The most recent Case-Shiller Report indicated that Charlotte Home prices were down 9% over 2008, placing Charlotte real estate 5th best on the Case-Shiller Index of 20 major real estate markets. Better news is that home prices, month to month, were rising, albeit slowly, but for the 3rd month in a row. That 3 consecutive month price rise leads me to the conclusion that home prices had bottomed in Charlotte and things are looking up.
But… of course the devil is in the details, and as I look, trouble for Charlotte real estate certainly is Not over. Lets check the critical numbers out.
First lets look at volume, as expressed by Houses sold in the first 3 quarters – the 9 month period of 2009 ending September 30, versus the same period in 2008. These are all single family homes in 9 Counties surrounding Charlotte-not the full MLS, but the closest.
Charlotte Home Sales
Home sales through 3 quarters in the greater Charlotte 9 county area are off 25.95% at 13,683 units sold and closed. All the various price ranges I measured are off atleast 25%, with homes from $500k-1M suffering a 41% loss in volume, and homes over $1m a 52% loss in volume.
These higher price ranges had dramatic falloffs, made worse by larger inventories in the upper price ranges as well. Absorption is the amount of time required to sell off the inventory on hand. Generally measured in months, anything more than 6 months is considered a Buyers Market.
The overall absorption rate – based on the prior 9 months of sales, is 9.5 months. Here is how I figured our simplified absorption rate: I took the total 9 month number of sales, 13683 and divided by 9 for a monthly average sales rate of 1520 units. Then I took the number of homes Active For Sale as of 9/30/2009 in the same 9 County area, and thet number is 14470, so 14479/1520, doing the division that is a 9.5 month supply of homes.
The city wide average masks a lower absorption rate in the $75K-$200K range of 7.3 months, and a larger, much larger absorption rate in the $500K-1M, and the Over $1m categories, at 25 Months and 57 months respectively…
The area as a whole looks good – a strong Buyers market, and not especially threatening at 9.5 months. Then we look first at the over $500K market, which has a 24.8 month supply of homes, a 2 year supply. But that’s nothing compared to the over $1M market, with 57 months of inventory, nearly a 5 year supply of homes at this price point.
Charlotte Home Prices The average price per square foot fell 12.1% for the region, considerably higher than the Case-Shiller number cited above. There was quite a spread, the lowest price fall came in the 75K-$200K range at 6.27%. Not surprisingly, the higher price ranges, the $500k-$1M, and the over$1M category fell 9.8 and 9.3%. I say not surprisingly because of the high inventory levels – maybe I should be surprised that house values didn’t fall further in these upper price ranges, and indeed they still may have a ways to go. Continuing high inventories suggest prices here will fall further, a 56 month inventory is not sustainable.
What has caused this distortion in the higher price range of Charlotte homes? That is the subject for my next essay – what it is NOT is the loss of Wachovia as a corporate headquarters – that wouldn’t explain more than 30-50 homes, tops. I’ll explain why in the next article.