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Real Estate Interview
Riley says region's growth will carry it through realty slowdown
Despite some warning signs, the president of the region's largest real estate company says he remains bullish about Charlotte's ability to withstand the pressures pummeling much of the country's residential marketplace.
Pat Riley, president and CEO of Allen Tate Co., told Business Today that the fundamental qualities of the Charlotte region will continue to attract people and companies. Moreover, the planned increase in conforming mortgage limits will provide a boost to more expensive homes.
The proposed U.S. economic stimulus plan would make refinances-and outright purchases-easier for borrowers looking to finance more than $417,000.
If passed by Congress, the new limit of $625,000 would encourage activity in a segment of the market that has begun to slow down.
Riley called it "fantastic" news, in an interview with Business Today editor Dave Yochum. Here's what Riley had to say about several real estate-related subjects:
Business Today: Will the Charlotte market continue to be immune from what's happening to the residential market nationally?
Riley: "We're in a very, very good place. North Carolina is in a very good place in that we are creating jobs organically from very good companies that are here, plus we are in a great position in terms of recruiting companies from around the world. That's one piece of it. We are very fortunate in that we are attracting retirees and attracting folks from around America, who do not want to wait for another real estate cycle to take their equity out, and find a place where they are going for quality of life, or price of housing. A lot of the time, that stick pin is going to the Charlotte region. Last but not least, the young people are enamored with our area, coming and finding a job, bringing their parents and then their grandparents. Put it all together, it's a heck of an engine."
Business Today: It sounds as if there is an entrepreneurial or consultant segment that is attracted to our region in particular.
Riley: "These are folks that, many times, all they need is an airport because they are a consultant or a national sales manager."
Business Today: There are signs things are slowing down even in our fast-growth areas.
Riley: "Is it as rambunctious as it was in 2005 or 2006? No, you might call it the paralysis of the analyst. People are sitting on their hands and sharing their dilemmas around America. Some parts of the country are not creating jobs, or still adjusting from an over-inflated market. Some parts are still suffering from the sub-prime meltdown more than others. That negativity on the residential side of the equation, coupled with the volatility of the stock market, causes people to take a time out, even though we have all those good things going for us."
Business Today: So there aren't enough buyers.
Riley: "The biggest challenge is people not being able to sell their homes to get here, plus we have over-built some of our price points. Toward the last couple of years, most of America's builders came here…and, in some price points from condos to homes priced at more than $1 million."
Business Today: How about The Peninsula and The Point?
Riley: "Of all the Charlotte region, that northwest flank over to Mooresville was our healthiest marketplace, because of that beautiful natural feature called the lake. What you have is that market being attractive to that guy from all around the country, coming down the back side to get to the airport. There are also many people who work in Winston-Salem, many people who look at that community as a destination. It feeds multiple markets, more so than South charlotte or Weddington."
Business Today: What sub-markets are doing best?
Riley: "Mooresville and Lake Norman are the hottest. University and Cabarrus have more housing in the low to mid price points, which have a tendency to have more inventory to work through, longer days on the market."
Business Today: What about the upper-bracket buyers? What is their mood?
Riley: "That $750,000 to $1 million buyer…they sit on their hands, too, if their investments seem volatile. These buyers have more discretion in saying 'when should we' or 'when shouldn't we.' It allows them to do it when they are ready."
Business Today: You're saying there are buyers out there, no matter what?
Riley: "A home today in any price point that is memorable will sell. It might take a little longer. This will be one of those years where we're all going to say 'we should have.' People today should be refinancing or they should be moving. It is a great buyer's market."
Business Today: But what if you have to sell a home?
Riley: "If you have to sell and you can go on and purchase at a [good price], what difference does it make?"
Business Today: The proposed change in the conforming (non-jumbo) mortgage limit to $625,000 is good news.
Riley: "It is fantastic news for all of us because as you know, the number of investors that are lending has shrunk. This brings a lot more opportunity back into the marketplace for more borrowers who have good credit and have good jobs. Remember, when you talk about Miami, or Detroit, even in those areas, 90 percent are paying their mortgages. The most Americans in history now own their own homes."
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