Charlotte Real Estate Market Insights

Charlotte Real Estate
A Factual Overview in a Time of Uncertainty

By: Eric J Cox, Realtor®
Cox Residential

2011 Copyright: Cox Residential, LLC. All Rights Reserved.
1

About Eric J Cox:
US Marine Corps combat veteran and author, Eric J Cox understands what
it takes to accomplish missions (goals). Cox was nominated for the Realtor
Rookie of the Year award following his inaugural year and has since risen
to the top 1% of brokers in the Charlotte and surrounding areas with over
$6MM in closed sales in last year's "down" market alone. Cox branched out
in Feb of '11 and launched Cox Residential.

Knowledge, experience and work ethic aside, Cox attributes his success to
his genuine ability to Listen and Understand his clients.

Honors & Credentials Community Involvement
• Licensed in NC •  Our Forgotten Warriors – Vice President
• Top Producer •  Soldier’s Angels (volunteer)
• National Association of Realtors (NAR) •  Operation Homefront (volunteer)
• North Carolina Association of Realtors (NCAR) •  Honor Them Foundation (member)
• Charlotte Regional Realtor Association (CRRA) •  Operation PTSD (member)
• Charlotte Multiple Listing Service (CMLS) •  Veterans Help Network (member)
• 2010 Government Affairs Committee (CRRA) •  Iraq & Afghanistan Veterans of America (member)
• CRRA Vane Mingle Rookie of the Year Nominee •  CombatVets.org (member)
• Charlotte Style Magazine Top 25 Most Stylish •  USA Cares (member)
People in Charlotte (emphasis on career success) •  Home Sweet Home Campaign (member)

2

Seasonal Home Sales Cycle
1.2

1

0.8

0.6

0.4

0.2

0
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar
Real estate cycles every year. The market begins picking up during the Spring selling season
and continues to build momentum through the summer months often driven by children’s
school status. After August, sales taper off and decline until after the holiday season.

3

3 Types of Markets
—  Buyers Market
—  More than 7 Months of Inventory
—  Sellers Market
—  Less than 5 Months of Inventory
—  Equilibrium
—  Between 5 – 7 Months of Inventory

Months of Inventory Supply is defined as the total number of homes for sale in an
area divided by the number of homes sold per month in that area.

Market Transitions:

—  National transitions occur slowly due to multiple markets and respective
local economic conditions
—  Local market transitions occur very quickly

4

Mecklenburg County Housing Inventory
19.0

17.0

15.0

13.0

11.0

9.0

7.0
Equilibrium: Transition
only lasted 9 months
5.0

3.0

1.0
Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10

MSI Trend

5

Pricing : Up Market vs. Down Market
Average Home Price

Average Home Price
Price Seller Wants

Price Correction

Price Correction
Price Seller Wants When They Get It

They
Never
Get It

Time on Market Time on Market

Eventually time will correct high pricing Seller ends up chasing the market down
and make agents appear smart when when the home should have been priced
success is practically inevitable. properly from the beginning.

6

The Cost of Overpricing:

Stable Market Declining Market
Initial List Price
Initial List Price

Market Interest

Fair Market Value
Fair Mark
et Value

COST of overpricing

Time on Market Time on Market

Market interest is highest within the first 3 weeks on In a declining market, these characteristics are
market. In a stable market, fair market value is stable. amplified. Additionally, homes that take price
The salable price has to do with the psychology of reductions take 3 times longer to sell than homes
buyer interest vs. elapsed time on market. priced properly from the beginning.

7

Pricing Into the Market:

Buyers’ Market Sellers’ Market
Above

Above
Price vs. Comps

Price vs. Comps
Out of
the market
In the
market
Below

Below
In the
market

Great Poor Great Poor
Condition vs. Comps Condition vs. Comps

In our buyers’ market, only a small percentage In a sellers’ market, only a small percentage
of homes - those in great condition priced of homes - those in the worst condition priced
below the comps are IN the market. above the comps are OUT of the market.

8

The Pond: Current Housing Market

New Listings 12% of Inventory
Enter the Pond FLOW Sell and Exit the Pond
Best Value
Shown & Offers Made

SHOW
No Man’s Shown but No Offers 24% of
Land Inventory
Almost always due to condition but may be slightly overpriced.

STAGNANT MASS
Not Being Shown
OUT of 64% of
Simply overpriced.
the Market Inventory

9

Mecklenburg County Days on Market

110

100

90

80

70

60

50

DOM Trend

10

CMLS Entire Area List-to-Close
170
Jan-11, 159.7
160
150
140
130
120
Sep-06, 113
110
100
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
List To Close Trend

11

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

Aug-‐07

Nov-‐07

Feb-‐08

May-‐08

Aug-‐08

Nov-‐08

Feb-‐09

May-‐09

$150,000
&
Under

Ac#ve

Aug-‐09

Nov-‐09

Feb-‐10

Trend

May-‐10

Aug-‐10

Nov-‐10

Feb-‐11

500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500

Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Sold

Jun-09
$150,000 & Under

Aug-09
Oct-09
Dec-09
Feb-10
Trend

Apr-10
CMLS Active vs. Sold $150,000 & Under

Jun-10
Aug-10
Oct-10
Dec-10
12

Feb-11

CMLS Active vs. Sold $150,001-$250,000

Active Sold

9,000 1,400

8,000
1,200

7,000
1,000

6,000
800

5,000

600

4,000

400

3,000

2,000 200

Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Aug-09
Nov-09
Feb-10
May-10
Aug-10
Nov-10
Feb-11

$150,001
-‐
$250,000
Trend

$150,001 - $250,000 Trend

13

CMLS Active vs. Sold $250,001-$500,000

Active Sold
9,500 900

8,500 800

7,500 700

6,500 600

5,500 500

4,500 400

3,500 300

2,500 200

1,500 100
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Aug-09
Nov-09
Feb-10
May-10
Aug-10
Nov-10
Feb-11

$250,001 - $500,000 Trend $250,001 - $500,000 Trend

14

CMLS Active vs. Sold $500,000 +

Active Sold
5,000 300

4,500
250
4,000

3,500
200
3,000

2,500 150

2,000

1,500 100

1,000
50
500

0
0
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Aug-09
Nov-09
Feb-10
May-10
Aug-10
Nov-10
Feb-11

$500,001 + Trend $500,001 + Trend

15

Timing the Market
Home Prices

Market Transition
Point of Realization

Time
Markets are defined by past performance - no one can time a market. By the time a market is
realized to have changed direction, it has already passed bottom or top for some time.

16

CMLS Total Sales Volume vs. Avg Sale Price

Total Sales Volume
$12,000,000,000

$10,000,000,000

$8,000,000,000

$6,000,000,000

$4,000,000,000

$2,000,000,000
2003 2004 2005 2006 2007 2008 2009 2010
Avg. Sales Price (Year)
Total Sales Volume Trend
$240,000
$230,000
$220,000
$210,000
$200,000
$190,000
$180,000
$170,000
$160,000
$150,000
2003 2004 2005 2006 2007 2008 2009 2010

Avg. Sales Price (Year) Trend

17

Mecklenburg County Average Sale Price

310000

290000
285000

270000
265400 Q3 '10, 262500

250000 252300

230000 231000

210000

190000

170000

Q3 '06 Q3 '07 Q3 '08 Q3 '09 Q3 '10

18

CMLS Average Monthly House Payment
$1,550.00
Jun-07, $1,515.88

$1,450.00

$1,350.00

$1,250.00

$1,150.00

$1,050.00

$950.00

Feb-11, $912.93

$850.00
Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10

Avg Monthly Payment Trend

19

Opportunity of Our Market: Trade Up
Sarah pays $180,000 for her home in 2007
Today her home is worth $153,000 (15% less)
After selling & paying closing costs she gets $143,500
Her mortgage on $130,000 at 6.75% is $843/mo
She nets $ 13,500
Due to real estate losses, she writes off $ 36,500 in taxes

}  At 4.95% interest, payment remains at }  5% down payment is $13,500
$843/mo }  Purchase price is $270,000
}  Purchase price is $166,000 }  At 4.95% interest, payment increases
}  Down payment is $8,300 to $1441/mo
}  Cash leftover is $5,200 }  Assuming new house was purchased
}  Assuming new house was purchased 15% 15% less than it was worth at the
less than it was worth at the peak, new peak, new home is worth $318,000
home is worth $196,000
}  Assuming new house was purchased as
}  Assuming new house was purchased as a a distressed sale 30% less, new home
distressed sale 30% less, new home is is worth $386,000
worth $238,000
}  Potential equity = $129,500
}  Potential equity = $80,000

20

4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08

Rate

Jan-09
Mar-09
May-09
Jul-09

Trend
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
30-Year Fixed Mortgage Rate

Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
21

Hazard of Our Market: Affordability

Current Market: +.5% Interest -.5% +1% Interest = Price
price
Home Price = $200,000 Home Price = $190,000 Home Price = $200,000
Interest Rate = 5% Interest Rate = 5.5% Interest Rate = 6%
Monthly Payment $1020 Monthly Payment $1025 Monthly Payment $1139
Able to Afford $189,092 Able to Afford $179,075

22

Home Affordability at $1500/mo

360,000

340,000
•  Assumes Home Purchase Price at
recorded 30-year fixed mortgage rates Oct-10, $321,729
320,000 with 5% down payment
•  Does not factor Taxes or Insurance

300,000

280,000 $287,546

$284,338
Jul-07, $244,944
260,000 $272,044

240,000

220,000

200,000

23

Financing Programs/ Options:
—  Physician 100%LTV, no PMI
—  100% up to $650k
—  95% up to $1 Million
—  90% over $1 Million

—  FHA 96.5% LTV, Low Credit Score
—  580 minimum credit
—  Assumable (allows someone to take over your payments should rates increase)

—  BB&T CHIP up to 100% LTV, no PMI

—  FHA 203 Rehab
—  Finance the cost of repairs into the loan
—  Roll 6 months of payments into the loan if uninhabitable at purchase

—  JUMBO loans up to 90% LTV, no PMI

—  Adjustable Rate Mortgage (ARM)
—  When used properly, an excellent financial vehicle (the norm in many countries)

—  Down Payment Assistance Programs

—  Revitalization loans such as House Charlotte or HomePath

—  Seller Financing

24

The Cost of Owning vs. Renting
2,300

The average monthly
2,100
cost of owning vs.
1,900
renting a typical 3 bed,
2.5 bath home in…
1,700

PITI
1,500
Rent

1,300

1,100

900 Additionally, homeowners are able
to deduct:
700

•  mortgage interest
500
•  property taxes
•  mortgage insurance (PMI)
•  any maintenance or repairs

* Owning figures above are not reduced by the annual tax savings …from their taxable income.

25

Home Compare Rates Calculators News & Advice Life & Money Blogs
Home CDs & Checking & Credit Debt College
Mortgage Refinance Auto Insurance Retirement Taxes Find rates
Equity Investments Savings Cards Management Finance

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Charlotte Leads the Recovery… Print E -mail
NAR HOME VALUES STUDY
Compare Mortgage Rates
MORTGAGE

Q1 2011 NAR best housing markets 30 yr fixed average Zip code: Zip Code

4.53% Product: 30 yr fixed

About our rates Search

NAR home values study » Top 5 housing markets on the rise

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Mortgage Overnight Averages About this index

Product Rate +/- Last week
30 yr fixed 4.53% 4.55%
15 yr fixed 3.77% 3.78%
5/1 ARM 3.11% 3.10%
30 yr fixed refi 4.52% 4.55%

View rates in your area: Zip Code Search

See the five markets where prices are falling fastest Source: NAR, Comparing Q1 2010 & Q1 2011
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Related Links:
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Related Articles:
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26
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Fight low home appraisal Selling in a soft market

Testimonials & Recommendations

Eric is an extremely dedicated agent. His knowledge, dependability, honesty, integrity and his unbelievable
rapid response at all hours gave me confidence…I felt at ease with Eric and I always had a sense of peace
that he would do his best on my behalf. Eric is truly a remarkable agent and person…
As an Orthopedic Surgeon, I am in the “service industry” as well and believe I should be there in every way for
my patients. Frequently, when I work with others, I feel that service is lacking. I am proud to say that Eric
provided excellent service, above and beyond my expectations!
I have recommended him to countless friends.
-Kent Ellington, MD

“Eric is a real go getter...he has quickly established a large base of business clients and continues to build the
foundation for an outstanding career in Real Estate sales. He is service oriented and consistently presents
value opportunities to his customers.”
-OK Hogan
Coastal Ventures Group
Elizabeth City, NC

"I have worked with Eric Cox for the past year on three separate investments. Eric has been professional,
knowledgeable and most helpful. I am from out of state however when I deal with Eric for my investments
I do so with complete confidence and trust."
-Sara I. Sandoval
San Diego, CA

27

Testimonials & Recommendations
“From my first meeting with Eric, it was evident he offers a deft combination of authenticity, professionalism,
and patience. I felt comfortable with him from the start, and as my wife and I expand our real estate
investment portfolio, I'll continue to seek him out. During some atypical scenarios that popped up in my
deals, Eric was tireless in making extra phone calls on my behalf. Perhaps best of all, he is able to service
my real estate investment needs on a wide continuum across the whole region, including distressed
properties, new development, predevelopment, and even commercial interests. Eric is one of the hardest
working professionals in real estate, and his attentiveness sets him even further apart.”

-John Martin
Charlotte, NC

“Dear Eric,
I just wanted to let you know that you have helped me to find and purchase two pre-construction resort
properties which I intend to resell and turn a nice little profit. You have given me guidance and advice that
has helped to get good properties in places that will be of interest to investors as well as end users. You
are also helping me to sell some properties and during the slow down in real estate sells you have brought
several interested investors to the table. Thank you for you expertise and help,”
-Gary Lynn
Accuspect Investments, LLC
Asheville, NC

“Man, what to say about Eric... The guy's on fire. His enthusiasm about what he does is contagious and his
drive to know all aspects of the real estate world is impressive…he has worked with buyers looking for a
primary residence, investors looking for flips, and buyers wanting multi-million dollar commercial. He has
worked aggressively at becoming a land and development expert and continues to push towards being a
full resource for all matters real estate. I can't wait to see where his ambition and work ethic take him!”
-Brian Trainum
Charlotte, NC

28

References & Sources:

—  Keller, Gary, Dave Jenks, Jay Papasan. Shift: How
Real Estate Agents Tackle Tough Times. New York:
Relleck Publishing Partners, Ltd. 2009. Print.

—  National Association of REALTORS®
—  Charlotte Regional REALTOR® Association
—  Carolina Multiple Listing Service
—  Federal Reserve

29

Thank You.

Eric J Cox, Realtor®
Principal Broker, BIC
(704) 493-5981
Eric@CoxResidential.com

30

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