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Single-family homes under $100,000 have accounted for more than one in six Charlotte-area sales this year, almost double the rate before the downturn.
Some of these deals are older houses and rural properties, which are often less expensive. Other homes have fallen below $100,000 amid a weak market that's pushed prices down. And a major driver of the low-end increase is foreclosures and distressed sales, more common among lower-priced houses.
The erosion of property values pains the broader community, driving down neighbors' home values and property tax revenues. But it also means bargains for buyers. And reducing inventory at all price levels is a necessary step toward a housing recovery.
“These distressed properties have to get moved at some point,” said Matthew Martin, an economist and head of the Federal Reserve in Charlotte. “It will help the healing process in the market.”
Rising low-end sales during the second quarter helped give the region its best spring bounce from the winter doldrums in three years.
Jeffrey Hood, 25, and his fiancee Samantha Lear, 23, offered less than $100,000 last week on a four-bedroom east Charlotte house that sold for $175,000 in 2007. The house fell into foreclosure in January. The couple, who plan to wed next year, also expect to qualify for the $8,000 first-time homebuyer tax credit.
“We're tired of renting, just giving money away,” said Hood, a maintenance mechanic for Carolinas Medical Center. “With the market being down, it's a good time to buy.”
Sales at the very low end began gaining market share late last year as total home sales dropped sharply, according to Market Opportunity Research Enterprises. So far this year, single-family sales below $100,000 accounted for 18 percent of deals in the eight-county area, according to an Observer analysis of the Rocky Mount firm's data compiled from court records. That's double the 9 percent market share in 2006 and 2007.
About 40 percent of the area's low-end single-family sales this year were in Mecklenburg County. Throughout the eight counties, nearly all were existing homes, not new construction.
The MORE Report, one of the most precise measures of the eight-county region's home sales, doesn't track which sales are foreclosures.
But an Observer analysis of Mecklenburg County data found about two-thirds of homes that sold for less than $100,000 this year had fallen into foreclosure during the last 18 months. That compares with about one-fifth of all county sales, based on data available from the county last week.
“Lower-end sales and foreclosures are absolutely driving the market,” said Joe Clorite, a Keller Williams Realtor in Charlotte.
“The magic number” for hot properties is $90,000 to $125,000, said Brenda Goddard, an Allen Tate Realtor, who represents Hood and Lear. “Everybody is looking for the biggest amount of bang for their buck, and those bargains are out there.”
And that means first-timers, newcomers, investors and other bargain hunters competing for the deals.
“When we see a house that we like, you don't have time to think about it,” said Hood, whose current offer is his fourth. “You either move on it or somebody sweeps in and gets it.”
David Forker moved to Charlotte in January, not long after retiring from a 20-year career that began with mopping floors for a grocery chain and ended as a store manager. Forker, now 50, plunked down $72,000 cash for a house in northwest Charlotte.
The three-bedroom house had sold new in 2001 for $109,500, fell into foreclosure in 2006, resold for $91,000 and foreclosed a second time last fall, according to county records.
Forker has been a homeowner since shortly after graduating college and a saver, socking away enough money to retire two years ago. He worked in Virginia, tried living in West Virginia, but wanted something different. His research led him to Charlotte.
“Charlotte was the most affordable place to live. I got a great bargain,” said Forker, who also was drawn as a Panthers football fan and theater lover.
Real estate investor Kevin Brown moved from Florida to an uptown Charlotte apartment two years ago. He says he bought 20 single-family houses this year alone, most under $100,000.
“It's been nice,” he said. “I can buy my properties 40 to 50 percent off their values.”
Brown, who is 32, began investing in lower-end houses in South Florida six years ago. He wanted a different lifestyle, so he researched cities across the country. Charlotte's housing market looked more stable and profitable than other places like California and New York. He moved after selling all but two of his Florida properties.
Brown rents most of the houses, and says he does background checks on tenants before letting them move in. Business has been “pretty lucrative so far,” but he declined to say how much he is making.
Also, about once a month Brown buys a house, fixes it up and sells as fast as he can.
“I like flipping houses,” Brown said. “The rental business can be kind of boring.”
Database editor Ted Mellnik contributed.
