze in other cities nationally?

[PerryChase]

Rent a nice house for a year in the neighborhood you really desire. Then watch all the new listings trickle in everyday in all the neighborhoods you like. After 6 months you’ll get a good feel of where the market is headed. On weekends, are you run errands, drive by some on houses you like. Realtors will tell you that there’s nothing like knowing the market by driving around.

Most important, don’t get emotional. Think of buying a house as buying a computer. You want the best deal for the price.

[smfj]

Thanks PerryChase.

I’m very glad that I’ve let my rational side overweigh the emotional so far.

[(former)FormerSanDiegan]

I second PerryChase’s recommendation on spending a lot of your spare time on the ground while you rent for 6 months to a year. That’s exactly what I did when I moved to SD in the mid 1990’s. You can learn a heck of a lot about a local market by looking at listings on-line, driving through the neighborhoods and getting a feel for them at different times of day/night and seasons.

Once you are in tune to the area, I’d recommend finding a few areas that you really, really like and can afford (conservatively: fixed-rate loan). Make sure you want to actually stay in the area for a few years and that if current jobs fall through there are sufficient opportunities in your field. Then buy a house you like in a location you love.

[sdduuuude]

Not only should you rent for a while to get a feeling for the different neighborhoods, you should also “practice” making your desired house payment, like this:

Lets say you rent a place for $1000/month but if you bought a house, the monthly payment would be $1500/month.

Every month, make the rent payment and put $500 into a savings account of some sort.

After a year, not only will you have made progress towards a down payment, but you will also really understand what it is like to live with a $1500/month payment. Do you both have to work to support this? Could you survive if one of you didn’t, etc.

I make this suggestion to lots of people I know and it always goes over well. In San Diego where rent is $2,000/month and the payment on that same house would be $3,500/month, it is very important to “practice.”

[Cow_tipping]

I live in Charlotte NC and have since 2002. Moved from northern CA.
This is my general idea of the housing market.
1998 to 2002 houses went down in price per sqft. That was mainly due to builders switching from semi custom to tract.
2002 through now, the basic factor that has governed the market is inflation. Essentially you can buy a new house today similar to one in 2002 in a similar neighborhood for about the same inflation corrected price. If you are buying a tract house, rent should be about = payments. A 2200 sqft is ~1100 for rent in a good area. A straight 30 year will right about cost that including most of the MIP, taxes, insurance and P&I. Dont expect any real gains when you sell either.
There are also bubble markets in charlotte but I expect those to die a quick death in the comming waves of foreclosures etc. Those will more than likely drop to the same basis the lower priced ones are going for. Typically Tract houses sell for what you can build it for + 10%. Bubble areas have been selling for a lot more. I expect the bubbles to burst. And I dont expect much of a drop in non bubbles. Over supply has always been the trade mark of charlotte and will continue to be so. Builders will build, and build, and build … dont expect gains at any time, but more than likely you wont lose.
Cool.
Cow_tipping.

[smfj]

Thanks everyone!

To my new neighbor Cow_tipping- in which areas do you see a bubble? My guess would be the areas surrounding uptown? I would love to hear your thoughts on the uptown market. My desire to own a condo (uptown, or at least within walking or cab distance of stores, bars, etc.) vs. a house is a key driver in my decision to wait. It’s hard for me to tell as an outsider if the growth of “urban housing” is sustainable. Is there really enough interest in these type of units? Are speculators scooping up the units like they did here? I know Charlotte has changed a lot since the sleepy town of my childhood, but how much has it changed?

[meadandale]

Suze Orman recommends the ‘practice’ payments in one of her books that I’ve read. Great idea and if you decide not to buy, you’ve got a nice little nest egg for a rainy day.

[Cow_tipping]

Surrounding uptown is definetly a bubble, but not the real bubble. I’d make the case that being walking distance form restaurants, bars, and work is a great thing. In 3 years, I could ahve walked everywhere and never driven the car so much if I did live uptown. I’d also make a case for the old neighborhoods (dilworth, cotswold etc – the real south charlotte). The useless bubble is in south OF charlotte. Ballantyne, and that whole area surrounding it. Its within 5 miles of SC (wholly great place to live BTW) and traffic to there is a bitch, its just insane. A few years ago you could not find anything over 250K there (bad enough I said) now its 400+.
The flip side is – north charlotte or University area is now teeming with builders that are in the 400’s right next to neighborhoods in the 150’s. I live in one of them 150’s and Weiland is putting up olmstead – 400K+ … we are target fixated with 485. Where it goes, the bubble grows. 485 was in ballantyne for 5-6 years and its bubbled up. That is my ghetto take. Yea we cant see past the next week, and we cant see beyond last week. 485 plans have been around for 5-8 years. No one thought of it till now looks like. You can still get some tract developments (centex larkhaven is a clone of mine BTW) under $60-65 a sqft. Who knows what may happen next. Check out their nautilus. Love it, I live in one. Warranty service from centex is designed to make you stop calling them on warranties. So put the screws to them before close and make them fix it and fix it right. They know how, they just wont unless you put some pressure on them.
Cool.
Cow_tipping.

[Cow_tipping]

Oh also, all of this is IMHO, OK NSHO.
Follow at your own peril, or ignore at your own peril … how is that for on the fence …
My take is that, 3000 sqft Mcshitbox wont cost under 125K. I bought for 150 in 2003. Inflation would ahve adjusted to 150K – maybe. So today’s price of Mcshitbox = 175. That seems to be holding tight. Now interspersed with these Mcshitboxes, are other builders Mcshitboxes albeit built 1 stick at a time and at design time they’ll let you move walls and windows all you want … and yea they have granite counters and what ever – fluff, and those cost say 200. They want to sell you for 400. OK I expect that to crash to 220 (cost + 10%) … of course that may stay strong and mine might crash to 100 like WTF … but my hope is that, that is not likely, and my Mcshitbox is better than theirs cos atleast its not shit laced with granite and hence more $$$ … who knows … Ergo my conclusion that I am so special (OK atleast I have some research proving it) and they aren’t.
Cool.
Cow_tipping.

[Cow_tipping]

Oh yea … I forgot, Enjoy the petrochemical mix we call cheer wine. Last year evidently with gas prices surging, Cheer wine also went up in $$$. Then they had to lower the octane rating of it. Then petro express helped out and they all settled down again. B of A wanted to loan them an IO reverse amortising loan to buy the chemicals from russia. God bless the local companies.
Welcome to charlotte. Enjoy the local flavor. Which I am guessing is lead which flows like a river through charlotte and is called sugaw creek.
Cool.
Cow_tipping.

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