3rd Ward Midrise Projects

[CLTProductions]

^ the mellenial's are also carrying more student loan debt than any previous generation. They may start making babies soon, but mortgages are not going to be automatic.

Being a millennial with student loan debt, I know a mortgage isn't in my future anytime soon.  

[15895]

Being a mellinial with debt, I think Mortage is cheaper than rent for much more value

[tozmervo]

It certainly is, but I wouldn't underestimate how much harder it is to get a mortgage now. It's going to take folks a while to save up down payments that will get banks to even return your call

[dubone]

Plus, the old rent vs buy calculators consistently ignore maintenance, so not only do you have to save up for down payment but also be prepared to handle all the things that come up.  Responsibly, you'd plan a monthly homeowners dues to yourself if it's a house, but then condos have the dues for the structure and staff and other amenities.  Tax benefits are nice, but only if you're at a certain income level.  Then traditionally people used to assume that value would more than compensate for improvements and maintenance and real estate fees upon sale, but that was an illusion.  It turns out from the Shiller and other studies, that over time, home values roughly grow with inflation.  It is a complicated equation.   But if you're the subject of the Onion article and you're planning to put down roots here, and have the benefit of combining dual incomes by swapping some rings, then it is often the best choice to buy. 

 

I do like the apartment boom overall, because it means projects get announced and built without the impossible sales cycle that condos have, and also they are backed often by capital enough to insure or plan for cycles whereas condos are all individuals of varying economic security.  

[Niner National]

It certainly is, but I wouldn't underestimate how much harder it is to get a mortgage now. It's going to take folks a while to save up down payments that will get banks to even return your call

I got a 100% loan without any problem. I don't have much in student loan debt (only around 5,000), but I didn't have much at all in my savings account when I applied for a mortgage. I don't even have to pay mortgage insurance...

[navigator319]

Agreed mortgages are not as hard as people assume.  Was 28 in 2012 when bought condo uptown.  5% down payment... 50k student loan debt about 3k on credit card when applied and approved.  For me this was a better payment then rent.

 

Family member with significantly less income and 0 debt also got mortgage recently again 5% down and her payment per month is cheaper then rent would would be for a beautiful new construction 3bed 2.5 bath town home where she can get roommate if she wants and make money per month.  And this is not hours away, off south tryon before 485 and Ardysly

[kermit]

So we have so far heard from four mellineals (no idea if they are representative of the cohort). Three have said that getting a mortgage is (or should be) no problem, even with student loan debt. One (25%) said that they are unlikely to qualify for a mortgage in the near term.

A 25% reduction in demand for owner occupied, entry level, housing would be a HUGE disruption to the market. If 25% is a reasonable ballpark then our new supply of rental space will also prove to be grossly inadequate. Even just a 5% decline in demand (1 in 20 potential buyers) would create major changes in residential pricing and inventory.

While this 'analysis' may, or may not, be reasonable. I am certain that this is the type of trend (and depth of analysis) that apartment developers are using to justify their projects.

[standard disclaimers apply: unscientific sample, speculation only, I am not an expert, please -- no wagering, yadda yadda]

Edited March 19, 2014 by kermit

[CLTProductions]

Being a mellinial with debt, I think Mortage is cheaper than rent for much more value

I agree, but it is very hard (for me at least) to save the money needed for a decent downpayment. Especially when what's available to buy uptown for a decent price, are essentially glorified apartments.

 

And I would definitely qualify for a mortgage, I have great credit. I am just more focused on paying down my debt. I want to be debt free before I go into any more of it. I completely understand that I am throwing money away by renting, just personally I want to be debt free.

 

I think we may have gone a tad off topic......GO CHARLOTTE BUILD TOWERS, are we back on now?

Edited March 19, 2014 by Jayvee

[Guest]

I agree, but it is very hard (for me at least) to save the money needed for a decent downpayment. Especially when what's available to buy uptown for a decent price, are essentially glorified apartments.

 

And I would definitely qualify for a mortgage, I have great credit. I am just more focused on paying down my debt. I want to be debt free before I go into any more of it. I completely understand that I am throwing money away by renting, just personally I want to be debt free.

 

I think we may have gone a tad off topic......GO CHARLOTTE BUILD TOWERS, are we back on now?

I just can't bring myself to put 5% down ever. 

You might be throwing away on rent, but a $300,000 house after putting 5% down over the life of a 40 year mortgage will cost you $650,000. Thats crazy.

Edited March 19, 2014 by Guest

[CLTProductions]

I just can't bring myself to put 5% down ever. 

You might be throwing away on rent, but a $300,000 house after putting 5% down over the life of a 40 year mortgage will cost you $650,000. Thats crazy.

That is why I have no problem renting until I am completely out of debt and be able to put at least 15% down. I think 5% down is just a bad investment.

Edited March 19, 2014 by Jayvee

[HopHead]

Getting a mortgage with 0-5% down is one of the worst financial things you can do, short of withdrawing from your 401k 20+ years before retirement. The amount of interest you'll pay is astronomical. You're better off just renting until you can afford 20% down. I saw an article the other day where ARMs are making a comeback, though they claim things are different... yea right. Will we ever learn? Not as long as there is a buck to be made 

Edited March 19, 2014 by wend28

[teeg]

I just can't bring myself to put 5% down ever. 

You might be throwing away on rent, but a $300,000 house after putting 5% down over the life of a 40 year mortgage will cost you $650,000. Thats crazy.

 

40 year mortgage?!?!  

[CLTProductions]

Getting a mortgage with 0-5% down is one of the worst financial things you can do, short of withdrawing from your 401k 20+ years before retirement. The amount of interest you'll pay is astronomical. You're better off just renting until you can afford 20% down. I saw an article the other day where ARMs are making a comeback, though they claim things are different... yea right. Will we ever learn? Not as long as there is a buck to be made 

I don't know how anyone with any financial knowledge would trust in an ARM again. I know when I eventually go down that road, nothing but fixed. And yes exactly as I/we said. I'm a 20 something with plenty of student loan debt to pay off, that's "throwing money away" on renting. However I would probably be throwing more money away long term by putting only what i could afford (0-5%) down on a mortgage. It's much better to come out of debt, and hit that 20% mark, just a much better investment. That being said and bringing it ALL back around:

 

There is certainly an extreme boom in apartments around the city and while very short term, it could cause an issue, but I think long term it will be beneficial. There will never be a shortage of people like me, content with renting for now just wanting to live in the city. I don't see Charlotte's growth grinding to a halt and hopefully it will start booming again. Having all these apartments will make for a better environment for renters.

 

 

40 year mortgage?!?!  

Ha, yes i meant to question that too.

[dubone]

There are too many math combinations to be reasonable to go through all the options, but yes 30y mortgages are the old standard, not 40.

 

The problem with generalizations is that it is impossible to know all the circumstances.   The things that are different now than in previous generations is that banks may be lending now, but not with the absurd underwriting that went on during the Bush era.  I know from my the refi's done by people close to me that they require a lot more information now proving income, etc.   100% mortgages are rarely solid financial planning, but that isn't to say that they are bad in every case.  Each payment does include equity purchase, so there is ownership over time, and tax deductibility of interest and taxes, and perhaps the purchase price was low enough to assume some amount of equity from appreciation.   There are always cases where smart choices will mean equity will grow.  Across the board, appreciation averages the level of inflation, but that doesn't mean a smart pick won't lead to more.   

 

 

 

I am curious how it plays out.  Traditional societies have far more renters than owners-occupied, and urban centers often more because of barriers to entry.  Maybe we have permanently shifted, and these apartment towers ought to all move forward as long as as they are not timed too close together.   But if there is going to be a shift in the next 5 years to ownership, then either the urban growth will slow considerably, or we are going to need to see more condos proposed.

[Guest]

I don't know how anyone with any financial knowledge would trust in an ARM again. I know when I eventually go down that road, nothing but fixed. And yes exactly as I/we said. I'm a 20 something with plenty of student loan debt to pay off, that's "throwing money away" on renting. However I would probably be throwing more money away long term by putting only what i could afford (0-5%) down on a mortgage. It's much better to come out of debt, and hit that 20% mark, just a much better investment. That being said and bringing it ALL back around:

There is certainly an extreme boom in apartments around the city and while very short term, it could cause an issue, but I think long term it will be beneficial. There will never be a shortage of people like me, content with renting for now just wanting to live in the city. I don't see Charlotte's growth grinding to a halt and hopefully it will start booming again. Having all these apartments will make for a better environment for renters.

Ha, yes i meant to question that too.

Blame it on iPad and cold fingers. I meant 30.

However 15 yr. 30 yr and 40 yr are all things

[teeg]

Blame it on iPad and cold fingers. I meant 30.

However 15 yr. 30 yr and 40 yr are all things

 

I did not know that 40 was a thing.  I guess I should not be too surprised, since interest-only mortgages have been around for a while.  At least with a 40 year mortgage, you'd be paying down some principal every month. 

[navigator319]

Getting a mortgage with 0-5% down is one of the worst financial things you can do, short of withdrawing from your 401k 20+ years before retirement. The amount of interest you'll pay is astronomical. You're better off just renting until you can afford 20% down. I saw an article the other day where ARMs are making a comeback, though they claim things are different... yea right. Will we ever learn? Not as long as there is a buck to be made 

 

I just don't agree with this and while i will explain i do realize and respect everyone has a different situation and POV

 

For my personal example I bought a condo in TradeMark in May 2012 for $229k  the 5% down was about ~$11k closing costs were rolled into mortgage for a seling price if you look on county web site of $234k

 

I did a 15 year FIXED mortgage @ 3.8% my payment is $1900 a month.  I could have done a 30 year for $1500 per month payment.  The PMI INS I needed as was not 20% down was $2.5k one time payment in the closing costs.

 

Today the mortgage is down to $196k only 20 months after purchasing and condo very conservatively worth $255k, real estate friend of mine says if were to list it today she would list for $270k.  This has been the best investment that I could have made.

 

If I or several others I know have waited until had 20% to put down we would still be waiting and missed out on appreciation of asset and ultra low interest.  This is still available today! The $2500 of PMI is the sunk cost of this approach, but its not a negative for the two reasons i mentioned previously.  Certainly not a reason to not purchase.

Edited March 19, 2014 by navigator319

[birky]

I don't know how anyone with any financial knowledge would trust in an ARM again.

 

I would think it depends on the lender. For example, the SECU only offers ARMs if you want a 30 year mortgage.  However, they don't sell your loan, have no PMI, and they have a reasonable cap on the rate. The bank even showed us an extensive worst-case scenario report when we applied for a loan.

 

I am far from an expert on such things, but my understanding was that the issue with ARMs and sub-prime lending was people purchasing more than they could afford if the rate increased.  I don't see how ARMs are, on their own, bad.  I think it depends on your situation.  A person getting a 5-year ARM for a home they only intend to live in for 7-10 years is not a terrible idea.

[dubone]

There are too many scenarios to hash out.  

 

There are always cases where risks yield rewards.  I still wish I had moved forward with the high asking price above my means for a tear down house in Dilworth for $150k when I was 21, and I didn't have the foreknowledge to see that my income would increase in a year to easily cover a house that was falling down and enough of an income to rebuild a custom home in a couple years.  It has now been rebuilt and on zillow as $785k.  But in the end, I didn't take the risk.

 

You just have to hope that the economic situation keeps equity that high from appreciation.   Over the whole market, appreciation is not likely to sustain spikes like that, and in some ways that high value may actually be due to temporary high rental rates or temporary low condo supply which could be corrected in the long run.  You might also get a surprise assessment for some major maintenance or lawsuit.   These are RISKs, and there are plenty of cases where it works out well and the negative outcomes do not materialize.   But taking risks without fall back savings or with overly optimistic projections that don't materialize, people go bankrupt, like in 2008-9. 

 

Regardless, this is between the banks and the borrower assuming finally the world is back to more rational choices.  (In the Bush-era, a bank might make your loan, then buy credit-default insurance that makes them benefit from your failure to pay, so they didn't even mind if the borrower wasn't worthy. I think and hope those conditions are gone).   We also could be back on a track of more reasonable levels of appreciation that will avoid dramatic corrective drops.   

 

Looping back to topic, people ARE in the buying mode, and people exist outside the currently young and childless people that make up most of the renting demographic.  There might even be a swap with baby boomers wanting to rent maintenance free urban condos and millenials finally moving to the burbs to raise children.  But I'll tell you, developers will need to predict this and change some things, as most aging baby boomers would not put up with the noise and low grade finishes in many of the apartments recently built in South End. 

[Niner National]

Getting a mortgage with 0-5% down is one of the worst financial things you can do, short of withdrawing from your 401k 20+ years before retirement. The amount of interest you'll pay is astronomical. You're better off just renting until you can afford 20% down. I saw an article the other day where ARMs are making a comeback, though they claim things are different... yea right. Will we ever learn? Not as long as there is a buck to be made 

With mortgage rates between 3.5 and 4% the last few years, you could pretty easily take the money you would have put down as a down payment and have that money do FAR MORE for you as an investment than if you just spent it on a down payment.

 

If interest rates were significantly higher, then yes, I'd certainly agree with you, but if you can't get more than a 3-5% return on your money in the market, you're doing something very wrong.

[HopHead]

With mortgage rates between 3.5 and 4% the last few years, you could pretty easily take the money you would have put down as a down payment and have that money do FAR MORE for you as an investment than if you just spent it on a down payment.

 

If interest rates were significantly higher, then yes, I'd certainly agree with you, but if you can't get more than a 3-5% return on your money in the market, you're doing something very wrong.

 

Yea, but by the same token, if you have that 20% towards your downpayment at ~3.75% you'll pay off your home a lot faster. $240k is paid off a lot easier than $300k. Heck. If you just stay in your home for 3-5 years and your house sells for $330k, which is entirely doable unless we have another financial crisis, you've done alright. That's over 15% return once you take out the typical realtor fees. I realize everyone's situation is different. However, living in a home when I'm retired that's paid for is what most people I know strive for. Do you really want to keep paying a mortgage or worse yet, rent when you're 62? Not me. 

 

EDIT: I realize I contributed to going way off topic, so feel free to move to the Coffee House.

Edited March 19, 2014 by wend28

[dubone]

If you have the 20% down payment but can get a 100% mortgage with the tricks to avoid PMI and with a low rate, and you're willing to take the risk of value drops and lean years, the best is to invest that 20% in areas that are highly likely to return more than the effective mortgage rate.    A 4% mortgage rate is effectively 3% after taxes.  S&P returned 25%+ last year, and home values went up solidly too.   We might be mocking a really sweet deal, and dude is making bank.

 

 

 

Annnd, pretending to be on topic, these are the microeconomic decisions that individuals must make.  If things shift for personal reasons of people doing things based on emotions and not economics, we could see a shift away from urban rentals to suburban rentals or suburban mortgages.       As long as the rental market continues growing and isn't its own temporary bubble, then I don't see any reason why uptown won't consistently have tower or midrise announcments and construction for the next few years. 

[DMann]

Just had a good source tell me that the Greystone Development apartment building will be on Third between Church and Poplar, not Poplar and Mint..

[Guest]

Just had a good source tell me that the Greystone Development apartment building will be on Third between Church and Poplar, not Poplar and Mint..

That'd be a tight squeeze... Unless the partner with existing parking decks. I'd be happy with that though

[atlrvr]

https://aca.accela.com/charlotte/default.aspx

 

The county land-use website lists the address as 225 S Mint.  Aside from the posting on the county site, I agree with RDF that 1 block east would be much tougher to develop something of this scale.