charlotte real estate - a factual overview in a time of uncertainty

2011 Copyright: Cox Residential, LLC. All Rights Reserved.

Charlotte Real EstateA Factual Overview in a Time of Uncertainty

By: Eric J Cox, Realtor®Cox Residential

1

2011 Copyright: Cox Residential, LLC. All Rights Reserved. 2

About Eric J Cox:US Marine Corps combat veteran and author, Eric J Cox understands what it takes to accomplish missions (goals). Cox was nominated for the Realtor Rookie of the Year award following his inaugural year and has since risen to the top 1% of brokers in the Charlotte and surrounding areas with over $6MM in closed sales in last year's "down" market alone. Cox branched out in Feb of '11 and launched Cox Residential.

Knowledge, experience and work ethic aside, Cox attributes his success to his genuine ability to Listen and Understand his clients.

Honors & Credentials Licensed in NC Top Producer National Association of Realtors (NAR) North Carolina Association of Realtors (NCAR) Charlotte Regional Realtor Association (CRRA) Charlotte Multiple Listing Service (CMLS) 2010 Government Affairs Committee (CRRA) CRRA Vane Mingle Rookie of the Year Nominee Charlotte Style Magazine Top 25 Most Stylish People in Charlotte (emphasis on career success)

Community Involvement• Our Forgotten Warriors – Chairman • Soldier’s Angels (volunteer)• Operation Homefront (volunteer)• Honor Them Foundation (member)• Operation PTSD (member)• Veterans Help Network (member)• Iraq & Afghanistan Veterans of America (member)• CombatVets.org (member)• USA Cares (member)• Home Sweet Home Campaign (member)


Seasonal Home Sales Cycle

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar0

2

4

6

8

10

12

Series 1


3 Types of Markets Buyers Market

More than 7 Months of Inventory Sellers Market

Less than 5 Months of Inventory Equilibrium

Between 5 – 7 Months of Inventory

Months of Inventory Supply is defined as the total number of homes for sale in an area divided by the number of homes sold per month in that area.

Market Transitions:

National transitions occur slowly due to multiple markets and respective local economic conditions

Local market transitions occur very quickly


Mecklenburg County Housing Inventory

Q3 '06Q4 '06Q1 '07Q2 '07Q3 '07Q4 '07Q1 '08Q2 '08Q3 '08Q4 '08Q1 '09Q2 '09Q3 '09Q4 '09Q1 '10Q2 '10Q3 '10Q4 '101.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

17.0

19.0

MSI Trend

Equilibrium: Transition only lasted 9 months


Pricing : Up Market vs. Down Market

Eventually time will correct high pricing and make agents appear smart when

success is practically inevitable.

Seller ends up chasing the market down when the home should have been

priced properly from the beginning.

Time on Market

Aver

age

Hom

e Pr

ice

Price Seller Wants

When They Get It

Time on MarketAv

erag

e Ho

me

Price

Price Correction

Price Correction

They Never Get It

Price Seller Wants


The Cost of Overpricing:

Market interest is highest within the first 3 weeks on market. In a stable market, fair market value is stable.

The salable price has to do with the psychology of buyer interest vs. elapsed time on market.

In a declining market, these characteristics are amplified. Additionally, homes that take price

reductions take 3 times longer to sell than homes priced properly from the beginning.

Time on Market

Fair Market Value

Initial List Price

Time on Market

Market Interest

Salable Price

Stable Market

Fair Market Value

Initial List Price

Market Interest

Salable Price

Declining Market

COST of

overpricing


Pricing Into the Market:

In our buyers’ market, only a small percentage of homes - those in great condition priced below

the comps are IN the market.

In a sellers’ market, only a small percentage of homes - those in the worst condition priced

above the comps are OUT of the market.

Buyers’ Market Sellers’ Market

In the market

Out of the marketOut of the market

In the market

Condition vs. Comps

Price

vs.

Com

ps

Condition vs. Comps

Price

vs.

Com

psPoor PoorGreat Great

Belo

w

Belo

w

Abov

e

Abov

e


The Pond: Current Housing Market

12% of InventorySell and Exit the

Pond

24% of Inventory

64% of Inventory

FLOWBest Value

Shown & Offers Made

SHOWShown but No Offers

Almost always due to condition but may be slightly overpriced.

STAGNANT MASSNot Being Shown

Simply overpriced.

New Listings Enter the Pond

No Man’s Land

OUT of the Market


Mecklenburg County Days on Market

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Q3 '08

Q4 '08

Q1 '09

Q2 '09

Q3 '09

Q4 '09

Q1 '10

Q2 '10

Q3 '10

Q4 '10

50

60

70

80

90

100

110

DOM Trend


CMLS Entire Area List-to-Close

100110120130140150160170

Sep-06; 113

Jan-11; 159.7

List To Close Trend


CMLS Active vs. Sold $150,000 & Under

Aug-07

Nov-07Feb

-08

May-08

Aug-08

Nov-08Feb

-09

May-09

Aug-09

Nov-09Feb

-10

May-10

Aug-10

Nov-10Feb

-110

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Active

$150,000 & Under TrendAu

g-07Nov-

07Feb

-08May

-08Au

g-08Nov-

08Feb

-09May

-09Au

g-09Nov-

09Feb

-10May

-10Au

g-10Nov-

10Feb

-11500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

Sold

$150,000 & Under Trend


CMLS Active vs. Sold $150,001-$250,000

Aug-07Oct-

07Dec-

07Feb

-08

Apr-08Jun-08

Aug-08Oct-

08Dec-

08Feb

-09

Apr-09Jun-09

Aug-09Oct-

09Dec-

09Feb

-10

Apr-10Jun-10

Aug-10Oct-

10Dec-

10Feb

-11200

400

600

800

1,000

1,200

1,400

Sold

$150,001 - $250,000 Trend

Aug-0

7Nov-

07Feb

-08May-

08Au

g-08Nov-

08Feb

-09May-

09Au

g-09Nov-

09Feb

-10May-

10Au

g-10Nov-

10Feb

-112,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Active

$150,001 - $250,000 Trend


CMLS Active vs. Sold $250,001-$500,000

Aug-0

7Nov-

07Feb

-08May

-08Au

g-08Nov-

08Feb

-09May

-09Au

g-09Nov-

09Feb

-10May

-10Au

g-10Nov-

10Feb

-111,500

2,500

3,500

4,500

5,500

6,500

7,500

8,500

9,500

Active

$250,001 - $500,000 Trend

Aug-0

7Nov-

07Feb

-08May

-08Au

g-08Nov-

08Feb

-09May

-09Au

g-09Nov-

09Feb

-10May

-10Au

g-10Nov-

10Feb

-11100

200

300

400

500

600

700

800

900

Sold

$250,001 - $500,000 Trend


CMLS Active vs. Sold $500,000 +

Aug-0

7Nov-

07Feb

-08May-

08Au

g-08Nov-

08Feb

-09May-

09Au

g-09Nov-

09Feb

-10May-

10Au

g-10Nov-

10Feb

-110

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000Active

$500,001 + Trend

Aug-0

7Nov-

07Feb

-08May

-08Au

g-08Nov-

08Feb

-09May

-09Au

g-09Nov-

09Feb

-10May

-10Au

g-10Nov-

10Feb

-110

50

100

150

200

250

300

Sold

$500,001 + Trend


Timing the Market

Safe Zone

Lucky Zone

Unlucky Zone

Market Transition Point of Realization

Hom

e Pr

ices

TimeMarkets are defined by past performance - no one can time a market. By the time a market is realized to have changed direction, it has already past bottom or top for some time.


CMLS Total Sales Volume vs. Avg Sale Price

2003 2004 2005 2006 2007 2008 2009 2010$2,000,000,000$3,000,000,000$4,000,000,000$5,000,000,000$6,000,000,000$7,000,000,000$8,000,000,000$9,000,000,000

$10,000,000,000$11,000,000,000

Total Sales Volume

Total Sales Volume Trend

2003 2004 2005 2006 2007 2008 2009 2010$150,000 $160,000 $170,000 $180,000 $190,000 $200,000 $210,000 $220,000 $230,000 $240,000

Avg. Sales Price (Year)

Avg. Sales Price (Year) Trend


Mecklenburg County Average Sale Price

Q3 '06

Q4 '06

Q1 '07

Q2 '07

Q3 '07

Q4 '07

Q1 '08

Q2 '08

Q3 '08

Q4 '08

Q1 '09

Q2 '09

Q3 '09

Q4 '09

Q1 '10

Q2 '10

Q3 '10

Q4 '10

170000

190000

210000

230000

250000

270000

290000

310000

265400

285000

252300

231000

Q3 '10; 262500

Avg Price Trend


CMLS Average Monthly House Payment

Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10$850.00

$950.00

$1,050.00

$1,150.00

$1,250.00

$1,350.00

$1,450.00

$1,550.00 Jun-07; $1,515.88

Feb-11; $912.93

Avg Monthly Payment Trend


Opportunity of Our Market: Trade Up Sarah pays $180,000 for her home in 2007 Today her home is worth $153,000 (15% less) After selling & paying closing costs she gets $143,500 Her mortgage on $130,000 at 6.75% is $843/mo She nets $ 13,500 Due to real estate losses, she writes off $ 36,500 in taxes

At 4.95% interest, payment remains at $843/mo

Purchase price is $166,000 Down payment is $8,300 Cash leftover is $5,200 Assuming new house was purchased 15%

less than it was worth at the peak, new home is worth $196,000

Assuming new house was purchased as a distressed sale 30% less, new home is worth $238,000

Potential equity = $80,000

5% down payment is $13,500 Purchase price is $270,000 At 4.95% interest, payment increases

to $1441/mo Assuming new house was purchased

15% less than it was worth at the peak, new home is worth $318,000

Assuming new house was purchased as a distressed sale 30% less, new home is worth $386,000

Potential equity = $129,500


30-Year Fixed Mortgage Rate

Jul-06Sep

-06Nov

-06Jan

-07Mar-

07May

-07Jul-07Sep

-07Nov

-07Jan

-08Mar-

08May

-08Jul-08Sep

-08Nov

-08Jan

-09Mar-

09May

-09Jul-09Sep

-09Nov

-09Jan

-10Mar-

10May

-10Jul-10Sep

-10Nov

-10Jan

-11Mar-

11May

-11Jul-11Sep

-11Nov

-114.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

Rate Trend


Hazard of Our Market: Affordability

Current Market: +.5% Interest -.5% price

+1% Interest = Price

Home Price = $200,000 Home Price = $190,000 Home Price = $200,000Interest Rate = 5% Interest Rate = 5.5% Interest Rate = 6%Monthly Payment $1020 Monthly Payment

$1025Monthly Payment $1139

Able to Afford $189,092 Able to Afford $179,075


Home Affordability at $1500/mo

200,000

220,000

240,000

260,000

280,000

300,000

320,000

340,000

360,000

Jul-07, $244,944

Oct-10, $321,729

$287,546

$284,338 $272,044

• Assumes Home Purchase Price at recorded 30-year fixed mortgage rates with 5% down payment• Does not factor Taxes or Insurance


Financing Programs/ Options: Physician 100%LTV, no PMI

100% up to $650k 95% up to $1 Million 90% over $1 Million

FHA 96.5% LTV, Low Credit Score 580 minimum credit Assumable (allows someone to take over your payments should rates increase)

BB&T CHIP up to 100% LTV, no PMI

FHA 203 Rehab Finance the cost of repairs into the loan Roll 6 months of payments into the loan if uninhabitable at purchase

JUMBO loans up to 90% LTV, no PMI

ARM When used properly, an excellent financial vehicle

Down Payment Assistance Programs

Revitalization loans such as House Charlotte or HomePath

Seller Financing


The Cost of Owning vs. Renting

Dilwort

h

Myers

Park

Midwoo

d

Birkda

le

Hough

High Sc

hool

Skybro

ok

Balla

ntyne

Highlan

d Cree

k

Old Sto

ne Cros

sing

500

700

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

PITIRent

Additionally, homeowners are able to deduct:

• mortgage interest• property taxes • mortgage insurance (PMI) • any maintenance or repairs

…from their taxable income.

The average monthly cost of owning vs. renting a typical 3 bed, 2.5 bath home in…

* Owning figures above are not reduced by the annual tax savings


Testimonials & Recommendations“Eric Cox originally made contact with us on behalf of his buyers who were looking for a waterfront home on Lake Norman with similar features to ours. While our home's layout didn't work for his specific buyers, we were impressed with his innovative and common-sense approach. This prompted us to list our home with Eric and after following his advice, sold our home in just 4 days in this 'down market.' Selling our 2nd home from out of state, we knew we were facing a challenge but Eric put our minds at ease. He gave sound advice when asked, made personal recommendations and lined up contractors for us. More than anything - he answered the phone when we called and responded to our emails within minutes - that made all the difference! We absolutely endorse Eric Cox as great realtor always going above and beyond.

-Robbie & Katrina Skelton

We picked Providence Country Club because it was beautiful and the house is very unique, one floor and in a great neighborhood. Our experience working with Eric Cox was incredibly good. The whole process was very efficient and smooth. Looking for and buying a home can be very stressful, however because of Eric, there was no stress at all. We would not hesitate to recommend him to anyone. Thank you for your knowledge and professionalism Eric!"

-Randie & Claire KopfCharlotte, NC

“I have hired Eric for multiple real estate projects including buying, selling and managing my real estate portfolio. Eric never fails to deliver quick, profitable results that exceed my expectations every time. I have known Eric for nearly a decade and he is one of the most honest and reputable men I know. I have the pleasure of calling Eric my real estate manager and my friend and I will never enter into a real estate transaction without Eric by my side. Please reach out to me at 704.280.3275 for a reference.

-Trip BlazerCharlotte, NC


Testimonials & Recommendations “We loved the house and the neighborhood! It is close to the interstates and very close to the city. We also felt it was a good deal for us. It was wonderful working with Eric Cox. He was very professional from day one and his response time to any questions or needs we had were prompt. We highly recommend his services to anyone buying or selling their home.” -Joe and Trish Olshefski

Hilton Head, SC

Eric is an extremely dedicated agent. His knowledge, dependability, honesty, integrity and his unbelievable rapid response at all hours gave me confidence…I felt at ease with Eric and I always had a sense of peace that he would do his best on my behalf. Eric is truly a remarkable agent and person…

As an Orthopedic Surgeon, I am in the “service industry” as well and believe I should be there in every way for my patients. Frequently, when I work with others, I feel that service is lacking. I am proud to say that Eric provided excellent service, above and beyond my expectations!

I have recommended him to countless friends.-Kent Ellington, MDCharlotte, NC

“Eric is a real go getter...he has quickly established a large base of business clients and continues to build the foundation for an outstanding career in Real Estate sales. He is service oriented and consistently presents value opportunities to his customers.” -OK HoganElizabeth City, NC

"I have worked with Eric Cox for the past year on three separate investments. Eric has been professional, knowledgeable and most helpful. I am from out of state however when I deal with Eric for my investments I do so with complete confidence and trust."

-Sara I. SandovalSan Diego, CA


Testimonials & Recommendations“From my first meeting with Eric, it was evident he offers a deft combination of authenticity, professionalism, and

patience. I felt comfortable with him from the start, and as my wife and I expand our real estate investment portfolio, I'll continue to seek him out. During some atypical scenarios that popped up in my deals, Eric was tireless in making extra phone calls on my behalf. Perhaps best of all, he is able to service my real estate investment needs on a wide continuum across the whole region, including distressed properties, new development, predevelopment, and even commercial interests. Eric is one of the hardest working professionals in real estate, and his attentiveness sets him even further apart.”

-John Martin Charlotte, NC

“Dear Eric,

I just wanted to let you know that you have helped me to find and purchase two pre-construction resort properties which I intend to resell and turn a nice little profit. You have given me guidance and advice that has helped to get good properties in places that will be of interest to investors as well as end users. You are also helping me to sell some properties and during the slow down in real estate sells you have brought several interested investors to the table. Thank you for you expertise and help,”

-Gary Lynn Accuspect Investments, LLC Asheville, NC

“Man, what to say about Eric... The guy's on fire. His enthusiasm about what he does is contagious and his drive to know all aspects of the real estate world is impressive…he has worked with buyers looking for a primary residence, investors looking for flips, and buyers wanting multi-million dollar commercial. He has worked aggressively at becoming a land and development expert and continues to push towards being a full resource for all matters real estate. I can't wait to see where his ambition and work ethic take him!”

-Brian TrainumCharlotte, NC


References & Sources:

Keller, Gary, Dave Jenks, Jay Papasan. Shift: How Real Estate Agents Tackle Tough Times. New York: Relleck Publishing Partners, Ltd. 2009. Print.

National Association of REALTORS®Charlotte Regional REALTOR® AssociationCarolina Multiple Listing ServiceFederal Reserve


Thank You.

Eric J Cox, Realtor®Principal Broker, BIC(704) [email protected]