Do you live in Charlotte?  Do you have the impression that Charlotte will be a leader in economic growth, middle of the pack, or lagging behind?  The Charlotte Business Journal reported a story last week from Business Facilities magazine that Charlotte is faring well in some regards.  Charlotte is ranking #5 in economic growth potential and #5 in most wired cities.  The state of North Carolina on the whole also ranked well for economic growth potential, work-force training and business climate.

A good friend of mine who works for a prestigious consulting company and is constantly jetting all over the country and meeting with high-powered business leaders has anecdotally told me the same thing for months now.  The thought is that NC remains a great destination point and place to live.  We have the beach in our front yard and the mountains in our back yard.  The climate is great, we have all four seasons and it doesn't get as hot as some parts of the country, nor as cold as other parts.  The cost of living remains very low compared to other high-powered areas such as NYC or LA.  Furthermore we have been a great banking city for a long time that has attracted some very smart financial minds.  With the banking crisis some of those people still find themselves un- or under-employed.  So, as companies establish, grow and expand they will begin looking to Charlotte as a place to do so.  For all of the above mentioned reasons making this a great place to attract employees, but also because some of those bright financial minds are already here and waiting for new opportunities.

And as Charlotte does well in business and economic growth so also will we see our employment and housing markets continue to stabilize.

So, what does all of this mean for you?  If you live in Charlotte, enjoy it.  If you don't, consider moving here!

In response to our last blog post about the tax credit I had a good discussion with one of our friends on facebook.  She asked, "who really benefited from the tax credit: the buyer or the seller?"  Of course, the general idea behind the tax credit was that the buyer would be getting a house at current market value AND would be getting $8,000.  But, what if the prices were instead just inflated by $8,000 or more?

As soon as the tax credit expired, it was my premise that, in fact, the price had simply been inflated.  So, any buyers that I had looking to go under contract after 04/30 I looked at the comparable sold data from the past 6 months and then deduct $8,000 from that price to reach my suggested offer price.  Some real estate agents didn't get it, others disagreed and others just got angry.  And at the time, there was not enough data to know which of us was right.  But, that was my premise.

Now that some time has passed we do have some data that we can look back on and see what happened.  I researched all of the sold comps in Charlotte in May between $60-250k (nearly all of them were likely to have received the $8,000 tax credit).  And then looked at the same data for July (none of them should have received the tax credit).  And this is what I found:

• May sold for $78.18/sf
• July sold for $72.11/sf
• Delta: -$6.07/sf
• Extrapolated over an average 1828sf = -$11.096

It has now been over three months since the tax credit contract date has expired.  So, what has the market done since then? In the three months leading up to the tax credit there was an average of 8 total showings on each listing in Charlotte.  That was not a lot, but it was a surge at the time of people trying to get in to get under contract before 04/30 to be eligible for their $6,500-8,000 from the government.  The idea was for this to "jump start" the slumping real estate market and propel it forward and upward into the summer months.  In order for that to be true these buyers needed to be people who were not going to buy otherwise in the near future.  Did it work?

In the three months after the deadline passed there have only been an average of 5 total showings on each listing in Charlotte; nearly a 40% reduction in showings.  There simply are far fewer buyers now than there were before.  The fear is that instead of producing new buyers, rather the tax credit merely used up a future supply of buyers.  Now the only question is: "How far into the future did the tax credit reach?"  That is a question we cannot answer for sure, but many "experts" are trying.

An article last week from Bloomberg Business made their best guess at when exactly is the bottom of the real estate market - the trough.  As a nationwide average they predict it will be early next year.  But, what caught my attention about this article is that it detailed state by state and metro by metro what each trough may likely be.  They note that the trend seems to be improving in Charlotte and that we should reach our trough in the 3rd quarter of this year. I think this sounds right.  Interestingly, while the number of sales are still down, the price of the sales that are happening are stabilizing and even starting to trend upwards.

So what?

If you are a seller the advice would be to not sell right now unless you must.  And if you must, then be open-minded to some alternatives like rent-to-own.  If you are at all considering buying at some point in the next year there is likely no better time to act than now.  Of course we will never know what was the bottom until it is behind us, so there is no point in trying to be Nostradamus.  Instead, take advantage of all of the indicators of now being a good time to buy as rates continue to fall to record lows and home prices seem to be stabilizing. If you can buy, there has never been a better time than right now.

We did a survey asking what our first blog topic should be and the consensus was to discuss alternative sales techniques.  In this buyer's market it helps to think of creative ideas that can set your house apart from your competition.  I was reading one article last week that discusses five wacky ways to sell your house:

1. Let prospective buyers sleep over
2. Hire house sitters
3. Offer incentives, incentives, and more incentives
4. House trading
5. Sell to a builder

Now, some of these are indeed pretty wacky and have their pros and cons.  Offering incentives has become fairly commonplace, but does it work; and if so, which ideas work the best?  The most common incentive is to offer to pay closing costs.  But, in this market buyers now expect to receive some seller paid closing costs, so offering it does little more than communicate the seller's "real" asking price.  Other popular incentives are things like paint, carpet or appliance allowances.  There is a big problem with this in today's market.  Right now buyers are either looking for an absolute steal of a deal or they are looking for a fairly priced home that has all of the nice finishing touches.  This means that sellers really need to decide in which of these two categories they will fit.  And with so many bank-owned distressed properties with which to compete, most sellers will need to compete on the market as a nicely finished move-in ready home.  And a seller cannot compete effectively in that market if there is paint, carpet or appliances that need to be replaced, even with an offered allowance.

Incentives that make the most sense are ones that are so unique or outlandish that it will certainly grab a buyer's attention and make them want to find out more.  Ideally it would be something that does not have an obvious dollar value attached to it since, again, this would mostly just communicate the seller's "real" asking price.  For example, maybe the seller own's a time share or has access to a beach house for a week and can offer buyers an all expenses paid vacation for a week.  Or perhaps a seller might own season tickets to a theater company or sports team that are really difficult to come by and offer buyers some or all of those tickets.

One of the most practical and effective incentives is to find out how much it would cost to buy down a typical buyer's interest rate to say 4% or even 3%.  And then market the incentive that if a buyer purchases your home they can do so at that incredible interest rate.  Picture that on a sign in your yard and on all of your web advertising or perhaps even flyers around town.  That will most certainly grab some attention.

Now, one more question to ask is if the seller should instead just lower the price.  Showing statistics consistently reveal that houses priced right below quarter marks (for example, $225k, $250k, etc.) get the most showings compared to those priced $5-10k above a quarter mark.  So, if you are priced right above a quarter mark and you are trying to figure out how to better market yourself to potential buyer then your best bet will be to lower your price under that next quarter mark.  If you are already right under a quarter mark and you are trying to figure out what to do, then consider offering the rate buy down or some other incentive instead of lowering your price.