It's a 🔥🔥 seller's housing market

Plus: Which Charlotte companies received 2nd round of PPP payments?; McClatchy approved for $10M PPP payout; Developer buys whole 2.6-acre block in Midtown; 'Exotic cereal bar' headed to uptown

Good morning! Today is Wednesday, March 31, 2021. You’re reading The Charlotte Ledger, an e-newsletter with local business-y news and insights for Charlotte, N.C. This post is sent to paying subscribers only.

Buyers face limited choices, soaring prices, higher fees; A snap decision in Villa Heights, campouts in Steele Creek

Tom Levin (right) was one of the first house hunters to get a showing at this 1921 Villa Heights home when it went on the market last week. He decided to pass on it after seeing it with his Realtor, Julie Taché (left), but it went under contract just hours after the seller’s deadline for submitting bids.

by Cristina Bolling

Julie Taché slips a key into the mustard yellow door of a 1921 Villa Heights bungalow, and with a tight 25-minute clock ticking, she and real estate client Tom Levin size up the handsomely remodeled 3 bedroom, 2 bath 1,475 s.f. home. Asking price: $479,900.

They admire the high ceilings and charming backyard, and when they walk back out the front door exactly 25 minutes later, another Realtor and two clients are waiting on the front porch.

Taché locks the door and slips the key back into the lockbox as the the next Realtor taps on her phone for the code to open it back up.

This house hit the market in the morning, and Realtors and buyers will be bumping up against each other all day for the chance to get inside and make an offer before the following day’s 10 p.m. deadline. Without a doubt, the sellers will have multiple offers to pick from.  

Across Charlotte, this exact scenario is playing out at the alarmingly few homes that have “for sale” signs dotting their lawns.

Red-hot sellers market: Charlotte’s real estate inventory has sunk to what experts say is an all-time low, with just 1,193 homes for sale in Mecklenburg County as of last month, according to the Canopy Realtor Association.

That’s just 18 days worth of inventory, when a balanced market should have a 5- or 6-month supply of homes.

Realtors like Taché are frazzled. Buyers are wringing their hands at the thought of overpaying. Sellers are delighting as they analyze mountains of offers, many of which are coming in higher than banks’ appraisals.

As Taché and Levin stand on the freshly pebbled front walk, Levin has a decision to make.

If he wants this house, he’ll need to make an offer before the next day’s deadline, at well over asking price. He already missed out on a house he liked a few weeks back when a seller turned down his offer. He later learned that he lost out on the home to a friend.

Levin does a quick gut-check. The layout isn’t quite what he wants, so he tells Taché he’ll pass.

The yellow door opens back up and the next group rushes out. One of the house hunters slips on a painted brick step and lands on her backside.  

Taché checks to be sure she’s OK, then checks her watch — she has 45 minutes to make it to her next appointment with another buyer in Rock Hill.

Levin asks Taché if they can see another house he’s been eyeing nearby that hits the market the next day. “Text me the address,” she says, and they make a plan to meet.

Camping for homes is in, letters are out: Taché owns her own boutique real estate firm, Homes With Cachet, and in her 18 years as a Charlotte Realtor, she can’t remember a time when the real estate market was this nuts.

The 2005 to 2006 years were close, she recalls, when she bought her own home as a foreclosure. But now, foreclosures and short sales are in short supply, and interest rates are far lower.

The internet also wasn’t a key part of home-buying back then like it is now, with apps like Zillow making shopping for houses an activity you can do from your couch, and sellers able to market homes on Facebook and Instagram.

Social media spells out the frenzy.

In Taché’s Facebook feed, a giddy new townhome community agent congratulates prospective buyers who camped out overnight — one couple for two nights — earlier this month to be first in line to put down deposits on new $200,000 to $300,000 townhomes in Steele Creek.

The market has been changing in other ways these last few weeks that may seem small but are significant:

  • Due diligence fees, which are non-refundable sums paid by the prospective buyer to the seller to compensate them for taking their home off the market when the home goes under contract, have skyrocketed. Fees that were once $500 to $1,000 are now often in the range of $5,000 to $10,000.

  • Taché is seeing more homes listed with the phrase “back on the market, no fault of the seller,” often because homes are appraising for less than their sale price, or an offer was made too quickly before they knew they could get through underwriting.

  • And those emotional letters prospective buyers sometimes write to sellers with the hopes of pulling on their heart strings to accept their offer? Taché says she’s noticed in recent weeks that more Realtors are including the phrase “no buyer letter to seller will be received or communicated” in their notes on a listing. (She avoids those letters at all costs for her buyers and sellers, she says, because they’re fraught with potential Fair Housing Act violations.)

No more deal-sweeteners: Taché heads out of Villa Heights in her black Acura MDX and cruises down I-77 to a new home community in Rock Hill, where Corey and Raegan Anderson are days away from closing on a new 4-bedroom, 3-bath home with a 3-car garage and a big white kitchen.

Taché has Housemaster inspector Mark Crawford doing a new-home inspection, and as he finishes up his report, Raegan Anderson excitedly describes about how she drove past the home site one day and saw a blue heron taking off from a lake behind the house.

“I knew instantly it was our house,” she says.

Raegan Anderson (left, holding 1-year-old Baylor) and her husband, Corey scooped up this under-construction 4-bedroom home in Rock Hill just after it went on the market after its previous buyer backed out. Realtor Julie Taché (right) says she’s selling more new homes these days because so few existing homes are on the market.

 A sizeable percentage of the homes Taché is selling these days are new construction — partly, she says, because that’s all that’s available that checks off her buyers’ boxes.

The Andersons were quickly outgrowing their small Rock Hill home, and couldn’t seem to find an existing house to fit their move-in-ready desires and space requirements. They drove past this home under construction in January that had just hit the market when a buyer backed out, and put down a deposit within days.

Crawford takes Taché and the Andersons through his report. Two project managers with the builder, H&H Homes, show up to see how the inspection is going. They’re hustling, too — they have double the number of homes under construction right now that they normally have in progress, they said.

Demand is so high, they said, that they don’t sweat if a buyer wants to back out of a contract.

Taché nods her head.

In other times, builders would sweeten the deal for buyers by tossing in free appliances or window blinds.

None of that is happening now.

Aiming for the ‘win-win’: But so far, the Anderson’s home purchase seems bound for smooth sailing. Nothing big turned up on the inspection, and the builder seems open to fixing the things that were wrong.

Their current home, a 3-bedroom about 20 minutes away, sold in a day for about double what they paid for it seven years ago, and they’ve scheduled back-to-back closings for one day next week.

“We can’t wait,” Raegan Anderson says.

Taché makes plans to come back in three days for the new home orientation with the builder, when she’ll check on any last-minute fixes that need doing before closing.

Until then, she’ll be busy lining up showings for other clients who’ll need to be ready to pull the trigger if they see a home they love. And she’ll be coaching sellers on how they’ll evaluate the spreadsheets of offers she’ll be putting before them.

“I tell my clients ‘there’s a karma to real estate,’” she says later, as she drives home from another client appointment. “The most successful transactions are the ones where everyone realizes that this was a collaborative effort. … everybody had to do a little give and take. The sellers are doing a little less give right now, but if the buyer feels like, ‘I got the house I wanted and I’m thrilled about it’ and the sellers are happy, it is a win-win.”

Cristina Bolling is managing editor of The Ledger:

Next week in The Ledger: All-in on entrepreneurs

Editor’s note: With Good Friday and Easter approaching, this will be our final regular Ledger this week. Next week, we’re doing something a little different, exclusively for our community of paying subscribers. It will be CMS spring break, many of our readers are traveling and it’s traditionally slow for big news.

In place of regular newsletters next week, we will bring you what we’re calling “Entrepreneur Week” — articles and Q&As with owners of Charlotte companies and others with interesting and helpful stories about starting and building businesses. We think you will like it. Our regular editions will return April 12.

2nd round of PPP loans: What Charlotte companies are on the list?

Some of Charlotte’s most notable restaurants, breweries, nonprofits and churches are among local businesses approved for payments in the second version of the federal government’s Paycheck Protection Program.

Nearly 700 Charlotte companies applied and were deemed eligible for payouts of $150,000 or more, according to a Ledger analysis of Small Business Administration data. More than 15,000 Charlotte small businesses received money in the first installment of the PPP program last year, we reported in December. The list from last year included companies “in industries that seem to be recovering just fine, such as commercial real estate, homebuilding, hardware stores and gun shops,” we wrote.

The government tightened the requirements for the 2021 version of the PPP and required businesses to show that their revenues dropped by 25% or more. Previously, they had to attest only that their business suffered economically because of Covid.

You can also use the amounts of the PPP payments to get an estimate of the businesses’ payroll costs, since the maximum amount is 2.5x monthly payroll (3.5x for restaurants).

Some of the more recognizable names OK’d for payments in the PPP’s second round (with total amounts) include:

➡️ Restaurants: Amelie’s Holdings, $1,749,300; Beef N Bottle, $429,572.50; Bulla (SouthPark), $414,662; Cabo Fish Taco (NoDa), $437,167.85; Common Market, $163,802; The Crunkleton, $372,183; Fahrenheit, $888,930; Goodyear House, $414,963; Kings Kitchen, $247,061.64; Lebowski’s, $259,203; Mama Ricotta’s, $715,100; Midwood Smokehouse of Birkdale, $397,800; Rooster’s (SouthPark), $698,068.17; Suffolk Punch, $457,210; Thomas Street Tavern, $288,000; Yafo (SouthPark), $315,000.

➡️ Breweries: Heist Brewing Co., $598,934; Lenny Boy, $221,140; Olde Mecklenburg Brewery, $1,461,873; Resident Culture Brewing, $215,039.51; Sugar Creek Brewing, $160,141; Three Pillars Brewing, $271,986; Wooden Robot, $352,800.

➡️ Houses of worship: First Baptist Church, $374,002.50; Forest Hill Church, $1,739,700; Myers Park Baptist Church, $245,575; Temple Beth El, $282,056; Temple Israel, $160,782.

➡️ Real estate/architecture/building: Alan Simonini Homes, $680,940; MPV Properties, $604,947; ODA Architecture, $361,472; Odell Associates, $834,412.

➡️ Cultural: Mint Museum of Art, $776,145; Museum of the New South, $208,542; Opera Carolina, $188,915.80.

➡️ Youth sports: Charlotte Soccer Academy, $661,550; Girls on the Run International, $640,455.

➡️ Nonprofits: Charlotte Sports Foundation, $156,984; Council for Children’s Rights, $318,600; Girl Scouts Hornets Nest, $387,500; Habitat for Humanity Charlotte, $1,628,952; Mecklenburg County Council Boy Scouts, $521,952.50.

➡️ Other: BooneOakley, $284,500; Central Intercollegiate Athletic Association, $162,000; Providence Eye and Laser Specialists, $245,575; Southminster, $1,911,845; Victory Chevrolet, $1,043,747.40.

We put the full spreadsheet of Charlotte businesses approved for PPP loans of more than $150,000 on our supplemental website. The complete national data is available from the Small Business Administration (click on “all data”).

Previous data releases have had occasional errors. Last week, Congress extended the deadline for applying for PPP money until May.

Related Ledger article:

The Observer’s parent company, owned by a hedge fund, keeps quiet about $10M government payment

The Charlotte Observer’s parent company, The McClatchy Co., was approved for a $10M payout from the federal government under the Paycheck Protection Program, according to a review of PPP records by The Ledger.

The newspaper chain hasn’t announced the money or explained its participation in the program — even though journalism ethics experts say that’s a good idea.

McClatchy is one of several big newspaper chains approved for federal funds in the second round of the program. Big newspaper companies were ineligible in the first round of funding in the spring. The PPP is a federally backed loan, but the loans are forgiven if companies use them for payroll and other approved business expenses.

Other big newspaper companies have publicly acknowledged the government payments. The Los Angeles Times announced last week that it had received a $10M PPP payment, the maximum allowed under the program. And the parent company of the Minneapolis Star-Tribune said this month it received the same amount.

McClatchy has made no such public announcement. One of its papers, the Miami Herald, acknowledged the company had been approved for a payment about halfway through an article this month about associates of former President Trump receiving PPP loans. The program is intended to help small businesses that have suffered financial losses during the pandemic.

Rhonda Gibson, who teaches media ethics at UNC Chapel Hill’s Hussman School of Media and Journalism, said media organizations receiving government money should provide “transparency and accountability” to their audiences: “If the news organization is covering the ongoing Covid relief funding efforts, which I assume most are, then I would expect the explanation to provide details about how they are managing that potential conflict of interest.”

In Charlotte, The Observer has reported previously on large companies receiving PPP payments. A May 2020 article, for instance, was headlined “Foundation for the Carolinas gets $2.3M federal stimulus loan.” It said:

The PPP was created to be a lifeline for small organizations struggling financially during the new coronavirus pandemic. But big firms like Ruth’s Chris Steak House generated controversy when they secured loans while many small businesses missed out. …

The program’s ticking clock and limited supply of money have raised questions about whether the neediest companies are the ones benefiting.

The most recent PPP data, available in a spreadsheet on the Small Business Administration’s website, shows McClatchy was approved for a $10M payment on Feb. 21 through PNC Bank of Delaware. Asked about the payment, the woman listed on McClatchy’s website as a spokeswoman told The Ledger in an email: “Unfortunately, we are in between Communications people and aren’t able to comment at this time.”

McClatchy, based in California, is owned by the New Jersey-based hedge fund Chatham Asset Management, which purchased the company out of bankruptcy in September for $312M.

The newspaper chain’s reporting has at times been critical of some recipients of PPP payments with questionable financial backgrounds: “A number of the businesses have owners with troubled financial pasts, including some with multiple personal bankruptcies,” McClatchy’s Washington bureau wrote in September. —TM

Development heading toward new med school? Pappas Properties buys a whole block in Midtown

Pappas Properties on Tuesday closed on 6 single-family homes in Midtown, a move that gives it ownership of an entire residential block between a new office building and the planned location of the Atrium Health-Wake Forest medical school.

Property records show that the purchases, totaling $4.9M, give Pappas control of the entire Kenilworth Avenue side of Greenwood Cliff and Harding Place. Its holdings on that block, all contiguous, total 2.6 acres. That would be sufficient for something pretty big … if somebody thought building commercial property between a new medical school and a growing hospital were a good idea. It’s zoned for office (O-2). —TM

In brief

  • Epicurean lot sells: The vacant lot on East Boulevard in Dilworth, home to Christmas tree lots and the old Epicurean restaurant, has been sold. Property records show Selwyn Property Group closed on the purchase of the 1-acre site at East Boulevard and Scott Avenue on Tuesday for about $5.1M. Selwyn Property Group had the land rezoned last year to allow for a building as high as 85 feet that could accommodate 170 residential units or 80,000 s.f. of office space, plus a parking garage. The Ledger was the first media organization to report the land was under contract, in February 2020.

  • Pool company HQ heading to Charlotte: A New Jersey manufacturer of pool equipment is moving its corporate HQ to Charlotte. Hayward Holdings has 90 people in its New Jersey office but will move most of those jobs to Charlotte, with some heading to a manufacturing plant near Winston-Salem. The company’s CEO said in a statement that the move would “result in long-term cost savings” and place it closer to customers and its plant. It’s a publicly traded company with $875M in annual revenues. A spokesman told The Ledger that the company is “still evaluating sites” in Charlotte.

  • Robinhood to open Charlotte office: Financial technology company Robinhood confirmed Tuesday that it’s heading to Charlotte, with plans to add 389 jobs by 2025. The California-based company, which has a no-fee trading app, could receive nearly $4M in state and local incentives. It’s expected to open its Charlotte office in September at 650 South Tryon, part of Lincoln Harris’ Legacy Union development uptown. The Ledger was the first to report Robinhood’s impending arrival last week. (Biz Journal, subscriber-only)

  • Med school rezoning: As expected, Atrium Health filed a rezoning request with the city this week that gives more details on its proposed Wake Forest School of Medicine campus in the Dilworth/Midtown area. It proposes an entrance to Baxter Street from Morehead Street and would allow for 1.3 million s.f. of commercial space, 150,000 s.f. of office, 1,000 apartments and 600 hotel rooms — although Atrium might choose not to have all those elements on the site.

  • Trains to north Mecklenburg: There’s railroad track already there, and two decades of plans — so why is there still no commuter line to northern Mecklenburg County? Writer Mary Newsom takes a deep dive into the twists and turns of the still-unbuilt Red Line that’s well worth the time. (UNC Charlotte Urban Institute)

  • Tillis cancer diagnosis: U.S. Sen. Thom Tillis said this week he has been diagnosed with prostate cancer and will soon have surgery. “Next week, I will have surgery in North Carolina to treat prostate cancer. I am in the hands of outstanding medical professionals and expect to make a full recovery,” Tillis, 60, wrote in a statement. (WBTV)

  • DiMicco parting ways with soccer team? Former Nucor CEO Dan DiMicco is considering selling his majority stake in the Charlotte Independence pro soccer team, the team said this week. In the last year, activists had denounced DiMicco following what ESPN called “incendiary” posts on Twitter. In an interview with the Business Journal, DiMicco said news of a sale is “not new” and that “this idea that I’m a racist is garbage.”

  • CMS summer learning camp: Charlotte-Mecklenburg Schools is offering students who fell behind during the remote school year a free six-week summer “camp” that will include learning and physical activity. The camp will run Monday through Thursday beginning June 14 and is aimed at K-12 students who need help in reading, math and science — including students learning English and students with disabilities. (Observer)

  • Pass the popcorn: The Regal movie theater chain announced reopening dates for its Charlotte-area theaters. Regal Stonecrest at Piper Glen 4DX, IMAX & RPX will reopen April 16, followed by Regal Birkdale in Huntersville and Regal Starlight in Charlotte on May 7, Regal Phillips Place in Charlotte on May 14 and Regal Cinebarre Arboretum in Charlotte on May 21. (Observer)

  • Podcast on N.C.: The producers of the hit podcast series “Serial” have teamed up with The New York Times on a new podcast looking into voting fraud allegations in Bladen County, N.C. The new 5-episode podcast, “The Improvement Association,” debuts April 13. (New York Times)

  • Museum reopening: The Charlotte Museum of History will reopen its modern museum building and exhibits June 12 with the museum’s free annual African American Heritage Festival. New in-person exhibits are coming this summer, including an exhibit about the history and significance of the historic Siloam School and the relaunch of an art exhibit by Chas Fagan.

  • Finally, a cereal bar: What’s being billed as Charlotte’s “first exotic cereal bar” plans to open next month in uptown. The founder says when he moved to Charlotte a year ago, “I saw that it was missing a nostalgic cereal shop.” Day & Night Exotic Cereal Bar will feature “classics like Froot Loops and Honey Nut Cheerios” and “more exotic cereals offered in countries around the globe.” Bowls are $7. (CharlotteFive)

Calling college journalists — intern with The Ledger team!

Do you know a college journalist with some reporting and writing know-how who’d like to learn from longtime Charlotte writers and work at one of the most dynamic new media companies in Charlotte?

The Ledger is seeking applicants for two part-time reporting internships — one as a reporting intern this summer, and another for the 2021-2022 academic year.

You can find the particulars of what they entail and what’s needed to apply here for the summer and here for fall. They come with a modest stipend. (This is journalism, not investment banking.)

The Ledger is a fast-paced news organization that values smart thinking, original and timely story ideas and an openness to improvement and innovation. Know someone who might fit the bill? Share this newsletter!

Programming note: Ledger editor Tony Mecia appears as a guest on 90.7 WFAE at 6:40 a.m. and 8:40 a.m. on Thursdays for a discussion of the week’s local business news in the station’s “BizWorthy” segment. Audio and transcripts are also available online.

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Executive editorTony MeciaManaging editorCristina BollingContributing editor: Tim Whitmire, CXN AdvisoryReporting intern: David Griffith

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