The most recent monthly Standard & Poor’s/Case-Shiller Home Price Index was published on December 30 and shows an index of house prices month-to-month. It lags a couple of months, so this time we got the October, 2008 numbers. It is broken down by major metropolitan areas that include the Charlotte area. It showed a drop from October of 2007 to October of 2008 of 4.4%. The previous 6 months have also shown similar declines. For the sake of comparison so you don’t feel too “rained on”, San Francisco dropped 31 % and Phoenix dropped 32.7%. Only Dallas was better than Charlotte at a 3% drop. You can see these numbers at the Standard & Poor’s site HERE. Note that they are in Excel spreadsheet format. There are some useful market commentaries there, too.
When I first started in real estate some years ago, we often quoted a figure of 4-5% price appreciation per year in the Charlotte area. Mortgage money was easy and lots of people were buying houses, effectively bidding them up. Fortunately for us, we never got into a truly overheated speculative situation like we saw in San Francisco or Phoenix where normal working folks were being priced out of the market by speculators. That’s one of the downsides of a big “UP” market. In hindsight, we also have figured out that much of the statistics back then were driven by people getting loans who really should not have been in the housing market. Their financial strength and stability was just not strong enough to justify a mortgage loan, but for a variety of reasons, the lenders kept signing off on the mortgages. This was really not a good situation and one that in hindsight we wouldn’t want to sustain.
My point is (and I do have a point) that when we compare recent sales to previous sales that came from an environment that was not financially healthy, we really shouldn’t complain about the recent drop in prices. They simply represent the adjustment of the market back to more solid footing that we should have never left. Obviously, if you are being hurt by this situation, that’s small comfort, but for the health of our long term economy, this process is unavoidable.
If I have to go through it, I’d rather do it here in the Charlotte area than in San Francisco or Phoenix!
