The economy and its effects on Charlotte

[Charlotte_native]

There was an article in the Observer about a month ago where they interviewed a Emma Littlejohn of The Littlejohn Group. They said there was close to 1000 condos on the market in downtown. This was something like 375 from developers, 300 coming on the market, and 275 resales from owners. I knew it wasn't good but this seems like a staggering number in an area that only has ~9K - 10K residents.

[monsoon]

^I do commend you for actually responding to what I posted instead of completely mis-reading and beotching about it as did the previous posters. One would think they were being forced to read these posts.

I made that post because I wanted to understand where Emma Littlejohn's numbers are coming from. The comment about Furman was more an observation as he certainly didn't say any of this when he was selling condos. If he had, maybe people would not have been as quick to jump into one.

[SmellyCat]

I recommend that you send a letter to Furman to understand why he said it.

[monsoon]

.....

So he's saying this is NOT unique to the uptown condo market.

[SmellyCat]

Where did anyone say that it was? I don't understand why you are asking this question. My post and questions were specific to downtown Charlotte. There was no commentary about the rest of the world. Why am I constantly having to explain myself for things that I never posted?

[monsoon]

.... I'm sorry if I irritated you for asking you to clarify, it wasn't my intention.

[SmellyCat]

You didn't do that. You first asked me how this was unusual. Then you said nevermind, you found it. Which would have been fine except that you had to add the little snip that negative news was much higher profile downtown. What you were implying is clear enough and I am not giving you the benefit of the doubt, yet again, because you do this all the time. If you were truly confused by what I posted then you could have just said you didn't understand and I would have been glad to have explained. Actions speak louder than words. Why don't you put me on ignore? That way you won't have to be bothered by what I post.

[magnolia73]

Emma Littlejohn did the market studies on nearly all of the condo projects in uptown Charlotte and gave them all a big green "GO!" stamp. It didn't matter the project or the scope, her studies told banks to lend money to build them based on what was then a booming economy and housing market.

[magnolia73]

There aren't 1000 condos on the market in uptown right now. There are 312 on the market (MLS). Add in The Vue units -- how many? 350 or so? Those won't be done until at least a year from now (and shouldn't really be included since you can't close now since they aren't done and for the same reasons listed below for Fourth Ward Square). Catalyst was converted to apartments for the most part and the other new complexes that were just finished are included in that MLS number. No other big uptown projects nearing completion.

[monsoon]

.....

I'm sorry to butt in- but I felt the need to correct the idea that our firm somehow goes around giving the green light on any ill conceived project that comes around.... or that we somehow have a say in every condo project in and around Charlotte.

[Charlotte_native]

We count MLS listings, Plus the unsold at Vue +/- 400, had to account for Catalyst - give it half at 200 units because you could buy there at the time of that article, various midrises, 4th Ward Square, Garrison, Encore, Citiline over by BoA stadium. And MLS for new doesn't always list each unit- sometimes they do one of each plan or just a small assortment of plans.

Yeah- not the most exact science. But you would not be accurate saying there were 357 units for sale either. And we generally give info to the Observer as "close to" or "around".

[magnolia73]

Normally when I send the Observer data, I also break it down- say 100 resales, 100 units preconstruction/not under contract. Sometimes they merge it, sometimes they just need a quick number. It is a challenge that there is no good public source to give a count of MLS, FSBO's and non- MLS developer units. When we do studies for customers, we break things down better, but consider pre-construction in the view that buyers might be considering something pre-construction vs your inventory or resale and do consider it as part of supply.

if you ever have questions about our comments/numbers you are welcome to email me deleted

[monsoon]

The normally boosterish Observer is now referring to it as a "Condo Glut". It was an article about owner of the unsold units in The Arlington, 36 units, just slashing 30% off the asking price. A significant drop. This is getting closer to the 50% decline in prices that I predicted would happen in these kinds of developments and which was scoffed at when I said it. More to come.

[SmellyCat]

The Arlington had problems selling units even when the market was going gangbusters, which is indicative it having highly overpriced units since it came online 2002. While your oft-touted 50% prediction may still come to fruition, IN MY OPINION I wouldn't use a 30% slash in the price of 36 Arlington units that have been sitting empty for 7 years to be a legitimate comp as a reason to significantly downward reprice all Charlotte condo projects.

Relatedly - I could be wrong on this, but isn't there a threat that the Arlington's views of uptown, one of it's few selling points, could be totally eclipsed after the area right next to building was rezoned for another high rise office/apt mixed use project? Didn't this significantly reduce the value of the existing units when it was announced?

[Charlotte_native]

The Arlington had problems selling units even when the market was going gangbusters, which is indicative it having highly overpriced units since it came online 2002. While your oft-touted 50% prediction may still come to fruition, IN MY OPINION I wouldn't use a 30% slash in the price of 36 Arlington units that have been sitting empty for 7 years to be a legitimate comp as a reason to significantly downward reprice all Charlotte condo projects.

Relatedly - I could be wrong on this, but isn't there a threat that the Arlington's views of uptown, one of it's few selling points, could be totally eclipsed after the area right next to building was rezoned for another high rise office/apt mixed use project? Didn't this significantly reduce the value of the existing units when it was announced?

[monsoon]

^It's a matter of opinion what the 30% cut at the Arlington means, I admit that. However it's not something that happens in a robust market. I believe it was slow to sell because it was a higher quality and hence more expensive product, as say compared to The Trademark, Courtside, and even The Avenue, and people flocked to these towers and sucked sales away. The Arlington also has very large units on average compared to what came afterwards which made biting off one of these difficult even in the bubble economy. I also think the developer has rubbed a lot of people the wrong way and people were pointed elsewhere who were in the market.

However lopping 30% off the asking price before any negotiations even start is quite significant. This kind of action won't be limited to the Arlington. The bottom line is that without bubble financing, there just isn't the income to support the prices that have been out there.

[palmetto75]

The article mentioned Metropolitan is doing roughly the same thing in terms of discounts. Sure the Met is not uptown either, but the condo bust is slowly spreading north. It started in SouthPark with several new projects languishing(Grubb cut Morrison pretty hard around this time last year as example), and has now spread to SouthEnd/Midtown.

[Charlotte_native]

The article mentioned Metropolitan is doing roughly the same thing in terms of discounts. Sure the Met is not uptown either, but the condo bust is slowly spreading north. It started in SouthPark with several new projects languishing(Grubb cut Morrison pretty hard around this time last year as example), and has now spread to SouthEnd/Midtown.

[Conformity]

The article mentioned Metropolitan is doing roughly the same thing in terms of discounts. Sure the Met is not uptown either, but the condo bust is slowly spreading north. It started in SouthPark with several new projects languishing(Grubb cut Morrison pretty hard around this time last year as example), and has now spread to SouthEnd/Midtown.

[monsoon]

....The average rate of growth over the life of the index adjusted for mean deviation reveals that Charlotte supports a 3.31% growth rate. .....

[Charlotte_native]

Remember past trends are no prediction of the future. If they were, we would still have booming prices in real estate.

[monsoon]

^I am not sure the point you are making. Isn't that what I said?

[lewy2000]

That doesn't mean one can predict when, where, or how a swing up might occur, but it is likely that at some point in the future things will get better (making it clear to not be saying 'back like they were 5 years ago').

[Charlotte_native]

Thanks for providing an interesting perspective, Charlotte_native. This region has a fascinating history of ups and downs and in some ways I feel lucky to experience this downturn first hand. Your post reminds me of the chronology of exhibits at the Levine Museum of the New South... wondering if anyone over there is keeping notes!

[monsoon]

......

We can be certain of one thing -- if there is a boom again sometime soon or even sometime late, it will eventually be followed by a lull or a crash -- they always do.