The Residential Real Estate Market

Transcription

1 The Residential Real Estate Market Charlotte Regional Realtor Association Carolina Multiple Listing Services, Inc. CEO Anne Marie Howard, Esq. CRRA Speaker Series February18, 2009

2 CHARLOTTE REGIONAL REALTOR ASSOCIATION (CRRA) 501(c)(6) professional trade association Owned by and governed by Realtors CRRA leads, educates and equips members to be productive 8,000 members

3 REALTORS VERSUS REAL ESTATE AGENTS As a member, you are a Realtor and adhere to and operate under the National Association of Realtor (NAR) Code of Ethics Licensees who are not members of a local association are not Realtors and are not bound by a Code of Ethics

4 CAROLINA MULTIPLE LISTING SERVICES, INC. (CMLS) Largest regional MLS between Northern Virginia and Atlanta 9,200 CMLS Subscribers serving 10 counties in the surrounding area Alexander Anson Cabarrus Gaston Iredell Lincoln Mecklenburg Montgomery Stanley Union City of Kannapolis CMLS is owned by and governed by Realtors CMLS is not a public utility and all the data/information in the MLS cannot be accessed directly by the public

5 CMLS is a cooperative where members agree to cooperate and compensate one another in an effort to find a perfect fit (buyers and sellers) for their clients Listing information from the MLS provided by Realtors is sent at the brokerage s request to: Firm Web sites Charlotte.com Distinctive Homes of Charlotte Realtor.com Contracted with Threewide s for its ListHub product, which now gives the broker the ability to select from the following: AOL Real Estate CLRSearch.com CyberHomes Google Base Homes and Land Prospect Plus The Real Estate Book Homescape Hotpads MyRealty.com Oodle PropSmart Trulia VastYahoo! Real Estate Zillow.com Integrity of the CMLS data and information is key

6 CRRA Budget Budgeted for a 20 percent drop in membership CRRA is showing a balanced budget for 2009 Realtor dues account for 11 percent of revenue, down from 15 percent in 2008 Non-dues revenue include Realtor Reflections, rental income and the Realtor Store, and advertising on the member-only Web site Cost-Saving Initiatives Hiring freeze No salary increases for staff Further staff reductions will be considered during the first quarter of 2009 The Realtor EXPO has been postponed to 2010 CRRA Orientation will go paperless CMLS Budget Budgeted for a 20 percent drop in membership 2009 budget shows an 18 percent decrease in revenue over 2008 Expenses budgeted to drop 9 percent CMLS quarterly fee and annual Supra service fee remain unchanged Cost-Saving Initiatives Provide tax services from only one vendor (CRS expired in Dec. 2008) Went paperless in CMLS Orientation classes Continue to pursue NCDS/Statewide IDX Delay obtaining a new MLS system until 2010 Budget Highlights and Cost-Savings Initiatives

7 CRRA Housing Opportunity Foundation s (HOF) concentration is on affordable workforce housing Charitable arm of the association 501(c)(3) nonprofit The mission of HOF is to: Position and educate Realtors as leaders Promote homeownership Provide funding to create housing opportunities Four areas of work: Funding Education Leadership Advocacy

8 Distribution of funding given on behalf of Realtors : Habitat Support Program $20,000 to eight area Habitat organizations (Mecklenburg, North Meck, Iredell, Union, Stanly, Gaston, Cabarrus and Lincoln). Dollars will fund specific house builds, offer expanded credit counseling and permit expansion of a Habitat Re-Store to allow for increased revenue Community Grants Program Will launch in 2009 and will specifically address unmet housing needs in Mecklenburg and Iredell counties 2008 Humanitarian Award Given at the Gala to the HAMMERS project, a program of the Davidson Housing Coalition ($1,925 to contribute to a nonprofit of its choosing)

9 263 Realtors currently enrolled in program 109 current Realtor Alumni Mark your calendars for Realtors Care Day, April Realtor volunteers have already indicated their interest; e-blasts will be generated through out the project to keep volunteers up-to-date on progress of project Sites to be confirmed in February and will be throughout Mecklenburg and Iredell; anticipate approximately 30 sites total To volunteer, register at

10 What is Mingle School of Real Estate? In 1992, CRRA purchased the Mingle School of Real Estate The official school of real estate in the region Provides professional-development opportunities for the public and Realtors by offering a variety of education classes Broker Pre-Licensing Classes Broker Post-Licensing Classes 24-Hour Broker Transition Course Continuing-Education Classes (classroom and online) Appraisal Classes (Pre-Licensing and Continuing Education) NAR-approved designations Let our experience be your best teacher.

11 CRRA Government Affairs works closely with REBIC to address regional public-policy issues Transfer taxes and impact fees Tax on services Land development issues Rights of property owners

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13 Economic forecasters tell us in a recession Tighter credit: reducing growth of personal consumption Consumer confidence, weak consumer spending Stock market roller coasting Rising unemployment/job losses, housing slowdown Lower retail sales Weaker corporate profits, slowing business investment Recession: announced in fourth quarter 2008 Source: NAR

14 Est GDP 2.0% 1.3%.5% Consumer Price Index (CPI) Inflation 2.9% 3.6% % Job Growth 1.1% -0.1% 1% Unemployment Rate 4.6% 6.8% 7.0% 10-year Treasury 4.6% 4%* 3.0%** 10 Year Treasure rate was between 4-5%; December 2008 rate was 2.17% ** 10-year Treasury rate at end of January 2009 not estimated rate for year Source: NAR

15 Short run: somewhat unstable at rate of 10 years ago Housing and Economic Recovery Act (July 2008), higher Government Sponsored Enterprises (GSE) loan limits, homebuyer tax credit, lower inventories of new homes, slowing foreclosures Financial-industry problems Bailout ($700 billion) Pending Homes Sales Index was 87.7 December 2008 (NAR uses this index to predict new home contracts the index measures housing contract activity and is based on signed real estate contracts of single family existing homes and condos.) Existing-Home Sales (December) 4.74 million units* - down 3.5 percent Existing-Home Median Price (December) $175,400 down 15.3% Housing Starts (December) 550,000 units* New-Home Sales (December) 331,000 units* - down 5.3 percent * Seasonally adjusted Source: NAR

16 Financial market troubles and other industry failures (i.e., auto industry) Rising unemployment Rising energy and food costs Consumer confidence

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18 Economic Indicators UNEMPLOYMENT RATE 8.7

19 Economic Indicators 2008 UNEMPLOYMENT RATE % Iredell 8.7% NC 8.3% Mecklenburg 7.1% US Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mecklenburg NC US Iredell

20 Economic Indicators REGIONAL UNEMPLOYMENT RATE 9.2% 10.4% 9.3% 12.0% 11.4% 8.3% 8.5 % 9.5% 9.9% 8.1% 12.6% 13.5% 13.9% Source: US Bureau Labor & Statistics, Dec. 2008

21 POPULATION CHANGES DATE CHARLOTTE MECKLENBURG MSA METRO REGION , , mil 2.5 mil , , mil 2.4 mil , , mil 2.4 mil , , mil 2.3 mil , , mil 2.3 mil , , mil 2.2 mil Source: Charlotte Chamber of Commerce, December 2008

22 Economic Indicators IREDELL COUNTY POPULATION INCREASING Population 200, , , , , ,000 80,000 60,000 40,000 20, , , , , , Source: ESRI Dec. 2008

23 Economic Indicators CHARLOTTE REGION POPULTATION INCREASING Population 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Although the region will continue to grow, 2009 growth will be slower Charlotte Mecklenburg MSA Metro- Region Source: Charlotte Chamber of Commerce, December 2008

24 Positive Economic Indicators Fastest Growing Areas with Population Over 1 Million Rank CBSA Core Based Statistical Area % of Population Change Las Vegas, NV San Bernardino, CA Orlando, FL Phoenix, AZ Austin, TX Sacramento, CA Charlotte, NC Atlanta, GA Jacksonville, FL Houston, TX 13.0 Source: Charlotte Chamber of Commerce, December 2008

25 Positive Economic Indicators Mecklenburg & Iredell County A Young Demographic % % Mecklenburg % % % Iredell % % % % % % % Source: NC Dept of Commerce -2008

26 Positive Economic Indicators Mecklenburg & Iredell County Buying Power $75, % Mecklenburg $0- $25, % $25,000- $35, % $75, % Iredell $0- $25, % $50,000- $75, % $35,000- $50, % $25,000- $35, % $50,000- $75, % $35,000- $50, %

27 THE REGION S ECONOMY CONTINUES TO DIVERSIFY 1998 Financial services Transportation and distribution services High-growth manufacturing 2008 Health care Plastics and rubber manufacturing Automotive and motor sports Finance, insurance and professional services Logistics Wholesale trade Tourism Emerging industries Aviation and defense Biotechnology and pharmaceutical Medical devices Optics Source: Charlotte Chamber of Commerce, December 2008

28 Positive Economic Indicators DEVELOPMENT TO WATCH

29 Positive Economic Indicators DEVELOPMENT TO WATCH N.C. Research Campus Kannapolis At completion, N.C. Research Campus will add 37,000 research-related jobs to the region. Source: Rowan-Cabarrus Comm. College

30 Positive Economic Indicators CHARLOTTE and IREDELL S RANKINGS & ACCOLADES Mooresville/Southern Iredell was ranked in the Top 100 cities/areas to live --- Money Magazine 2007 CHARLOTTE #1 Economic Strength Ranking July, 2008 Policom Corp. #1 Best Place to Live May 2008 Relocate-America.com #1 Top Large County (Mecklenburg) for Recruitment and Attraction July 2007 Expansion Management Magazine #1 Most Educated Workforce: Cities July 2007 Business Facilities #5 America s Best Housing Market - May 2007 Forbes Magazine

31 Positive Economic Indicators SUMMARY OF NEW & EXPANDED FIRMS Nine-Month Summary of New & Expanded Business at Third Qtr Charlotte Year Firms Employment Sq. Feet (millions) Investment (millions) , $1, , $1,878.0 Iredell county s new investments over the last 5 years resulted in 8,000 new jobs and over $2.1 billion in new tax investments to the county. Source: Charlotte Chamber and Statesville Chamber of Commerce

32 THE CORRECTION A return to levels of ,000 40,000 35,000 30,000 25,000 20,000 26,370 32,984 38,803 43,389 38,610 26,907 Total Closings Total Contracts 15,000 10,000 5, Source: CMLS data

33 2005, 2006 and 2007 data show exceptional market activity in number of closings Source: Carolina Multiple Listing Services, Inc.

34 Source: Carolina Multiple Listing Services, Inc.

35 CRRA PERCENT OF CLOSED LISTINGS BY PRICE % 12.27% 5.36% 1.10% 29.09% <$120,000 $120,001-$150,000 $150,001-$190,000 $190,001-$250,000 $250,001-$350,000 $350,001-$500, % 14.82% $500,001-$1Mil $1Million %

36 1,249 1,353 1,504 1,756 1,675 2,384 2,735 2,981 2, IREDELL COUNTY CLOSINGS Closings

37 IREDELL COUNTY AVERAGE SALES PRICE $300,000 $270,540 Avg. Sales Price $250,000 $200,000 $150,000 $100,000 $50,000 $237,115 $0

38 LAKE NORMAN/CMLS AREA 13 CLOSINGS ,176 1,214 1,261 1,469 2,033 2,263 2,112 1,754 1, Closings 0

39 LAKE NORMAN/CMLS AREA 13 AVERAGE SALES PRICE Avg. Sales Price $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 $457,042 $446,008

40 SUMMARY OF MARKET ACTIVITY DATA Number of closings January-December 2008 was: Slightly above 2003 by 2 percent Below 2004 by 18.4 percent Below 2005 by 30.7 percent Below 2006 by 38 percent Below 2007 by 30.3 percent 2005, 2006 and 2007 showed abnormally high market activity that skews current market data. The number of active listings flattened out over the summer of 2007 and remained flat into the fourth quarter of saw a gradual increase of active listings with the peak in May; however, since May, active listings have gradually declined. There has been some drastic slowing in the sales activity in the fourth quarter of This trend will probably continue through the second quarter of 2009.

41 The Elephant in the Room

42 2008 Foreclosure Rates Source: Realtytrac.com Currently 2,330,483 U.S. properties with filings National average foreclosure sales price $194,748

43 2008 Foreclosure Filings Source: Realtytrac.com

44 Foreclosure Filings MECKLENBURG COUNTY 2008 ACTIVITY Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Total foreclosure filings for Mecklenburg Co. Total filings for the year - 8,384 Source: Realtytrac.com & NC Administrative Courts

45 Foreclosure Filings IREDELL COUNTY JAN ACTIVITY Number of filings Source: Realtytrac.com & NC Administrative Courts

46 Subprime Mortgages

47 Source: Carolina Multiple Listing Services, Inc.

48 LOCAL MORTGAGE INDUSTRY Banks have gone back to basics, carefully screening applications when securing loans Credit worthiness Credit score no lower than 660 on average; The better the credit, the better the rate Down payment Buyer needs 3-5 percent depending on loan; in 2009, FHA requires 3.5 percent Documentation of income and the approved debt-to-income ratio Mortgages for investment property lenders are looking for 20 percent down payment

49 FEATURE CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 REVISED CREDIT EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 Amount of Credit Lesser of 10 percent of cost of home or $7500 Maximum credit amount increased to $8000 Eligible Property Refundable Income Limit First time Homebuyer Only Revenue Bond Financing Repayment Recapture Termination Effective Date Any single family residence (including condos, co ops, townhouses) that will be used as a principal residence. Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). Yes. Purchaser (and purchaser s spouse) may not have owned a principal residence in 3 years previous to purchase. No credit allowed if home financed with state/local bond funding. Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. If home sold before 15 year repayment period ends, then outstanding balance of repayment amount recaptured on sale. July 1, 2009 (But note program changes for 2009) Purchases on or after April 9, 2008 and before January 1, Repayment to begin for 2010 tax year. No change All principal residences eligible. No change Purchasers will continue to receive refund for unused amount when tax return is filed. No change Same income limits continue to apply. No change Still available for first time purchasers only. Threeyear rule continues to apply. Purchasers who utilize revenue bond financing can use credit. No repayment for purchases on or after January 1, 2009 and before December 1, 2009 If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in December 1, 2009 All revisions are effective as of January 1, 2009

50 IN SUMMARY Charlotte Region Unemployment concerns Potential job growth but slowed Positive population gain projections Diversification of job sectors New economic development initiatives impacting the region Foreclosure filings monitored Nationally National Association of Realtors proposed housing stimulus plan

51 WRAP-UP CRRA and CMLS Closings are down but sales prices are holding with only a decrease of 13.5 % over last January Contracts increased in January % - over Dec Membership CRRA 7,332 (as of February 9, 2009) CMLS 9,206 (as of February 9, 2009) Projected loss of CRRA/CMLS membership 20 percent Residential Sales Trends Coming soon Housing Affordability Index Data reported by county (data reported by area will continue) Median sales figures for single-family detached homes, condos/townhomes

52 Q&A