Who is going to buy all the Condos, (Part II)

[SgtCampsalot]

^I have to echo both KJH and Kermit; all of the above are important.

I don't know what anyone else seeing, but I constantly see Gen Z (like aged 16 - 25) talking about de-commodifying housing in general, and all of the possible tools and methods that can be used in the meantime to get there.

[KJHburg]

3 hours ago, kermit said:

^ the downside of emphasizing ownership is that it reduces mobility and flexibility for people as they change jobs or family situations. Transaction costs for real estate are high, so being forced to undertake a couple of home sales because of job changes can be financially punishing. Our current hot market masks this overhead.

[I am not knocking ownership, I agree that it is important for stability and continuity, but not everybody wants it. There has been a generational shift on views of residential ‘permanence’ that successful housing policies will need to accommodate.]

sure there are transaction costs but ownership of real estate is a path to building wealth and is the biggest or close to it path of building wealth in this country.  Especially for the long term.  I never advocate someone buying for a very short term gain but long term ownership is a way to build wealth.  Sure some people are life long renters but if you expect to remain in an area for years it makes sense to buy especially in Charlotte.  Little know fact of all the homes and townhomes and condos in America 40%  have NO mortgage.  4 out of 10 have no mortgages think about that.  The desire to own in this country crosses all races and nationalities.   

Nearly 40% Of Homes In The U.S. Are Free And Clear Of A Mortgage (forbes.com)

Home ownership is not for everyone for sure but it makes financial sense for most people.  

Edited February 20, 2021 by KJHburg

[KJHburg]

Here are the average condo and single family homes prices in the Charlotte metro from Zillow.  Condos would include townhomes as well even though all townhomes are not condos.

How The Condo Market Stalled in 2020, Even as Single-Family Homes Soared - Zillow Research

[KJHburg]

More on the renting side but average rent prices in the top US markets.  Charlotte not the cheapest but no where near the most expensive.  (from NAR) 

[KJHburg]

who is going to buy all the condos and houses?   well evidently lots of people are the market has half month supply!  Equilibrium between buyers and sellers market is viewed as 6 month supply and we are .6 Month supply now.

 

""With inventory at an all-time low, prices across the market will continue to increase. Both the median sales price ($293,495) and the average sales price ($340,881) increased last month, rising 11.7 percent and 11.8 percent year-over-year, respectively. The average list price of $380,319 rose 8.2 percent year-over-year, and the original list price to sales price ratio was 99.3 percent, showing sellers are getting nearly all of their asking prices in the market. Days on market averaged 31 days in February versus 50 days in February 2020, which shows homes are selling at a brisk pace.""

Edited March 18, 2021 by KJHburg

[Hushpuppy321]

Is there a place we can go to find out roughly how many apartment units have delivered in Charlotte 2020 and how many are under construction now?  I remember during the boom days (before COVID-19) there was reporting on over 12,000 units actively under construction.

[KJHburg]

7 minutes ago, Hushpuppy321 said:

Is there a place we can go to find out roughly how many apartment units have delivered in Charlotte 2020 and how many are under construction now?  I remember during the boom days (before COVID-19) there was reporting on over 12,000 units actively under construction.

Yes I just saw that let me see if I can find it again

[KJHburg]

Here you go from JLL report in CBJ

""In 2020, Charlotte, North Carolina, was among the top markets in the U.S. for apartment construction, seeing 6,603 apartment construction starts. This number will continue to rise year over year as developers strive to meet the fast-growing residential demand in the region. Pairing Charlotte’s rapid population growth with existing renters looking for ways to adapt to working from home, JLL predicts record-breaking multifamily growth for Charlotte this year.""

What’s powering Charlotte’s multifamily growth in 2021? - Charlotte Business Journal (bizjournals.com)

[HopHead]

The availability of housing for sale (or lack there of) in Charlotte is just astounding to me. That 18 days of inventory is real. I have a few different examples of people I know but one is that I have a family member that relocated here not long ago and is temporarily living in an apartment until they are able to find a house to purchase. Been a lot harder to come by than she anticipated. And it's not just existing houses too where you have multiple bidders that are only outdone by someone that just comes in with cash -- seems to be norm from people coming from more expensive markets like northeast and California or Pacific northwest. New builds are equally as bad. There are waiting lists dozens deep for lots at new construction. Just can't build fast enough. I assume part of that is a labor availability issue.  Good problem to have I suppose, just glad I'm not looking to buy a new place around here lol

[JHart]

1 hour ago, HopHead said:

The availability of housing for sale (or lack there of) in Charlotte is just astounding to me. That 18 days of inventory is real. I have a few different examples of people I know but one is that I have a family member that relocated here not long ago and is temporarily living in an apartment until they are able to find a house to purchase. Been a lot harder to come by than she anticipated. And it's not just existing houses too where you have multiple bidders that are only outdone by someone that just comes in with cash -- seems to be norm from people coming from more expensive markets like northeast and California or Pacific northwest. New builds are equally as bad. There are waiting lists dozens deep for lots at new construction. Just can't build fast enough. I assume part of that is a labor availability issue.  Good problem to have I suppose, just glad I'm not looking to buy a new place around here lol

Tons of the all cash offers are just investors, you'll see them popup as rentals a few days later or look for signs out front. Happening in cities all across the US, not just Charlotte, although Charlotte is one of the worst offenders. Nationwide it's 1.9 months of inventory which is the lowest since they've tracked the stat in 1982. 

[HopHead]

50 minutes ago, JHart said:

Tons of the all cash offers are just investors, you'll see them popup as rentals a few days later or look for signs out front. Happening in cities all across the US, not just Charlotte, although Charlotte is one of the worst offenders. Nationwide it's 1.9 months of inventory which is the lowest since they've tracked the stat in 1982. 

Yea, that's been an ongoing problem. Sucks because it prices out a lot of buyers that actually want to live there.  

[KJHburg]

8 hours ago, HopHead said:

Yea, that's been an ongoing problem. Sucks because it prices out a lot of buyers that actually want to live there.  

Not all cash are investors many are as you said people from more expensive areas paying cash.  The one thing I can tell you is this will not last for another year something has to give.  I too know of people are renting another year then will look again.  

[videtur quam contuor]

A home is being demolished today at 3230 Idlewood Circle. Tax Value is 887k$. Market value is surely a good bit more than that. Demolished, with a 930k$ building permit so a ~1.5mil$ home at the end of this year. Maybe higher. This is the real estate period we are in when a near one million dollar home is a teardown. 

Edit: this is a single family home replacing same. Family moved out about two weeks ago. Home in good condition. Owner occupied.

Edited March 19, 2021 by tarhoosier

[t_money]

We just sold our condo that is close to the midtown area. Modest 2b 2bath. We were fortunate to get way over list, but it was a bit disheartening to see 'normal' buyers that put in strong offers that weren't even close to top bid. We were lucky to sell to a nice owner that will actually live in it rather than an investor. Low appraisal value was a real concern for non-all-cash offers because nothing in our building has sold for awhile so the building comps were much lower, even though the $/sqft compared to the neighborhood comps was significantly reduced. I am also glad we don't need to buy for awhile.

12 hours ago, tarhoosier said:

A home is being demolished today at 3230 Idlewood Circle. Tax Value is 887k$. Market value is surely a good bit more than that. Demolished, with a 930k$ building permit so a ~1.5mil$ home at the end of this year. Maybe higher. This is the real estate period we are in when a near one million dollar home is a teardown. 

Edit: this is a single family home replacing same. Family moved out about two weeks ago. Home in good condition. Owner occupied.

I can't imagine selling my $800k+ house to see it torn down?!

[slipperypete]

53 minutes ago, t_money said:

I can't imagine selling my $800k+ house to see it torn down?!

It's not really an $800k house though.  The assessed tax value of the land alone is $700k - the house was only assessed at ~$180k. At any rate it looks like there were some odd looking deed handoffs in this house's history (back and forth between two sets of parties), so it may have been planned for rebuild or for-profit sale for quite a while.  

Edited March 20, 2021 by slipperypete

[videtur quam contuor]

I believe this demo/rebuild is by the same owner. Move into rental or other housing then build dream home to fit into neighborhood with many 1-2 mill$ homes. Return to their new home.  Permit identifies owner as same as owner for last 11 years. 

My point, perhaps lost or unstated, is that this may demonstrate how difficult it is to find the perfect home at ANY price. If search is unsuccessful then live elsewhere for a year, spend the money on a new build on current property and move again to the new home. This assumes one has the credit to own the current property since demo would violate mortgage (I assume).  The finance or cash for construction loan/costs. A wealthy person dilemma.

Edited March 20, 2021 by tarhoosier

[Hushpuppy321]

Is anyone here on UP planning to attend\defend the 2040 Plan at tonight's meeting?  Seems like a lot of people might be lined up in opposition to the SFH Zoning Amendment allowing for density on existing Lots

[jthomas]

On 2/20/2021 at 10:04 AM, kermit said:

^ the downside of emphasizing ownership is that it reduces mobility and flexibility for people as they change jobs or family situations. Transaction costs for real estate are high, so being forced to undertake a couple of home sales because of job changes can be financially punishing. Our current hot market masks this overhead.

[I am not knocking ownership, I agree that it is important for stability and continuity, but not everybody wants it. There has been a generational shift on views of residential ‘permanence’ that successful housing policies will need to accommodate.]

 

On 2/20/2021 at 1:24 PM, KJHburg said:

sure there are transaction costs but ownership of real estate is a path to building wealth and is the biggest or close to it path of building wealth in this country.  Especially for the long term.  I never advocate someone buying for a very short term gain but long term ownership is a way to build wealth.  Sure some people are life long renters but if you expect to remain in an area for years it makes sense to buy especially in Charlotte.  Little know fact of all the homes and townhomes and condos in America 40%  have NO mortgage.  4 out of 10 have no mortgages think about that.  The desire to own in this country crosses all races and nationalities.   

Nearly 40% Of Homes In The U.S. Are Free And Clear Of A Mortgage (forbes.com)

Home ownership is not for everyone for sure but it makes financial sense for most people.  

Sorry I'm way late to the party on this conversation but I think it's interesting to think about. Does it really make sense for a basic human necessity (shelter) to be a person's primary vehicle for wealth creation? We don't invest in the food we eat or the clothes we wear. And why does, say, a car depreciate in value, while a home appreciates over time? As a homeowner, I know that it takes just as much money (proportional to value of the asset) to maintain my house as it does my car. I don't have an answer, but it seems to be a parallel conversation to the idea behind a land value tax - i.e., separate the improvements on a piece of land from the value of the land itself. Hoping to hear thoughts from somebody smarter than me!

[Blue_Devil]

12 minutes ago, jthomas said:

 

Sorry I'm way late to the party on this conversation but I think it's interesting to think about. Does it really make sense for a basic human necessity (shelter) to be a person's primary vehicle for wealth creation? We don't invest in the food we eat or the clothes we wear. And why does, say, a car depreciate in value, while a home appreciates over time? As a homeowner, I know that it takes just as much money (proportional to value of the asset) to maintain my house as it does my car. I don't have an answer, but it seems to be a parallel conversation to the idea behind a land value tax - i.e., separate the improvements on a piece of land from the value of the land itself. Hoping to hear thoughts from somebody smarter than me!

Buildable land in highly sought locations in a finite resource. Houses do depreciate, land does not in most cases (it can). Cars can be an appreciating asset, just not your run of the mill Toyota Corolla since they build a million a year. IF Bugatti was pumping out 10,000 Chirons a week they probably would not be worth 3 million dollars. 

[Yo Diaz!]

What Blue_Devil said. Houses themselves don’t really increase in value. It’s the land and the location,location,location. Only things that add value to a house and then not really a whole lot - are kitchen and bath renovations or an addition of a fair amount of square footage to the house. Maybe a pool.


Sent from my iPhone using Tapatalk

[kermit]

4 hours ago, Blue_Devil said:

Buildable land in highly sought locations in a finite resource.

Well sorta. Zoning is used to exacerbate this scarcity and keep prices high. Less restrictive zoning would allow for denser development to occur -- thus reducing prices proportionally.

The problem with the fetish of making housing everybody's biggest asset is that it requires that the supply of housing stays limited. Some people get wealthy, while many others get left behind (or left outside).

Edited March 22, 2021 by kermit

[Blue_Devil]

Out of curiosity, why does Charlotte not see more Mix use condos? I mean, even Durham has mixed us Condo towers with Apartments and Office. Charlotte needs more Condos, especially in SouthEnd as it gets taller and land more expensive. Why aren't developers going that route in order to get financing? 

[KJHburg]

4 hours ago, Blue_Devil said:

Out of curiosity, why does Charlotte not see more Mix use condos? I mean, even Durham has mixed us Condo towers with Apartments and Office. Charlotte needs more Condos, especially in SouthEnd as it gets taller and land more expensive. Why aren't developers going that route in order to get financing? 

Condos require a lot of presales to get financing and after having 2 of the most spectacular failures in Charlotte (210 Trade, the Vue when it was going to be all condos) developers here are a little weary.  That all being said Raleigh and Durham both have more infill condos that we do.  I wish some apartment complexes would convert to condos but they need to be built better. NC also has some interesting laws about liability for newly built condos that makes developers more wary.  Houston is building condo buildings all over as is Austin.  NC's law is something to do with contractor liability for xx of years after completion.

I can't find it in the law but maybe someone can.

General Statute Sections - North Carolina General Assembly (ncleg.gov)

One thing I would tell anyone looking at a presale condo know where you deposit is being held.   Best to do in escrow with attorney or real estate firm not the developer. 

Edited March 23, 2021 by KJHburg

[videtur quam contuor]

My memory of this discussion some time ago is that the developer responsibility is seven years. I do not know if the responsibility declines over the period or is in full until the end.

[DMann]

I agree with the 7 year stipulation.  Pre-sale condos usually say that the developer can make use of the deposit.