North Carolina Housing Market: Experts Take “Wait and See” Approach
Those “for sale by owner” signs in neighbors’ yards will determine the direction of both North Carolina’s economy and the state’s cash flow, legislative economists told state lawmakers Tuesday.
“The real estate slowdown has finally arrived in North Carolina,” said Barry Boardman, economist for the General Assembly’s fiscal research division, during a briefing for legislators.
According to the Charlotte Observer, the area’s real estate conveyance tax collections went from 21 percent growth in January through March of last year to 2.2 percent growth for July-December.
But the National Association of Realtors tells the Observer that North Carolina has good reason to be optimistic, as a slowdown in the Tar Heel State won’t look like steep drops in some other states.
Sales of existing homes in North Carolina defied national trends in 2006, increasing 3 percent overall compared with 2005 sales, according to statistics recently released by the N.C. Association of Realtors.
The average existing home price statewide also was up: 2 percent in 2006 to $214,952, according to the association. Charlotte mortgage demand remained high, as the city showed 13 percent sales increases, while agencies in coastal N.C. areas reported drops, mostly due to declines in second-home sales.
The North Carolina housing market is the biggest uncertainty as far as the state’s finances are concerned over the next year. The severity of the real estate decline will sharply influence the overall economy and the amount of overall tax dollars flowing into the state.
Real estate will drive the economy for three reasons:
- North Carolina’s market has been holding up better than other parts of the country. That continued growth was offsetting damage from rising energy costs and rising rates on mortgage loans.
- Housing sales affect not only the construction industry, but other businesses altogether, such as furniture and appliance sales.
- Lastly, property sales, home loan refinancing and home equity loans all gave consumers huge amounts of money to pump into the economy.
The good news for the state is that economists projected very conservative growth this year and, with the exception of resort property and new urban mansions, North Carolina hadn’t experienced the sort of real estate bubble seen elsewhere. It doesn’t have as far to fall.
Charlotte already is showing signs of a potential rebound. Contracts and closings rose in January over the previous year after two months in which one or the other indicator fell, and North Carolina mortgage rates are low - and demand is at high levels - throughout the city.