Look for Charlotte home prices to triple dip this year. The Charlotte Observer just reported that Charlotte home prices are ONLY down 1.2 percent from a year ago.
The overall tone of the article is one of pending improvement, but clip and save this piece. Things are going to get much worse before they get better. Here’s why.
Home values (nationally) are expected to fall another 3.6% by next June, pushing them to a new low of 35% below the peak reached in early 2006 and marking a triple dip in prices.
Here’s why that is virtually guaranteed. Banks have resolved their robo-signing legal controversy and can now proceed with foreclosures that have been stacking up in the pipeline for over a year. A massive shadow inventory of six million foreclosed homes that are not currently listed on the MLS as for sale will hit the sales pipeline. That’s more than an extra year and a half of housing inventory during a healthy economy.
And then there is the fact that contrary to what the media says, the economy is getting worse, spurring a massive hike in default notices:
Earlier this month, RealtyTrac reported the first quarterly increase in foreclosure filings in three quarters. Even more discouraging: new default notices were up 14%.
There’s also a “shadow inventory” of homes in foreclosure that have yet to go back onto the market.
The specter that those foreclosed homes could flood the market at any time and drive prices significantly lower is a huge concern, said Mark Dotzour, an economist for Texas A&M University. “That’s the elephant in the room,” he said, noting that there are 6 million home currently in shadow inventory.
Combine that with even a few thousand local firings by Bank of America, which is cutting tens of thousands of jobs, and the real estate market here will take a wallop. Fiserv is predicting a modest recovery starting in June. Real estate junkies like me will tell you that is madness. Um let’s see … the market is going to somehow clear out a year an a half of extra shadow inventory in six months when we can’t hardly move what is on the market now?
Maybe in a parallel universe. In this one, three things are obvious. No one knows how fast the shadow inventory will hit the market, but everyone knows it is coming. The odds the banks can even roll out over six million homes onto the market in six months are pretty low. If you are looking to buy a house, wait until at least June, preferably late fall. That will likely save you $10,000 on a $250,000 house.
If you are looking to sell one, don’t hesitate. Slap it on the market now. Maybe you will get lucky. That sucker is declining in value daily. It just hasn’t shown up in the market price yet, but it soon will. Selling your home in the next few months could protect you from a loss in value of at least $10,000, probably more.
Now consider that the Charlotte City Council has long planned a massive tax hike for this fall, and consider what that will do to your home value, particularly if you are renting your property. Best of luck.
The upside by the way is that what you are seeing is the real estate market finally being allowed to crash the rest of the way to the bottom, wherever that is. The faster that happens the better, so the recovery can finally begin after all these years.
