Whether its the typical seasonal bump or the start of recovery, real estate sales in the Charlotte area are picking up.  Ok ok, don't pile on me yet.  There are still thousands of homes in inventory that remained unsold, still hundreds coming across the court house steps, but buyers are buying like they haven't in well over a year.  Fueled in part by low interest rates and the $8,000 first time buyer tax credit, the lower-end of the market is beginning to pick up steam, which helps to fuel the higher price point.  As will be posted over the next week, April was the best month for real estate sales throughout the Charlotte area since September.  That's not saying as March / April are the typical beginning months for real estate sales but considering the shape of the economy, that's saying a whole lot. 

However, the economy isn't recovering fast enough.  Credit the microwave with our fascination with having things done quickly but I guess those in Washington thought we would be out of recession by now, home prices would have recovered, at the unemployment rate would be back around 5%.  So, this past week, the HUD secretary goes before the National Association of Realtors and announces that "first time buyers" (anyone who has not owned a home in three years) will be eligible to use their up to $8,000 tax credit for their down payment.  This news is quietly sending shockwaves throughout the real estate community for the potential this has for sales. 

When the first time buyer tax credit was introduced first in 2008, it had a repayment penalty of $500 a year for 15 years.  It was also capped at $7,500.  This was poorly concieved because today's buyers occupy a home for less seven years.  Then in 2009, the credit was increased to $8,000 and the repayment penalty was eliminated so long as the buyer occupied the home for 3 years.  However, one aspect of the credit that was overlooked is that it could not be used for a down payment or closing costs.  The buyer would have to pay those fees from their own savings at closing, fill out a form with the IRS and wait for their refund / tax credit to arrive.  Many from our industry had been demanding for that oversight to have been changed to really spur sales and soon it will be. 

In the coming days / weeks, the FHA will allow first time buyers to use the credit for down payment.  While in some markets, $8,000 would barely scratch the surface of what it costs to purchase a home, here in Charlotte area the impact could be quite substantial.  In the market currently, sellers are receiving on average 90% of their asking price, which includes paying for a buyer's closing costs (roughly 3% of the sales price).  Once past, a buyer can negotiate the same deal with the seller to get them to pay the buyer's closing, use the credit towards their down payment, and get into their new home for next to nothing out of pocket.  Buyer's purchasing homes priced below $225,000 would actually have tax credit money left over. 

For the Charlotte area, this could trigger a substantial real estate bump that should last throughout the program's end on December 1, 09.  This bump will cause a ripple effect throughout the market as move-up buyers will finally be able to sell their homes to buyers utilizing the program.  

This could be really really big. 

Charlotte Real Estate