Average sale prices for Charlotte homes continue to rise. Foreclosures now account for fewer sales. Nearly 40 percent more area homes sold in October compared with last year.
Recent statistics for the Charlotte-area housing market have been pointing in one direction: up.
Local real estate agents, typically an optimistic bunch, are talking confidently about an improving market. Last week, Jennifer Frontera, president of the Charlotte Regional Realtor Association, said the area is no longer a buyers market.
Are things really this good?
Wells Fargo senior economist Mark Vitner concurs with the rosy outlook. His group recently raised its forecast significantly for national home sales and new-home construction in the current year, and he believes Charlotte is following the trend.
We are in a bit of a sellers market, as long as the seller is reasonable, Vitner told the Observer.
Even so, Charlottes housing market has not fully recovered since it fell apart in the mid-2000s. Sales prices are far from their record 2007 highs. And while home values are improving, tens of thousands of Charlotteans owe more than their homes are worth.
Then theres the uncertainty over the fiscal cliff, the set of automatic tax increases and spending cuts coming Jan. 1, unless Congress agrees to an alternate deficit-reduction plan. Economists have warned the fiscal cliff could send the U.S. economy back into recession.
Still, many in Charlotte real estate say buyers are back.
Upbeat in Dilworth
Real estate consultant Wendy Field said some people thought she was crazy this summer after she announced her first development project, The Cottages on Euclid 19 new townhomes in Dilworth.
Her project sits near a separate townhome development that went up four years ago but struggled. The remaining 49 of the original 69 units sold this year at a discount.
Sales for Fields New England-style cottages, priced between $330,000 and $450,000, she said, are beyond my expectation.
She planned for the project, being built in three phases, to take a couple years to sell out. She said shes already sold eight units and expects to be finished with sales and construction by the end of next year.
I just cannot build them fast enough, she said.
Driving the housing recovery, experts say, are historically low interest rates and rising rents.
Moreover, relatively few homes are on the market, which helps boost competition and prices. Nearly 3,450 new Charlotte listings were reported last month, down 27 percent from a year ago, according to Carolina Multiple Listing Service data. That puts the areas inventory at a six-month supply of homes, which is considered a healthy level.
The inventory excludes shadow inventory, or homes that are seriously delinquent or distressed or are in the foreclosure process but not officially on the market. It is unclear how much shadow inventory remains in Charlotte.
Vitner said the market has made slow but steady progress at cleaning out the backlog of foreclosures and bank-owned properties.
There are still plenty of foreclosures in the pipeline, he says, but much of what remains is either geographically or physically disadvantaged relative to new construction.
Foreclosures and short sales, where a home sells for less than its mortgage, accounted for 15.3 percent of closed sales in October, down from 20.2 percent of October 2011 sales, according to MLS data released this week.
Another positive trend: Sellers continue to get more of what they are asking for from buyers. Sellers received an average 92.4 percent of the list price, compared with 90 percent in October 2011.
Home prices remain well off their record highs. The average price in October was $204,335, down from the high of $248,048 in June 2007, according to MLS data.
Many homeowners remain underwater, or owe more than their homes are worth, according to real estate data and analytics firm CoreLogic. But the situation is improving, the firm has reported.
Nearly 66,000 Charlotte-area homeowners, or one in six, owed more than their homes were worth at the end of the second quarter, or about 17 percent of all residential properties with a mortgage. That is down from 70,716 underwater properties in the first quarter. An additional 31,000 homes were in near negative equity during the second quarter, down from 31,400.
Nationally, 22.3 percent of residential properties, or 10.8 million homes, were underwater at the end of the second quarter in 2012, also down from the previous quarter.
CoreLogic said 2 million borrowers currently underwater would be above water if house prices nationally rose 5 percent. CoreLogic president Anand Nallathambi said in a news release that as home prices increase, we could see significant reductions in the number of borrowers in negative equity by next year.
While some uncertainty remains, consultant Emma Littlejohn said demand for homes in Charlotte is vibrant.
She worries about a possible shortage of lots for new homes.
No one believed us when we said we were going to be short housing, said Littlejohn, whose Charlotte-based firm, The Littlejohn Group, advises developers and homebuilders across the country.
She said one new neighborhood her firm is marketing has sold more than 20 homes, priced between the $120,000s and $320,000s. Buyers at Brightwalk, a mile north of uptown, include empty nesters, young creative professionals and people who work uptown or in Concord, she said.
There is pent-up demand, she said. In general, we have not been building enough housing and rooftops to go along with population growth, replacement housing and in-migration growth.
Vitner, the economist, recently raised his estimate for new-home sales and housing starts in 2013 and 2014 because of positive reports from homebuilders. Nationally, housing starts surged 15 percent, which Vitners report called eye-opening.
In Charlotte, homebuilders have been active this year, buying up lots.
Lenders also are making more capital available for builders, Vitner says, which strengthens the overall housing market.
Household formations have increased and builders are clearly more optimistic, he says. We believe housing will strengthen even if the overall economy weakens in 2013.