Scott Wurtzbacher’s Blog

This week our listings saw an average of 2.8 showings each.  This is a tremendous pickup in activity over the last few weeks.  The increase could be due in part to a 25 basis point drop in the Fed’s key interest rate on Wednesday.  That drop has brought the rate down to 2.25%.  This rate drop may not have an immediate effect on primary mortgages, but it does directly effect the rate on most Home Equity Lines of Credit.

Our office did see a lot of increased activity over the past seven days.  We have begun to see a better influx of offers on our listings, although negotiating has been more difficult than it has been in past years.  Buyers have a lot more supply to choose from which has allowed them to become much more aggressive with offer prices.  The bottom line is that we are a lot better off now than we were six months ago, but we still have a ways to go before we can consider things ‘back to normal’.

This week our listings saw an average of 1.6 showings each which is a bit low based on the traffic we’ve been seeing over the past few months.  Activity has been steady in our office but the pattern that buyers are slow to act continues.  Inventory locally and nationally is increasing, but that trend will hopefully slowdown as we enter into the middle of the prime selling season.

The week to come is expected to have a big impact on how consumers will make their upcoming buying decisions.  The Federal Reserve is meeting this week and it is expected that little or no cuts will be made and in general rate cuts are expected to slow.  This is another signal that the market has hit bottom.

Specifically in the real estate market, it was reported this week that home sales slipped in March nationally but that certain markets including Charlotte continue to buck the trend.  It could be that we were behind in during the boom and hence we will be slow to fall.  However, it is more likely that because our ‘boom’ was much less significant than in the rest of the country, we are less likely to experience the dramatic downside.

All of this must be taken with a grain of salt.  The National Association of Realtors, Jed Smith put it well this week with his article on the value of forecasts, which is both amusing and dead on.

This week our listings saw an average of 1.8 showing each.  This is a bit slower than the previous week, but recent Charlotte market data is showing signs of improvement.  Our monthly e-Newsletter was published recently and revealed the following:

• Homes sales are still down over last year, but were up 40% over last month.
• The average sales price is holding steady and is up 1.8% over last year.
• Average days on market is still on the rise.  Its up 26% over last year and up 5% since last month.
• Pending home sales are down over last year, but up 7% over last month.

The encouraging news in the above data is that home sales look to be picking up again as of March and the pending home sales show that pattern should continue.  Wall Street seems to agree as the Dow Jones Index gained 4% just this week alone.

This week our listings saw an average of 2.2 showings each.  Buyers continue to be highly critical; with a high supply of active listings to choose from, many simply eliminate listings from their search based on very minor negatives that they would have overlooked a year ago.  Such is the nature of a buyer’s market.

Depending on whether you are in the market to buy or sell, that is just a matter of perspective.  Chief Economist of the National Association of Realtors, Dr. Lawrence Yun, reports this week that existing home sales are expected to remain stable but slow for the next couple months and then begin to rebound during the second half of the year.  That’s good news for those in the market to buy right now, but that positive news for buyers could soon shift to a better outlook for sellers. 

Remember that the data being reported has a ‘tail’,  (i.e. the news you read today reflects the market conditions from the month when the data was collected.)  So, if market data is expected to show improvement in a few months, doesn’t that mean that the market is already improving?  If that’s the case, then the opportunity for buyers is right now, but it won’t last.

This week our listings saw an average of 2.3 showings each, which is a significant increase over the past two weeks.  Our office saw a tremendous increase in buyer activity with one listing and two buyers securing contracts.  Much of the activity has been in the first time buyer market and/or the markets under $300,000.  This makes much sense, since many buyers in the higher price ranges have houses to sell in other markets.  Our listings in these higher price ranges are seeing limited traffic and its really only those that are priced very aggressively who are seeing a result.

I feel impelled to comment on some of the media reports this week with regard to employment data and a ’coming’ recession.  Friday, it was released that unemployment has risen to 5% as of the end of March, a significant increase in the first quarter of 2008.  Unemployment has always been a good precursor to recession when looking at historical data.

A recession is defined as six months (two quarters) of declining gross domestic product (GDP).  According to the data I’ve researched, the GDP in the fourth quarter of 2007 was up by 0.6%.  I realize that’s not a high percentage, but it was UP nonetheless.  I can’t seem to find any GDP data for the first quarter and can only assume that it hasn’t been reported yet.  In an article from ‘Market Watch’, economists are predicting somewhere between 0% growth to a 1% decline.  Time will tell.

Okay, so I’m no economist and I would love your comments;  But a recession, by definition, clearly hasn’t occurred since GDP in the fourth quarter 2007 was actually up.  This tells me that everything we read in the media is simply a prediction.  Don’t these media reports create a self-fulfilling prophecy?  When the media predicts a recession, consumers tighten up their spending, GDP falls, and there you have it.

I know its next to impossible to fight the media.  But if, as individuals, we understand the facts and reality of our economy, perhaps that’s enough not to be guided by people that just seek to be heard? 

Here is a prediction of my own:  As individuals, if we all sit back and wait for the economy to improve, its going to take a lot longer than the opposite approach;  individuals can create their own success in any market.

This week our listings saw an average of 1.6 showings each which is slightly less than last week and a bit slower than expected given the season.  We received offers on a few of our listings last week, but none that turned into contracts.  Buyers have become very, very discriminating because of the high inventory levels. 

The good news is that the national medial reported last week that national home sales were up in February for the first time.  Dr. Lawrence Yun, Chief Economist of the National Association of Realtors, says that he’s not expecting a significant turn around until the second half of this year, but is encouraged to see the improvement.

Charlotte has certainly not been as hard hit as many other areas of the country.  We are fortunate for that.  In our experience, there are still many buyers in Charlotte that want to buy, but can’t because they have houses to sell in other markets.  Hopefully, a pickup in the national market will result in improved sales here.  If houses in other markets start to sell, then those sellers will become ready and willing to buy in our backyard.

This week our listings saw an average of 1.9 showings each.  This traffic is down over the past few weeks which have been seeing well above 2 showings each.  This could be due to the Easter holiday and spring break, but could also be due to the uncertainty in the market. 

On the bright side, the Fed cut rates again this week by 3/4 points which has translated to a slight drop (of about .25%) of 30 year fixed mortgage rates.  The downside is that the financial industry as a whole has been experiencing an increased state of confusion.  Mortgage requirements have become increasingly more strict in recent weeks and loans have become much harder to find.  While well qualified borrowers are in a great position for purchases and refinances right now, those with less than great credit or little money to put down will have a hard time with financing.  Fannie Mae has recently eliminated the 100% financing loan and many other similar programs have ceased to exist.  For sellers this means there will be fewer qualified buyers for the increased housing supply. 

This coming week our monthly E-newsletter will be published.  Below is a sneak peek at what will be revealed about the real estate market in Mecklenburg County as of February 2008.

When considering February 2008 over the same period last year:

The number of homes sales are down 32.3%

Average sales price is up 6.7% to $248,344

Average days on market is up 16% to 86 days

Pending homes sales are down 37% (but up over Jan 2008 and Dec 2007)

Housing supply is up 43.5% to 7.75 months

Mortgage rates are down 5.88%

To summarize the data above, the market is bottoming out but should be on its way back up.  The number of home sales have hit a low, but the pending home sales have been up for two months in a row.  This means that the number of home sales should see an increase in the coming months.  Note that prices are still up, but this could definately be attributed to a few high priced sales skewing the averages.  The housing inventory has clearly shifted to a full blown buyers market;  a 6 month supply is consider balanced and anything over that is a buyers market.  We should expect to see a slowdown in price appreciation as a result.

The good news is that spring is here and Charlotte is a very seasonal market.  We have entered the prime listing and buying season and are sure to see an increase in sales simply due to improved weather.  Hopefully the spring surge will carry us through the bottom of the market and we’ll see a recovery by the time its over.

In the meantime, Happy St. Patty’s day and may the luck o’ the Irish be with you!

This week our listings saw an average of 2.7 showings each and 2 out of our 13 went under contract.  There isn’t much news to report on the real estate market this week.  It was certainly an ugly weak for the stock market with the Dow slipping under 12,000 on Friday.  Many expect the Fed to cut interest rates again, but not until their next scheduled meeting on March 18th.  That should continue to help the real estate by getting ‘on the fence’ buyers to jump off.  The National Association of Realtors Chief Economist, Dr. Lawrence Yun, published an article this week with his thoughts on things.  Basically, he (like me) expects things to remain slow, but steady for the next few months with a stronger recovery toward the end of the year.  Of course, that’s the national market.  Charlotte seems to be keeping a bit ahead.

This week our listings saw an average of two showings each.  That’s a bit slower than over the past few weeks, but activity still seems strong in general and my area Realtor peers are in agreement.  This month’s edition of Realtor Magazine was published and in it the Chief Economist of the National Association of Realtors, Dr. Lawrence Yun, wrote a great article indicating that the national real estate market may have hit bottom.  In his article, he writes “With the economy weakening, we’re unlikely to see today’s slow home sales pace pick up in the near future, but the picture isn’t uniformly bleak;  sales have appeared to stablize around a 5 million annualized sales pace, suggesting we might be seeing the formation of a bottom.”

Recently, several different publications have reported that the three best cities for recent real estate appreciation are Seattle, Portland (OR), and Charlotte.  This is right in line with the data I’ve been publishing over the past several months.  Don’t be surprised, however, if those same publishers start changing their mind in the next couple months. 

Over the past few weeks, I’ve explained in this blog that sales in Charlotte hit a low along with some negative price growth in January of this year.  However, the pending home sales were up for the first time since April of 2007.  This was an indicator that Charlotte, too, has hit bottom and is on the road to recovery.  Unfortunately, the national media tends to be a bit behind in their reporting.  So it won’t be surprising to hear the media report that Charlotte prices are on the decline.  Don’t despair, I don’t think you’ll see those stories last very long.