Scott Wurtzbacher’s Blog

Over the past two weeks, our listings have averaged 2.5 showings each per week. Its January, but yet the market isn’t acting like any typical January that I’ve known for the past 5 years. Traffic is strong, demand is up, and buyers are making offers.

I still hear a whole lot of hedging about the market and the economy in the media. After four brutal years of recession, many people are afraid to be wrong about an improving economy. But as I talk to buyers, sellers, fellow realtors, I always challenge everyone to help me see what bad news is still left out there. But I haven’t been able to find any! The financial markets are improving, the economy is improving, consumer condfidence is up, rates are still low, and real estate is selling!

Last week I did a listing presentation in a great section of Dilworth. It was the first one in a very long time where the neighborhood sales pace vs current inventory indicated that area is officially experiencing a SELLERS market. Dilworth has always been a hot neighborhood and ahead of the curve. To me its an indication that we will see similar results begin to occur all around Charlotte in the coming year.

For five years now, real estate professionals continue to say that there “is no better time to buy”. I’d argue that the best opportunity to buy may have already passed. We’ve made it through the bottom and we are well on the way back to a prosperous economy. To be sure, prices are still amazingly affordable and we probably won’t see huge price appreciation for awhile. But the screaming deals seem to be fading into history and the market volatility is shrinking.

Today I released the Mecklenburg County Real Estate stats for December in my monthly E-Newsletter. Here’s a quick summary when comparing December 2011 to the previous month and then to the same period last year:

- Home sales were up 17% from last month and 3% from last year.

- Average sales price was flat from last month and down 1.6% from last year.

- Medial sales price was up 7% from last month and up 7% from last year.

- Average time on market is down 3% from last month and up 11% from last year.

- Pending home sales are down 3% from last month, but up 18% from last year.

- Supply is down 7% from last month and down 24% from last year.

- Mortgage rates were at 3.96% which is just slightly below last month, but well below last year.

The most compelling stats from last month are the increase in pending home sales over last year in combination with the inventory which is down 24% from last year. Increased pending home sales indicate an upswing in demand and the lower supply means fewer homes coming on the market in relation to what’s selling. If this trend continues, we may see a quick shift across Charlotte from buyers market to sellers market. Sellers: you’ve been waiting a very long time for this day to come and it might just arrive this year.

Last week I wrote about the fundamental data sequence that needs to occur in order for the market to shift back to a sellers market. To recap: First the number of sales increases, then the supply of housing falls, then prices can begin to go back up.

Well, home sales are rising and supply is falling. Below is a graph of the quarterly housing supply in Mecklenburg County over the past 5 years:

Note that the last time inventory was as low as it is right now was back in March 2008. Remember that when inventory is at a six months supply the market is considered to be in balance. When it is below six months, then you have a sellers market. When it exceeds six months, it is a buyers market. We are clearly still experiencing a buyers market, but the trend is surely heading in the direction of balance. When that happens, we can expect to see prices begin to rise shortly thereafter.

Remember when the market was hot and no one thought the market would crash the way it did. Everyone one thought prices would continue to rise forever and the general media never warned us about what could be coming. Now the tables have turned and all we hear is that prices will continue to fall and will never go back to where they were. Funny how quickly we forget.

I prefer to focus on the data, the stats, and the trends. From where I sit, all I can see is recovery; 2011 started out scary to put it lightly but as the year progressed, sales picked up momentum and have only mildly dropped off due to seasonality this holiday season. Personally, I haven’t been this busy this time of year since 2006. I’m encouraged and extremely fired up for a better market in 2012. So for now, I’m thanking my lucky starts, preparing to enjoy some time with family over the holidays, and pumped to start off the new year with a bang.

Happy holidays to all of you, my valued clients, friends, family and fans. See you in 2012.

This past week our listings saw an average of 1.3 showings each. That traffic is certainly slower than we’d like to see during normal times, but then we are in the midst of the holiday season. I certainly see no cause for concern and I’m nothing but positive about the Charlotte real estate market heading into 2012. As 2011 draws to a close, lets recap a few fundamentals stats and their path over the course of the great recession.

During the boom years, the first thing that peaked was the number of home sales and that happened in mid 2006. As home sales increased, the inventory (or supply) of housing fell in direct proportion to sales but lagged by a few months. Supply hit a low point at the beginning of 2007 and at that time we were in a true ‘buyer’s market’ with only 4.7 months supply. (A six month supply is considered a balanced market.) When supply hit bottom, prices began their final push to peak. Average home price hit a high point in the summer of 2007 in Charlotte, but it hovered around that point and peaked again in September 2008 right before the market crashed.

After the financial system had its meltdown, real estate buyers went into panic mode and the number of home sales plummetted. Just as the supply dropped during the boom due to increased sales, supply began to rise as sales fell off. Housing supply hit a high point in summer of 2009 and prices followed suit.

Both 2009 and 2010 were quite confusing for real estate analysis because we had a government tax credit that created false demand. During the period that the tax credits were in effect, we saw abnormal sales spikes, small changes in supply, and minor price increases. When the credits expired, the market went back to where it was before the tax credits were implemented.

That brings us to 2011. The first half of 2011 was not much better than 2009 or 2010. However, during the second half of 2011, Charlotte saw a significant increase in home sales over the same periods from last year. In turn, supply has steadily fallen. As of this writing, supply has fallen to levels not seen since April of 2008, well before the finanicial market meltdown. We have not seen any price appreciation yet and we may not for awhile because of the higher than normal supply of distressed homes. But there is no doubt in my mind that the worst is over and we can just about see the light at the end of the tunnel.

Technically speaking, we can’t consider ourselves in a buyers market until supply drops below the six month level. That may not happen in 2012, but keep in mind that supply was at 12.8 months in April of this year and in just eight months it has fallen to just barely under 9 months supply.

There is still a lot of negative talk out there and after almost four years of recession its understandable why people are skeptical. But the truth is that we have just experienced a very ugly low point in normal market cycles. But it takes the low points to make the high ones possible and I’m pretty certain that another high point is not too far away.

This past week our listings saw an average of 2.1 showings each. This same time last year the average was about 1.5 showings per listing. We are well into November and while I am typically preparing for a slowdown this time of year, there is no sign of that yet. In fact, I am busier than ever.

As a practicing Realtor, I can honestly say that 2006 was the last time I was this busy with activity in November. Remember 2006? Of course its easy to be busy and not have any sales going on. That’s not the case. Maria and I had closed about 25 sales year to date at the end of October. We have 11 closings in escrow for November and December and we are confident that we’ll add a few more to that before the year is over. Needless to say, we are thrilled. (By the way, several of those closings involved multiple offers on a single property.)

I wish I could say that its just me and that I’m the world’s greatest Realtor bucking the trends in a sour economy. But the truth is that whenever my sales are sluggish, I talk to my peers and I hear the same thing. When sales pickup, its the same story. The media is still reporting gloom and doom but out in the trenches, its a different story. Oh, what a great time it is to buy.

Last week I had the opportunity to hear Dr. Lawrence Yun, Chief Economist of the National Association of Realtors, speak to our local association about the national outlook for real estate. Much of what he said supported what I’ve been blogging about for months now. But he shared even more great data that have gotten me even more fired up about real estate. Here are a few key bullets points that I found to be compelling…..feel free to email me for more details.

1) Home prices vs rent ratios have quickly shifted to the point where it is less expensive to buy than it is to rent. There are a number of reasons for this. But the important point here is that smart money is buying real estate because it produces a cash return on investment. If a landlord’s rental income covers expenses and there’s still money left over, there is profit. What’s the return on a savings account right now?

2) Back in 2002 when the market was “normal”, Fannie Mae mortgages written in that year had a default rate of 3.1% (after 18 months). This means that 3.1% of the mortgages made that year defaulted in that time period. In 2007, that default rate skyrocketed to 28.7%!! That is why there are so many foreclosures in inventory right now. However, the default rate for mortgages made in 2009 was only 1.9% which is far below what it was in normal times. Again, there’s good reason why this has happened. More importantly, this means that in a few years the foreclosures will dry up and homeowners will be rock solid. This is very likely to lead to a very strong economy in the not too distant future.

3) Inflation is on the rise for sure. Real estate has always been a hedge against inflation plain and simple.

I believe that we are on the brink of a tremendous upward trend in real estate both nationally and in Charlotte. Yes, there is still foreclosure inventory yet to be released to the market. That could hold prices down for a while longer. I also think that there is a lot of cash out there waiting to be invested, but consumer confidence is still low. To me, this just means that there is still opportunity to buy low before things take off again. Oh, there is opportunity right now but how much longer will it last?

This past week our listings saw an average of 1.6 showings each. Showing traffic is about the same as it was this time last year. The difference is that it seems more of the lookers are actually buying this time around.

This week we’ll publish our monthly E-Newsletter and will report the Charlotte real estate market stats for September. When comparing to the prior month and then to the same month last year, here’s a quick summary of how things look:

- Home sales are down 15% from the prior month, but UP 27% from last year.
- Average sales price is down 6% from the prior month and down 11% from last year.
- Median home price is down 11% from the prior month and down 11% from last year.
- Average time on market is up 3% from the prior month, but down 3% from last year.
- Pending home sales are down 5% from the prior month, but UP 14% from last year.
- Supply is down to 9.9 months which is 5% below the prior month and 18% below last year.
- Mortgage rates are hitting rock bottom. Currently around 4.1% they are down both from last month and last year.

I feel like I have a secret. The general buzz is still that the real estate market is in the dumps. I don’t see that. Sure, prices are still down and the numbers above show that they are still falling. But real estate follows supply and demand just like anything other product and the numbers above clearly show signs of strong improvement.

First of all, the number of home sales is way up from last year. Additionally, pending home sales are also way up from last year which means that the pattern of better than last year sales almost certain to continue in the next couple months. So, it is clear that demand is up.

On top of the increased demand, we see that supply is dropping. In fact, my latest stats show that supply is down to 9.9 months which is the lowest it has been since December of 2008. This is huge news for Charlotte real estate. Basically, this tells us that demand is up and supply is down. The result of that ultimately means increasing prices. Yes, that will take some time but we are absolutely heading in the right direction.

As a practicing Realtor, I can thankfully say that I’ve been busier in the last two months than I have been in a few years. Sales seem to come in waves, but I am definitely riding one right now. My ego would love to believe that I’m the only one experiencing this wave, but in my experience, whenever I get busy I find that other agents around me are in the same boat. Such is definitely true this time around.

There’s no telling what the economic and polictical climates will bring over the next few months and even years. But right now, the numbers are showing positive signs. So grab your boards and get ready to ride the next wave with me.

This past week our listings had an average of 1.3 showings each. Although I’d like to see at least an average of 2 per week, the current average is better than it was this time last year. Regardless of the negative news we keep hearing amongst the media, all signs in our local market are pointing to an improving real estate market.

This week we sent out our monthly E-Newsletter which included the real estate market stats for August. When comparing August 2011 with the previous month and the same month last year, here is a brief summary:

- Home sales were up 4.9% from last month and up 37.6% from last year.
- Average sales price was down 4.3% from last month and down 12.9% from last year.
- Median sales price was down 2.8% from last month and down 4.5% from last year.
- Average time on market was about the same as last month, and up 4.9% from last year.
- Pending home sales were down 4.3% from last month, but up 19.0% from last year.
- Supply was down 8.0% from last month and down 15.9% from last year.
- Mortgage rates are down to about 4.27% for a 30 year fixed, which is a drop from both last month and last year.

The indicators above all show improvement in the local market except for the sales price figures. However, you have to remember these numbers reflect the end of summer which is historically when sales and prices begin to drop from their season peaks during the calendar year. I’m not at all concerned or suprised to see a small dip in prices from the July peak.

Furthermore, I am very encouraged to see that pending homes sales are still almost 20% higher than they were a year ago. This indicates that home sales this fall will be significantly higher than they were last year.

My personal experience has shown that last year started out strong and finished poorly. This year it is the exact opposite. The weak sales last fall rolled right into the spring which was weak overall. However, the summer season has been consistently steady and it appears that trend will continue into the fall. Of course, I expect things to slow down into the fall, but if the market continues to be better than last year, there is a good chance that will roll into the spring of 2012.

There is one real looming concern that I have regarding our local economy. Bank of America has recently announced mass layoffs to cut costs. Implementation of that plan could most certainly have a negative impact on real estate sales in Charlotte. But I’m staying positive at this point and trying to avoid speculation. Right now our market is showing improvement and I’m sticking with that until the data begins to show us otherwise.

This past week our listings saw an average of less than one showing each.   It seems we are experiencing the typical slowdown that comes at the end of the summer around Labor Day and right after the kids go back to school.   If history is any predictor, we should see a slight rise in activity starting around now through the end of October before things slow down for the holidays.

Speaking of predictions, it seems that the media is full of negative ones regarding the fate of our economy.   More and more we are hearing about the coming of another recession.   Personally, I’ve grown a little tired of all the predictors.   Where were they when the market fell apart in the first place?   I’m certainly not qualified to refute the so called experts in terms of the global economy, but I am ready to make some predictions about Charlotte real estate.

I’ve been tracking real estate stats for about seven years now.   One of the patterns that I’ve picked up on that seems to occur every year with seasonality is the relationship between pending sales, home sales, and home prices.    First and most obvious is that pending home sales is a terrific indicator of home sales.   Those homes under contract today are likely to close in 30 to 60 days.   Second is that average home prices are very closely tied to home sales.   The theory of supply and demand would certainly support that pattern.

Since 2005, I’ve noticed that for any given month in a calendar year, the low month for home sales is typically about half of the high month.   Additionally, I have found that the low monthly average home price in a calendar year always follows the low month for number of sales.   Respectively, the high month for average home prices always follows the high month for home sales.

Through the recent recession, the worst year for sales and prices was 2009.   2010 was only marginally better in terms of sales and prices, and some of that year’s numbers are skewed because of the  first time buyer tax credits.   So far in 2011, we are seeing sales numbers very much in line with 2010 except that the demand is more evenly spread out.   (In 2010, demand was crammed into a few months during which the tax credits were in play.)   The best news is that the average prices in 2011 during both the strongest and weakest months to date are better than the same months in the prior two years.   This tells me that we are seeing a strong pattern of stabilization and even some degree of price appreciation.

The best news is that pending home sales are up well over where they were this time last year.   Again, the pending home sales number tells us what is likely to close 30-60 days from now.   So if pendings can predict home sales, and prices follow home sales, then it would make sense that we are in for continued improvement.   Pendings are up from last year, and so sales should also be up 30-60 days from now.  

Now of course if there should be some significant change in the global economy and things head south, the pendings will likely fall quickly and my prediction will be turned upside down.   But for now, I’m staying positive that Charlotte real estate will hold steady in the coming months and into next year.

This past week our listings saw an average of 2.5 showings each which is a definite increase over prior weeks.   Is it a fluke?   Hard to tell.   Seasonally, we usually see an increase in activity after the kids go back to school which happens this week.   Stay tuned here to see if that holds true again in 2011.

This week we’ll publish our monthly E-newsletter with the real estate market stats for Mecklenburg County in July.   When comparing that period to the month prior and again to the same period last year, here’s a brief summary:

- Home sales  were down 7.0% from the prior month, but up 26.7% from last year.

- Average sales price was down about 4.7% both from the prior month AND from last year.

- Median sales price was even with the prior month and up 1.1% from last year.

- Average days on market was about even with the prior month, and up about 4.9% from last year.

- Pending home sales were down 3.3% from the prior month, but up 25.8% from last year.

- Supply was down 3.4% from the prior month and down 8.8% from last year.

- Mortgage rates have remained flat from the previous month and about even with last year.

The most important thing to note in the data above is that both the number of home sales AND pending home sales are both way up from last year.   Home sales show a clear improvement over last year and pendings is a predictor that the next couple months will also be better assuming those contracts close.

This time last year, the market really slowed following the expiration of the tax credits.   This year it seems that the demand has been spread a bit more evenly throughout the year.   This was expected, but I think it will translate into media reports that the market is showing real signs of improvement.   It is good news that sales and pendings are up but that is really just in comparison to last year’s skewed numbers.   2011 was more of a “normal” year because there were no government incentives.   This time next year, we’ll be able to do more of an “apples to apples” comparison and when we do, hopefully we’ll see some true growth.

This past week our listings saw an average of 1.9 showings each.   Traffic has not showed a significant slow down in the past couple of weeks, but it is still slower than anyone would like to see.   As we head toward the end of the summer, it is seasonally common to slow down right before school starts, only to pickup again for a few months after Labor Day.

Over the past two weeks, there has been an over abundance of bad news in the media relating to our government and unemployment.   It seems that everyone wants to try and predict what’s going to happen next.   Recently, our government let a key decision stretch into the last minute over whether or not to raise the debt ceiling so that it could continue to pay the bills.   The decision was made, but yesterday the ratings agency Standard and Poors downgraded the US Governments credit rating from AAA to AA+.   The initial comments that I’ve read seem to indicate that investors are not overly concerned.

Nonetheless, the downgrade does and should signal a level of concern about the future of our country without some significant decision making inside Washington.    It is concerning that  the opinion of Standard and Poors is still regarded so highly even after the credit crisis, which was caused, in part, by their negligence.   When securities instruments were created back in the mid 2000′s using sub-prime mortgages, the ratings agencies  issued inappropriate ratings to those products giving a false sense of security to investors.   Investors relied on the opinions of the ratings agencies and bought sub-prime mortgage bonds without truly understanding them.   Only a few short years later, when people started defaulting on their mortgages as real estate prices fell, the whole system came crashing down.   For more detail on this, I highly recommend checking out the book “The Big Short” by Michael Lewis.

I digress as this blog is about Charlotte Real Estate.   But the truth is that what’s happened over the past week will undoubtedly have an impact on real estate sales.   Consumer (and corporate) confidence in our economy will undoubtedly go down and employers will surely be hesitant to add jobs.   Improving the unemployment situation in our area is one sure way to improve the housing market.   It’s going to be hard for that to happen with all the bad news out there.

For sellers of real estate, this means it’s time to buckle down or get aggressive.   At least for the next few months, I think we may see buying activity slow because of the lower consumer confidence.   On the buying side, what a great opportunity to take advantage of!!

In previous blogs, I’ve written about how the rental market is sure to help the recovery of real estate sales.   Our Charlotte real estate market has gotten to the point where it is now cheaper to buy than it is to rent in many parts of the city.   Investors and homeowners alike are bound to catch on soon.   Especially those with money  that don’t know where to put it.   Real estate could be a very  good place to invest right now if  decisions are made based on the fundamentals of cash flow.

Stay tuned to this blog….its going to be an interesting next couple of months.

This past week our listings saw an average of 1.4 showings each.   Overall, the showing traffic has been a little lighter than we’d like to see.   But it does seem that the quality of the showings has improved quite a bit and that is reflected in the latest market data for the Charlotte area.

This week we’ll publish our monthly E-Newsletter and will include the market stats for Charlotte in June.   Here’s a peek at the changes since the prior month and again when compared to the same time last year:

- Home sales were up 8.8% from last month, but down 11.9% from a year ago.

- Average price was up 3.7% from last month AND up 4.6% from last year.

- Median price was up 4.1% from last month AND up 1.4% from last year.

- Days on market was about even with last month, but up 9% from last year.

- Pending home sales were down 2.9% from last month, but up 22.55% from last year.

- Housing supply is down 7.9% from last month, but up 4.4% from last year.

- Mortgage rates are down from both last month and last year.   Right now they are at their lowest levels since Nov 2010.

Overall, the numbers for June look strong and show nice signs of a growing market.   The best news is the strong jump in pending home sales from last year.   This can be attributed to the expiration of the tax credits last year.   Remember, that the home buyer tax credits expired in April of last year.   Immediately after that happened, pending home sales fell sharply.   This year, with no tax incentives in play, pending home sales have held relatively firm.   This is an indication that the second half of 2011 is going to be far stronger than the second half of 2010.   My personal pipeline for the second half of this year, supports that.   Business is picking up and will hopefully remain steady.

The second great piece of news in the June data is the consistency in price appreciation shown through both the average price and the median price.   Both of these numbers have increased steadily since January.   Based on the patterns I’ve been tracking since 2003, it seems that seasonally prices seem to peak in the summer months and they bottom out in January or February.   So it makes sense that we’ve seen a continuous rise since January.   Hopefully, we’ll see a little bit more upward price movement into August before they drop back down.   More importantly, my hope for the rest of 2011 is that the price declines likely this fall and winter will be moderate giving us a higher baseline in February for strong growth in spring of 2012.

There is definitely a lot more confidence in the real estate market now than there was in either of the past two years.   Buyers are back for sure, but they are seeking deals.   Properties are moving, but only for those sellers committed to selling based on today’s market values.   As the volume of sales continues to grow, so will prices.