HOUSING NEWS REPORT
ATTOM DATA SOLUTIONS
March 2017 Home Sales
March 2017 Home Prices
THE ECONOMIC REALTY
“We are a state where there’s been a migration,” said Dr. Michael Walden, the William Neal Reynolds Distinguished Professor at North Carolina State University (NCSU). “We are seeing people move here from the Northeast and the Midwest. Plus there’s been a redistribution of the population over time. We have 100 counties, one-third of which have lost population. Now we’re a majority urban state with increasing population and increasing density.” The Carolina Population Center study also projects that 68 percent of all new growth in the state through 2035 will be equally divided between its two biggest metros -- the Research Triangle of Raleigh-Durham and Charlotte. Another 10 percent will go to the Triad metro area which includes Greensboro, High Point and Winston-Salem. The report also notes that in the next 20 years, half of the state’s new residents will be age 65 or older. And while Baby Boomers represent the largest adult generation in the state, by the end of 2017 it is expected that Millennial adults will outnumber Boomers.
above the number of units sold the previous month. Home prices rose 6 percent over the same time period a year ago to $201,172, according to sales data released by the North Carolina Association of REALTORS. The total number of distressed home sales statewide declined 20 percent between the first quarter of 2016 and first quarter 2017, according to ATTOM Data Solutions. Commenting in his press release for the April 2017 NCSU Index of North Carolina Economic Indicators, Dr. Walden noted that “the trend in the Index this year suggests a gradual increase in the state’s economic growth in coming months. With the housing market continuing to tighten — especially in metropolitan areas — new residential construction will increase its role in leading economic growth.” While Charlotte and Raleigh-Durham make up about 75 percent of the state’s employment growth, the Triad metro area is growing the fastest on a percentage basis, according to Jay Colvin, regional director for Metrostudy in Raleigh- Durham, Charlotte and the Triad. Colvin said with such low inventory his firm does see a fair amount of investor activity even on the new home side, although
In its April 2017 issue of “Snapshot,” the Federal Reserve Bank of Richmond reported that “economic activity in North Carolina generally picked up… with an increase in payroll employment, improvements in household conditions, and positive housing market reports.” “Over the last two years job growth in North Carolina has been running higher than the nation,” said Dr. Walden from NCSU. “We have the same issue as the nation – jobs are being created at the high end (professional jobs requiring college degrees), and at the low end (particularly leisure and hospitality); with the slowest growth in the middle (manufacturing).” During the fourth quarter of 2016, the FRB of Richmond reports that real personal income rose statewide both on a quarterly and annual basis. Unemployment continued its downward trend to 4.9 percent in March 2017, according to the Bureau of Labor Statistics. For March 2017, existing home sales in the state totaled 13,505 units, a 21 percent increase over March 2016 and 56 percent
21% Increase comparing to March 2016
6% Increase comparing to March 2016
Source: North Carolina Association of REALTORS .
flipping it in a few years. Goins focuses his attention on buying HUD properties directly from the MLS. His strategy these days, as he puts it, is to “go deep or go wide.” “Going deep means to dig deeper in that market to find deals in the area,” he said. “You may have to use multiple ways to find deals. If more people are buying from HUD and off the MLS, I’m going to have to use bird dogs, bandit signs and run my own ads.” “Going wide means I continue to make offers on every HUD house in North and South Carolina every day and some MLS homes too,” he countinued. “I’m just making offers based on my formula and what I think I can pay for a property. I’m getting them accepted in the smaller towns, and not getting them accepted in the bigger areas because of the competition.” When he does land a deal these days, Goins either wholesales the property out to another investor, does a lease option deal or sells it using seller financing. CRAZY IN CHARLOTTE Being in a seller’s market, Realtor Tijuana Smith with Coldwell Banker in Charlotte prepares her buyer clients for dealing with the pressure of having a bidding war on every property. “It’s crazy right now. Under $100,000 it’s definitely a war zone,” Smith said.
“Selling is automatic. Buyers are competing with investors. At one point the market was working in investors’ favor because they were coming in with cash. Now there’s so many offers, and the offers are going over asking price, so investors have to up their price.” Smith tells her buyer clients they may need to bid on around four properties before actually getting an accepted offer –- especially if the buyer is looking below $200,000. So whether they are traditional home buyers or investors, she advises her clients to consider looking at surrounding areas. “Sometimes they have to look at houses for less than what they’ve been approved for so they can overbid. It’s not as bad on the outskirts. Most people are okay with a 20- to 30-minute commute.” Smith also noted that there is quite a bit of new construction going on in Charlotte -– particularly condos, apartments, some retail, and a lot of mixed use. The median sales price in the Charlotte metro area for the first quarter of 2017 was $181,500, an 8 percent increase from the same quarter last year, but still below the $191,500 median price at the market’s peak in the third quarter of 2016, according to ATTOM Data Solutions. Also, the percentage of FHA sales, cash sales and sales to institutional investors all declined during the quarter.
TO FLIP OR NOT TO FLIP Loschiavo said it’s hard enough to find properties at full price, let alone flip them. “What I have heard is the safer place for investors to be right now is in rentals,” he said. “Buy it and hold it and get a reasonable rate of return. Let the property ride. The appreciation rates here aren’t very exciting. You’re really looking to hold that property for cash flow and have the renter pay the mortgage. Compared to a bank account that gives you nothing, it’s not terrible.” For veteran real estate investor Larry Goins, North Carolina is not a growth market in the same way as Las Vegas, Denver, Phoenix or California. “Typically in the Carolinas — like in a lot of the heartland — you’re not buying for appreciation. The way most investors look at the Carolinas is buy it, put some sweat equity into it, and rent it out,” said Goins who lives in South Carolina but has worked both Carolinas for many years. That’s not to say there are no areas in the state that attract investors for their appreciating values. The Raleigh- Durham and Asheville areas are examples he points to in that regard. Still, as he explained it, a lot of times those investors aren’t local. Local investors are looking to buy at a discount because the home needs repairs. They put some sweat equity into it to fix it up, and then hold onto the property and rent it out — maybe eventually
he estimates that investors represent no more than 10 percent of the business. “We’re underbuilt. What’s missing here is the lower price point. The entry level market is undersupplied,” Colvin said. The FRB Richmond’s April report noted 4,898 new residential permits were issued statewide in February, up 13.8 percent from the month before and a 27.3 percent increase over February 2016, with the most permits issued in the Charlotte metro area. Statewide housing starts were also up substantially in February, totaling 70,500, up 16.2 percent from the previous month and up 35.3 percent from a year ago.
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