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The Facts of Life...in the Uptown Market

The news of a slowing real estate market is hardly news anymore. The slowing in the national economy, along with the slump in the banking industry, has impacted the confidence of consumers which influences the real estate markets. While Charlotte has avoided much of the foreclosure trouble that has harmed many cities, there has been a slowing of the Uptown Charlotte market over the last 6 months.

It is important to note that inventory is still moving. People are still buying homes. The impact from the slowing of the larger economy is two-fold:

1. Increase in Days on Market.The amount of time it takes to sell a home is increasing. In 2006, the average DOM was 64 days. Currently, the average is 81 days.

2. Increased Gap Between Sales Price and Asking.The average sales price compared to list price in 2006 was 98%. Currently, the average is 96%. The increase in difference between the asking price and selling price can largely be contributed to the sense of urgency that is a result of the increase in amount of time to sell a home and boost in buyer confidence due to fear in the market place.

The basis of real estate is supply and demand. In the last years, supply has been outpacing demand.

2004 was a year of very little supply. On average, 24 homes were listed each month with 21 going under contract. 87.5% of new inventory was sold in that month. The result of the low supply and high levels of demand was a growth spurt. For the next several years things began to change.

What we've seen over the last two years is very different. The percentage of new inventory selling within that month has been just 55.4%.

The Result:

The number of available listings has grown dramatically. In 2004, there were approximately 35 listings on the market at any given point. This number is incredibly low considering the number of households that existed. The high levels of deman and low levels of supply resulted in development of new homes. Currently, there are 363 listings active on the MLS for the Uptown. Of those, 295 units exist and are ready to be occupied.

The Good News:

In 2007 424 units were reported to sell in the Uptown. This number, however, does not include the majority of units sold in Avenue (approximately 325 unreported) or Trademark (approximately 150 unreported). If we only compare the reported sales in MLS to the inventory of available units for sale, there is an 8.5 month supply of inventory on the market. Counting all the estimated sales in the Uptown for 2007 there is approximately a 4 month supply.

As far as new inventory goes, there are no new buildings in the Uptown planned for 2008. There is one building of about 150 units that may be completed in 2008 if the stars align. However, the credo of ’08 is Inventory Absorption. In order for this to occur most effectively, the number of new listings needs to decrease and the percentage of new listings sold needs to increase. If this happens, the Uptown will begin the position itself for another large growth spurt similar to what we’ve seen over the last two years.

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