Thought Exercise: 2008-Esque Correction Effect on CLT

[Brendan OConnor]

How do you think a 2008-esque housing market would affect the Charlotte area specifically? Are you positioned to make it through to the other side?

[Tom ONeil]

@Brendan OConnor My hope is that if there is another correction similar to what we saw, the results will be a bit different.  Lending has loosened up recently but I don't think it is anywhere near where it was back in 2006-2008, so my hope is that people are better positioned in their homes to ride out the downturn rather than be upside down on their mortgages and just walk away.  

I guess my question is, what do people think would drive a market correction?  A couple factors I can think of right now would be:

1) Increased inventory - new homes are being built like crazy all around the area.  We are still in an inventory shortage situation which is driving up prices.  If inventory picks up, prices should go down.

2) Increased interest rates - as rates increase, an equal monthly payment will result in a lower financed value for a house.  This will decrease the dollar amount people can receive financing for.

3) Business growth/Political climate - Have we seen the last of the fallout from HB2 or is there more to come?  

Personally, I feel confident that I am positioned to make it to the other side.  My investments are currently in buy and hold rentals, which have untapped equity and good cash flow.  A 30-40% decrease in current rent prices would be sustainable for me.