Charlotte Metro Housing Market Supply Analysis

[orulz]

I think the denial comes from people thinking that once this whole thing "shakes out" and credit markets start moving again, we'll be back on the high road. That once all of this "bad debt" and "toxic assets" are off the books and people, companies, and banks can borrow money at low, low interest rates again, then everything will be good.

But the root cause of the problem is not the frozen credit markets. That is a symptom. The root cause is too much easy credit, too much consumer debt, too much leverage, and too much of the economy being built on this whole house of cards. When debts are paid off with money that's borrowed from somebody who borrowed money to lend you the money eventually the whole pyramid scheme collapses.

There is no quick and easy way out of this mess. The only real permanent way out is long and hard. That means people working hard, saving money, paying off debts, and resisting the temptation to live beyond their means. Even if people actually do change and start to do that right now, it will still be long and hard because for years, the entire economy has been based on people spending more money than they have. When that stops, the total economic activity drops, which means fewer jobs, etc.

The path to a more sustainable economy will be painful, but we must walk it, or else face the prospect of eventual collapse, or at least irrelevancy on the international scene. All these bailouts and stimulus packages are probably just putting off the day of reckoning, and making it even harder and more painful when it comes.

That is what (I think) Monsoon means by denial.

[grodney]

A small problem I have is with the Avg ratio being called "normal", and the numbers derived from it (e.g. years of oversupply). The ratio is an average of only 28 years, and includes huge swings. I mean, what are there, 2 "normal" years, followed by a boom, followed by a recovery, followed by 2 "normal" years, followed by another boom. The averages are certainly averages, but I'm not sure we can tell what "normal" is, or if it even exists.

With this little data, a few high numbers or low numbers could shift the average from true "normal".

Having said that, I don't think that really diminishes the analysis at all.

[Charlotte_native]

^I don't know. I think a lot of people are angry about what is happening. I am not angry however as I knew this was coming.

You only have to check my posts here from years back where I questioned the priorities and construction and taking place in this city in that it was unsustainable. This was often met with derision. I was told, you are wrong, Charlotte is great, this is a younger generation that knows better, etc etc. Now that it has happened and yet we still have those that think the turn around is coming in just a few months, I see nothing wrong about repeating the position that I have always had on UrbanPlanet. I have yet to see any steps being taking that might address these issues as there is still ongoing topics in this forum where people actually believe the Wachovia tower condo tower is still going to go up.

If you interpret that as gleefulness on my part that housing and the economy is bad I am not going to try and tell you otherwise because if that is all you have ever gotten from my posts on UrbanPlanet, then nothing I can say here will convince you otherwise. I will add however that I am greatly saddened that this is happening and what it is doing to people that I know outside this forum. People that have been laid off, people who are worried for their children, elderly people who have seen their plans and promised retirement benefits disappear. That kind of stuff does make me angry. So if my posts here do something to expose what I think are the real roots of these problems, then I don't see any problems bringing them up. We have that going on yet executives at Wachovia get millions for destroying a bank and I won't even get into the billion dollars the city has spent on professional sports. You are more than free to disagree with my opinion or put me on ignore if you just can't take it.

[49er]

Just joining the discussion here, but what are the realities that buyers will be faced with in the future when they go to purchase a home or a car? Are we getting back to the point where you actually have to save up a down payment for a major purchase? I was proud that I was able to put 10% down on my home, but to someone in my grandfathers generation, that seems like pocket change. Maybe less obtainable credit and the fact that people will have to once again save for things will offset the instant gratification society we're in.

[atlrvr]

grodney....I understand your point, and thought about the same issues.

Obviously I would have preferred a larger data set, going back to 1950, but this is all that is easily available.

I think the fact that there are two obvious peaks and troughs in the data indicate that this data is relatively accurate in capturing the long-term trend. I also only averaged over a 20 (through 2001) year period, which corresponds two what I perceived as two full cycles. I didn't inclue the most recent years, because that would have been three "troughs" and have skewed the data down.

Finally, supply-side economics theorize that even in a relatively limited data set, the optimum supply always self corrects, so I feel that two full economic cycles was enough to achieve this balance.

The fact that the same basic trending existed across three distinct geographies add validity to my analysis.

Even if my optimum supply is slighty off based on the limited data, the relative comparison of the Charlotte MSA to the state and nation would not be noticeably affected.

I know you weren't debating my analysis, I just wanted to seal up my data, as some are bent on invalidating real data with unrelated discussions.

[orulz]

I don't know anyone that isn't facing these facts. I do believe, though, that because we are all being forced to deal with this situation that we have at least begun walking down the path. You have to face big problems like this to begin dealing with them. I think the difference in opinions here is fairly simple -- some believe we are not facing the problem yet, others do -- and that's fine. Just different opinions both likely with some validity.