This past week our listings saw an average of 2.1 showings each. This same time last year the average was about 1.5 showings per listing. We are well into November and while I am typically preparing for a slowdown this time of year, there is no sign of that yet. In fact, I am busier than ever.
As a practicing Realtor, I can honestly say that 2006 was the last time I was this busy with activity in November. Remember 2006? Of course its easy to be busy and not have any sales going on. That’s not the case. Maria and I had closed about 25 sales year to date at the end of October. We have 11 closings in escrow for November and December and we are confident that we’ll add a few more to that before the year is over. Needless to say, we are thrilled. (By the way, several of those closings involved multiple offers on a single property.)
I wish I could say that its just me and that I’m the world’s greatest Realtor bucking the trends in a sour economy. But the truth is that whenever my sales are sluggish, I talk to my peers and I hear the same thing. When sales pickup, its the same story. The media is still reporting gloom and doom but out in the trenches, its a different story. Oh, what a great time it is to buy.
Last week I had the opportunity to hear Dr. Lawrence Yun, Chief Economist of the National Association of Realtors, speak to our local association about the national outlook for real estate. Much of what he said supported what I’ve been blogging about for months now. But he shared even more great data that have gotten me even more fired up about real estate. Here are a few key bullets points that I found to be compelling…..feel free to email me for more details.
1) Home prices vs rent ratios have quickly shifted to the point where it is less expensive to buy than it is to rent. There are a number of reasons for this. But the important point here is that smart money is buying real estate because it produces a cash return on investment. If a landlord’s rental income covers expenses and there’s still money left over, there is profit. What’s the return on a savings account right now?
2) Back in 2002 when the market was “normal”, Fannie Mae mortgages written in that year had a default rate of 3.1% (after 18 months). This means that 3.1% of the mortgages made that year defaulted in that time period. In 2007, that default rate skyrocketed to 28.7%!! That is why there are so many foreclosures in inventory right now. However, the default rate for mortgages made in 2009 was only 1.9% which is far below what it was in normal times. Again, there’s good reason why this has happened. More importantly, this means that in a few years the foreclosures will dry up and homeowners will be rock solid. This is very likely to lead to a very strong economy in the not too distant future.
3) Inflation is on the rise for sure. Real estate has always been a hedge against inflation plain and simple.
I believe that we are on the brink of a tremendous upward trend in real estate both nationally and in Charlotte. Yes, there is still foreclosure inventory yet to be released to the market. That could hold prices down for a while longer. I also think that there is a lot of cash out there waiting to be invested, but consumer confidence is still low. To me, this just means that there is still opportunity to buy low before things take off again. Oh, there is opportunity right now but how much longer will it last?