Ballantyne Scoop tries to answer the question, are foreclosures hurting home values in Ballantyne — or elsewhere for that matter? Partial credit for the answer:
These properties do present a future risk to Ballantyne home prices, as they might come on the market as short sales or bank-owned sales in the future. However, these homes are distributed throughout the various Ballantyne neighborhoods. Statistically, only a small percentage of homes in each neighborhood are in the foreclosure or preforeclosure stage. So, it’s not the foreclosure per se that is causing home prices to fall. It is the oversupply of homes that is causing the home prices to fall.
It goes a little deeper than that, to the fact that bank sales are almost always fire sales. And those fire sales — at a time of relatively few sales overall — do put downward pressure on comps in the neighborhood. Take the sale which took place in April 2009 a few blocks from me in Providence Plantation.
The home had a revised 2006 tax value of $455,400 and had sold for $518,000 in June 2005, very nearly the peak of local home values. By late 2008 it was in foreclosure and was sold for $374,000 in 2009. That’s a 28 percent drop in value in less than three years. Does that mean that all homes on the same street saw a similar drop? No, of course not.
But some downward pressure tends to be confirmed by the fact 1) Only one other home on the street has been sold in the last 15 months 2) That home sold for all of three (3) percent above 2006 tax value and all of 5.5 percent above its 2000 sales price. Plus we must consider the fact that many South Charlotte homeowners in otherwise OK shape are probably staring at and servicing HELOCs they took out in the 2005-2006 boom times, effectively adding a 20 or 25 percent “bonus” to the home value numbers they need to have to feel whole.
Now, toss in the likelihood that the ongoing property tax reval is probably going to add 10 to 20 percent to their annual property tax bill — and hence to their monthly mortgage payment — whoosh, you have the makings of a real brushfire on top of the fire sales.
