How Did The Over $1M Market Get So Messed Up in Charlotte Real Estate?
We know there is a lot of inventory- 54 months according to my last post based on the first 9 months sales of this year… an almost 5 year supply of homes.
Does the word sub-prime, or Pick-A-Pay mean anything to you? Or my preferred term, Junk Financing? Looking back, way back all the way to 2001, I charted the growth of the Over$1M market in the Carolina MLS. It is important to note, the slow but steady growth from 2001-2003, and then the sharp rise in 2004-61%, or an additional 82 homes. Thes 82 new 1M homeowners represent 24% of all
the over $1m homes sold in 2001-2003.
So what happened in Charlotte to account for this massive influx of new money – 82 homes to be precise... Did we bring a corporate headquarters here that year of significance? A NFL franchise perhaps? What would account for not just the 133 home sales of 2003, but another 83 or215 in 2004?
What if I told you that Over $1M home sales jumped another 50% in 2005, and another 35% in 2006?
Check out the chart, and see if you can answer that question we heard so often: “Where were all these people coming from who can afford these Million dollar homes?”
In the peak year, 2007, 477 over $1M homes were sold. That is the equivalent of all the homes sold in 2001, plus 2002,2003, and most of 2004. Whaaat?
Those of us who lived here know there is no explanation for this kind of increase in demand. Job growth was good from 2001-2203, and from 2004-2008 and that produced healthy increase in demand for housing, but not this good.
This is about greed, our insatiable desire to have everything NOW, and junk loans. Junk loans that created a false demand, or a bubble, and now, as many of these mortgage reset, are going to produce foreclosures at record levels in the next 3 years.
Since the junk loans are no longer available, and most of those loans reset in 3-5 years, demand is quickly falling to pre-junk levels, and foreclosures will mount as sales won’t break 200 in 2009.
And in 2010? I’m predicting about 150, and inventory still at 5 year levels. It is going to get worse before it gets better.tm
Editors note- Better selling in 2011, prices better (lower) too- See summer of 2011 luxury home post
Is it safe to buy a home here in Charlotte? Yes- with conditions. Buy for the long term, buy in a blue chip neighborhood, and buy it cheap- We can help. We help with home finding, we do the research, and we take your lead in the negotiations.. 704-351-1519
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