Despite continual troubles in the financial markets—which should come as little surprise in light of prevailing headlines coast to coast—job growth in the sector remains positive in Charlotte. In fact, with the exception of manufacturing and government, all sectors in the metro either remained job-neutral or added positions, including construction, according to Hanley Wood Market Intelligence (HWMI).
Additionally, home prices in the metropolitan area continue to buck national trends. HWMI points out that Charlotte is one of a handful of select metros that repeatedly exhibit increasing median prices while the rest of the U.S. sees a drop in home values.
“Charlotte is one of only a handful of medium-sized metropolitan areas to break into the ranks of first-tier markets during the past decade,” writes Wachovia Corp. managing director and senior economist Mark Vitner in a June 24 report. “Solid population growth, a well-diversified economy, generally good governance, and an enviable quality of life have moved Charlotte forward. The metro area is often ranked as one of the best places to do business, raise a family, find a job, or start a new company. Most recently, Charlotte attracted a great deal of attention for being the lone metro area in the S&P/Case-Shiller 20-City Home Price Index to post a year-to-year increase.”
ALL CLEAR? NOT QUITE Of course, that's not to suggest that Charlotte has evaded the troubles that continue to plague other markets nationwide. “Gasoline prices topped $4 a gallon in Charlotte in early June, just like they did in most other parts of the country,” Vitner notes. “Housing also slowed.”
In fact, the credit crisis and lingering effects of a slowing U.S. economy are gradually taking effect. As HWMI points out, annual price appreciation slowed to 3.8 percent in 1Q2008, with a median price of $192,700. While HWMI doesn't expect a drastic correction, prices are expected to remain flat throughout 2008 and into 2009.
SO WHAT'S WORKING? With communities located throughout the Charlotte metro, C.P. Morgan Communities has found that closer-in projects are stronger sellers relative to those in outlying locations. But in its effort to improve performance, the builder is shifting its focus to product as opposed to strictly location.
“We've seen demand for some variation in product from what we've had in the past,” says John Nicholls, C.P. Morgan Communities' general manager in the Carolinas. “The trend is definitely still single-family detached, but with more architectural detail in the elevations and a little more function throughout the space. We actually worked with an architect, Barry Berkus, and designer Marianne Tate to incorporate coastal, Victorian, and European design, as well as richer color palettes.”
Yet while aggressive sales tactics such as slash-and-burn pricing and free promotional upgrades may prove effective in other regions, C.P. Morgan finds them to be a moot point in the Charlotte metro.
“We still believe that people want the most home that they can get for their money,” says Nicholls. “ Our brand, of course, more square feet for less money, is one that's pretty well known. But it translates to more than just square footage. You get within a particular area, if you can offer the most compelling price for what you have offer, you're going to be able to move [product]. We don't believe people are going to sacrifice location to get a free plasma TV. Those promotions may generate a lot of traffic, but I don't think they're converting to actual sales.”
“Charlotte's housing market has held up better than most other areas because the region never really saw a boom,” Vitner writes. “Housing prices have risen an average of 4.1 percent per year for the past five years, and the average price of an existing home sold in Charlotte during April was $200,620, down about 2 percent from a year earlier. The absence of a spike in home prices removed much of the incentive for speculators to enter the market, which kept supplies in check. There are pockets of overbuilding, mostly on the outer reaches of the metro area in places like southern Union County and eastern Iredell County. The Uptown condomium market has also hit a soft patch.”
Due in large part to the cooling of the condo market and weakening home sales, an increasing number of developers are moving toward apartment projects, according to HWMI, pointing to areas north and south of downtown as those that will see the most activity.
According to C.P. Morgan, public and private builders are feeling the same pressures and combatting the same frustrations. “I really think everyone's dealing with the same issues within the market,” Nicholls explains. “We just need to make sure that the folks out there that can buy right now understand that it's a good time to buy. [There are] government tax credits for first-time buyers, competitive prices in the market—where the confidence is off, we need to educate folks.”
Download the Employment Envy Table [Download Image] SOURCE: CHARLOTTE CHAMBER OF COMMERCE, JANUARY 2007
Download the Charlotte Statistics [Download Image] SOURCE: HANLEY WOOD MARKET INTELLIGENCE