Ballantyne Real Estate Market – Are Foreclosures Hurting Your Home’s Value?

Ballantyne, NC – Ballantyne Scoop would like to welcome their newest contributing partner Josie Mazzaferro. Josie is a licensed Realtor® with Allen Tate’s Ballantyne office. She lives in the Touchstone neighborhood and loves walking on the Four Mile Creek Greenway with her little black poodle, Pepe le Piu, and her beagle/basset hound mix, Sabaka. Josie loves to help clients better understand the entire real estate process. Please feel free to send your real estate questions to Josie.Mazzaferro@allentate.com and Josie will either respond to you directly or respond in an upcoming column.

Josie’s first column deals with an issue that has been sent in repeatedly to the Scoop: the impact of foreclosures on the Ballantyne real estate market. You can keep up with Josie on facebook by clicking here.

“How’s the real estate market? Are there a lot of foreclosures out there?” These are some of the questions I routinely get when I tell people that I am a Realtor ®. There is no doubt that the real estate market is tough right now and yes, there are a lot more foreclosures out there than there were back in 2007. However, Ballantyne is not as hard hit with foreclosures as Northwest Charlotte. There are two main reasons why Ballantyne home prices are going down: the tight credit market and the basic principle of supply and demand.

The tight credit market means that it is now harder for potential buyers to obtain a mortgage. During the market peak, buyers could obtain a mortgage with no documentation to verify their income and their assets, and credit scores below 600 were still acceptable to a lender. Lending standards are now higher, and generally, a buyer needs to have a minimum credit score of 620 to buy a home. Lenders are also verifying all sources of income and ensuring that buyers can afford to make the mortgage payments. These higher lending standards have reduced the pool of potential buyers, and therefore, decreased demand.

The slow economic recovery is creating another issue: an increased supply of houses. If you watch a business news channel, you might often hear the question “Is this a jobless recovery?” Regardless of how you would answer that question, it points to a key piece of data: the unemployment rate. At the beginning of the recession, the unemployment rate trended downward at a dizzying pace as the tightening credit markets made it difficult for businesses and they were forced to cut costs by laying people off. More and more people became unemployed and remained unemployed for several months. Some found a job in a different city or state, and needed to move. Some people could no longer afford their mortgages and decided to downsize. Others needed to sell short or were foreclosed upon. All of these situations combine to create a large supply of homes on the market.

When supply exceeds demand, prices fall, and that is why Ballantyne area home prices have decreased over the past two years. This has been especially true in the neighborhoods that have higher price point homes. There were 301 home sales that closed in the Ballantyne area from April 1 through July 31. The median sales price of these homes was $272,000 and the median days on the market was 72.

Another buzzword typically discussed by the media is “shadow inventory”. These are homes that are either in pre-foreclosure or are bank-owned but not on the market. In a search of all foreclosure activity in the Ballantyne area as of August 2, there were a little over 250 properties. About 80 were bank-owned, and the rest were in “pre-foreclosure”, which means that the owner is behind on mortgage payments and the lender has begun foreclosure proceedings. Once foreclosure proceedings have begun, it still can take several months before the property actually foreclosed upon. Some of these houses may currently be on the market, but many are not. These properties do present a future risk to Ballantyne home prices, as they might come on the market as short sales or bank-owned sales in the future. However, these homes are distributed throughout the various Ballantyne neighborhoods. Statistically, only a small percentage of homes in each neighborhood are in the foreclosure or preforeclosure stage. So, it’s not the foreclosure per se that is causing home prices to fall. It is the oversupply of homes that is causing the home prices to fall.

If you would like to receive monthly e-mail updates of market activity in your particular neighborhood, just send me an e-mail at Josie.Mazzaferro@atcmail.com with your name, address, and subdivision name. I would be happy to send these updates to you each month and answer any questions you might have.

The opinions expressed in this article are those of Josie Mazzaferro, and do not necessarily represent the opinions of the Allen Tate Company, the Carolina Multiple Listing Service, or the Charlotte Regional Realtors Association.