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Example of what this thread was started about...a single family in Lela Courts is now listed for $115,000 more than it was purchased for 2 months ago and the sellers did nothing more to it than close on it and put it on the market. This is what I see as potential for big losses for would-be investors and the issue of a "pop" <- in the very least for this investor. Nothing was done, no investment made (like buying a fixer-upper and fixing it up) so there is no return on a real investment.

This happened with a handful of townhomes in Wesley Heights as well. They closed on them, put them right back on the market with "profit" built in. A couple are still out there, a couple more closed, but the prices went down, down, down, until -- from my math -- no profit could have been made after commissions and carrying costs.

Why do people think you can buy something at market price and they mark it up? Because they hear about people doing it in Miami, Las Vegas, Cali -- can it work here? Doesn't seem to be...

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I've watched flippers do the same at 3030 South. They're having a tough time though, because the new phase just opened and they're competing with fresh, new units from the builder.

Really this is what I started the thread about -- i think the days of being able to buy new construction and make a heafy profit are long gone here unless the developer purposely sold low to sell out quickly or didn't know how to price their product.

I feel for those that are buying high priced downtown condos and thinking they will make an immediate profit once done (and after closing costs, commissions, etc.)

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These Real Estate 'Investors' are certainly like those who lost their shirts in the dot com craze. The promise of the quick buck can certainly blind people to the side effects of their actions.

I'm curious what those who are more knowledgeable about this stuff than I, think about this Fortune Article published in early part of may this year.

http://money.cnn.com/2006/05/03/news/econo...eguide_fortune/

It breaks down the housing markets in to three categories: dead, dying , and safe.

Which market would Charlotte most be in? I'm leaning more towards safe but again I don't know too much about real estate on such scale. What are some of things that could happen with the current direction this country is traveling - specific to Charlotte?

Another question. Since 'smart growth' could arguably inflate prices by decreasing supply, is that the best policy for this city to go into when affordability of housing will be key for future growth?

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Unless we start having a huge influx of people into the area we are not going to have any problems with supply. Remember the city of Charlotte sprawls over close to 300 square miles which is a huge land mass for a population of just 650,000 people. And this doesn't even count the 6 other municipalities in Mecklenburg. Outside the high profile neighborhoods that we have been discussing here, there are plenty of homes available, and plenty of opportunities to revitilize neighborhoods that have gone bad.

Right now, however. all of the large money is going into certain neighborhoods close to the core of downtown, condos in downtown, and lake front property. Most of this large money is dependent upon cheap financing and is the reason that prices are being driven to nose bleed heights for a lot of property. Aside from what we have discussed here, there are people in the Mecklenburg part of Lake Norman who are tearing down 5000 sq ft homes that are not that old to build 12,000-15000 sq ft homes. This is because the land has gotten so expensive. Its flabberghasting. There are a lot of signs the bubble is going to pop however if other cities are an indication and a lot of people are going to regret paying a huge amount over the median price for a home here. For people who intend to live in these places it won't matter much, but for investers, well.... its the same downside as those who stayed late in the dot.com craze.

I would say that in the long run that an investment in any home in Charlotte that is close to the median price for a home here and close to the median size of a home here is a safe investment. It won't see 50% appreciation every couple of years, but it won't see that kind of fall either.

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This is a great topic and I enjoy reading everyones informed opinion on this issue. We all know that home prices in Charlotte, and Uptown in particular, are at close to if not the top of the curve. We all know that curve will come down sometime. The question is when will it come down and when will it go back up? As a recent buyer of a condo in Uptown, which is my residence, I tell people all the time that I can't wait for the market to take a downturn. People usually respond by saying "Why, you just bought?" Well, even though I am young and have never experienced a downswing in the real estate market, I have read extensively regarding such and have numerous friends which were investors during the 1980's savings and loans crisis when real estate prices in many parts of the country plummeted. As all markets go, the real estate market must make a downturn at some point. I want that point to come now so in 7 or so years when I don't want to live Uptown anymore the market will again be on the upswing (hopefully). If its not on the upswing at that point more people will need to rent so I will be able to rent my place out for up to three years (tax reason), though probably not at a rate to cover my PITI payment plus HOA dues. At least I can pray it all works this way.

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  • 2 weeks later...

These Real Estate 'Investors' are certainly like those who lost their shirts in the dot com craze. The promise of the quick buck can certainly blind people to the side effects of their actions.

I'm curious what those who are more knowledgeable about this stuff than I, think about this Fortune Article published in early part of may this year.

http://money.cnn.com/2006/05/03/news/econo...eguide_fortune/

It breaks down the housing markets in to three categories: dead, dying , and safe.

Which market would Charlotte most be in? I'm leaning more towards safe but again I don't know too much about real estate on such scale. What are some of things that could happen with the current direction this country is traveling - specific to Charlotte?

Another question. Since 'smart growth' could arguably inflate prices by decreasing supply, is that the best policy for this city to go into when affordability of housing will be key for future growth?

On average safe, but I'd be loathe to buy some of these Uptown condos selling well north of $300 per square foot unless you plan to live in the place.

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On average safe, but I'd be loathe to buy some of these Uptown condos selling well north of $300 per square foot unless you plan to live in the place.

I second that. We are safe, but these 300-400 dollar per square foot places are a bit rich for my blood. I think they will correct. In the end the market has a wonderful self adjusting mechanism called supply and demand. I think the supply for the wealthy is being tapped now. Going forward I see money being made in projects like Quarterside and potentially Rentals. This would bring the demand side into play with the limited supply side of the Uptown market.

I think the ptown market is still severely underserved even if we get a massive sell off in Real Estate. Currently less than 1% of the entire Metro Population lives in Uptown !

That is amazing considering most Real Estate Experts will tell you that Charlotte's demand for Center city living could easily absorb 2%-3% of the total population if the supply was there for the lower end product. That would be like adding another 30 Towers the size of the VUE !!!!

The real question is "are developers going to be able to capitalize, and still make a profit?"

I would say yes.

Charlotte is still growing and will not stop, EVEN IN A MASSIVE DOWNTURN. But, developers, and investors alike will seek out returns anywhere they can, and Charlotte looks like a PRIME spot for them to do so. Other markets like Miami, California, Florida, and some other areas in the NE are too high a risk at this current juncture and as such we should be the benneficiaries of the capital flowing out to see the highest possible return on investment.

A2

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I think the only current issue for investors downtown will be those that buy expensive upper -end condos expecting to turn a profit renting them. Unless the investor doesn't need to cover their monthly costs from the unit, it will be VERY difficult to expect rent that covers mortgage, HOA dues, and taxes. Perhaps there will be a rush of people that want to rent high end condos, but to me the better investment is to buy the least expensive unit you can find in the center city market so your necessary rent will be in line with market rate rent. Currently there are folks seeking extremely high rental rates in condo buildings competing with significantly lower rents in Cotton Mills and other center city apartments - and their rents aren't that low, just much lower than investment condo rents.

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^That's interesting, but I don't understand why there is such a disparity between apartment rents and investment condo rents. If I was a renter, I would rather live in an apartment where I know I could call the office if the garbage disposal goes on the blink, not an absentee owner. Also...in theory, shouldn't the difference in rent between the two converge?

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^That's interesting, but I don't understand why there is such a disparity between apartment rents and investment condo rents. If I was a renter, I would rather live in an apartment where I know I could call the office if the garbage disposal goes on the blink, not an absentee owner. Also...in theory, shouldn't the difference in rent between the two converge?

My point exactly. Investors are buying condos and basing rent on what they NEED rather than what market rents ARE. You are correct, most tenants are going to price shop and apartments are going to be far lower. Of course some may not care and might rent based on wanting to be in a certain building or certain location, but most will get the best price.

In theory there really shouldn't be a difference in rental rates, and traditionally there isn't, but the current number of people buying uptown condos for an investment have changed that dynamic. We'll have to see if the public in general absorbs these units at higher rates or if the market holds out and the rents come down to a level that comes close or matches other rentals in the market. If that happens a lot of investors might bleed a bit of cash each month to cover expenses.

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