Sep 22, 2009

Urban Living – Unmatched Choice and Value

These are challenging times for residential real estate and the Center City has not been spared. However; there’s no better time for home buyers, yearning for the urban lifestyle, to find opportunities for great value and wide variety in the market. Their interest in Center City condos is still strong; and, in fact, the momentum for seeking walkable, urban living continues to build in cities all over the country.

However, the combination of rising unemployment and tightening credit has limited potential buyers’ access to mortgages. This combination has suppressed market demand for the time being. This stifled access to the market appears to be a combination of macro economic forces and not a negative reaction to the higher density housing product or the urban lifestyle.

Behind these market forces and demographics appear to be a strengthening demand for Center City housing over the next two decades. Urban living preferences are stronger among households without children. According to research by Chris Lineberger, Visiting Fellow at the Brookings Institution, this demographic has grown from 50% of the U.S. population in 1950 to 66% today. And, childless households are projected to grow to 80% of all U.S. households by 2030.

We recently completed the “Center City Residential Real Estate Study”, which analyzed residential closings in Uptown over the prior 13 years. This research found that Center City home owners have enjoyed strong investment returns as sales per square foot have increased, on average, 9% annually since 2000. We believe that this solid performance is due to some buyer’s desire for the uniqueness of the urban lifestyle as well as the structural constraints on land supply and therefore, on housing in the center city. Additionally, according to Carol Coletta of CEO’s for Cities, during this recession, center city residential real estate has held its value in comparison to its non-urban counterparts. The key to this success has been the walkability or pedestrian-friendly nature of urban places. A new study shows that homes in walkable areas are worth more. “Walking the Walk: How Walkability Raises Housing Values in U.S. Cities” by Joseph Cortright, analyzed data from 94,000 real estate transactions in 15 major markets provided by ZipRealty and found that in 13 of the 15 markets, including Charlotte, higher levels of walkability, as measured by Walk Score, were directly linked to higher home values. Visit www.walkscore.com for more.

In analyzing housing, the difference in how these markets behave must be factored in. Nearly 88-percent of homes inside the I-277 loop are condominiums . Due to greater land costs, high-rise condo towers especially require more density to meet capital return goals; therefore, these projects take longer to build (up to three years), have longer sales cycles and create “forward supply” as they are built. This forward supply is strategically released by the developer to balance market supply and demand for condominiums. This is demonstrated in today’s market conditions where there are only 151 units that are available in Uptown to close and made ready for occupancy.

Through analysis of absorption and supply in the Uptown condominium market, we have determined that our market will absorb, on average, 250 new condominium units per year, and this should trend higher over time as we recover from the economic downturn. Due to the construction lead time of Center City condominium projects, we believe it is optimal to have two years of forward supply available. Under this assumption, we hope the market will absorb today’s excess forward supply inside the next year and return to equilibrium.

Center City offers a unique lifestyle that cannot be replicated anywhere else in the Carolinas. The combination of entertainment and hospitality options and sustainable / walkable living offers a special choice. Our residents enjoy restaurant and play openings, world-class museums, live music, and movies as well as the Panthers, Bobcats and the new NASCAR Hall of Fame - all within walking distance of their front doors and without ever getting in their cars.

If you are curious about exploring this unique opportunity to experience all the Center City has to offer right at your doorstep, we have a great way for you to check it out. Center City Partners is organizing an Urban Living Showcase on September 25 and 26 when you can sample the nightlife, see live entertainment, take bus and skyline tours to various for-sale and for-rent properties, and learn about your city. Try Urban Living and see if it fits! Don’t miss this unique opportunity to discover incredible values and greater options than ever before. Find details at www.FindYourCenter.com.

Categories: Business, Charlotte Center City Partners, Development, Lifestyle