Thursday, September 25, 2008

Did CAAR CEO Dave Phillips Mean the Fundamentals Are Strong?

President Bush addressed the United States at 9 pm on Wednesday night, in a further attempt to prevent the credit markets from freezing and causing additional global financial turmoil.

"Our entire economy is in danger," President Bush said.

Bush urged the American people and lawmakers to support his administration’s bailout plan, saying that a failure to do so could plunge the United States into “a long and painful recession.”

He outlined what has led up to the current financial crisis, and then said "the market is not functioning properly. There is a widespread loss of confidence. Without immediate action, America could slip into a financial panic."

Here in C'ville, a story on the the front page of the local newspaper told a different story just yesterday. It recognized that real estate sales are sluggish, but then went on to offer comments and prognostications from Dave Phillips, the CEO of CAAR, the Charlottesville-Albemarle Area Association of Realtors. These comments included the following:

"The turmoil on Wall Street will not affect Charlottesville’s housing market," Phillips said. “Unless you’re in the financial business, it’s not going to affect you,” he said.

And

"He also recommended ignoring what he sees as the media’s negative spin on the economy. 'You can’t believe anything they say,' he said. 'They’re trying to drag the economy down because that makes good news.'"

These statements inspired anger and disdain in the comments section after the story in the Daily Progress, as well as in the Comments section after our original post. Additionally, there were comments over at REALCentralVA.

Was Dave Phillips serious? Or is this a case of John McCain having to explain what he meant by "the fundamentals of our economy are still strong?"

If so, we're still listening. We invite Mr. Phillips to add further commentary to his remarks. We invite him to do it here, or on the CAAR blog, or in the comments section of The DP.

We'll keep an open mind.

[The entire transcript of the President's speech is here.]

28 comments:

Dave Phillips said...

Hey Bub,
Long time no blog. I figured you'd take me to task on this article. Maybe I deserve it, maybe I don't. I will not attempt to defend my statements, but I will explain the context that these quotes were taken from. I try hard to present a fair picture of the local market and you have given me credit for doing so in the past. Thanks for keeping an open mind and offering me this forum.

First, I think it is important to understand that I was making a presentation to a group of business leaders and was not commenting to the press like I will when I realse the 3rd quarter marekt report on Oct 11. In the course of 40 minutes of my presentation, I covered a lot of ground. Brian McNeil is generally a fair reporter and I do not blame him for selecting choice quotes to print. I'm sure it makes for good press, but it could hardly contain the full context of my presentation. His orgininal article may have been more fair to me, but likely his editors chopped it up and made me look a bit more unrealistic than I am. I am, as you well know, an optomist, and I do not expect that to play well on a bubble blog.

The context of my entire presentation was to separate what was REALLY important to watch when looking at the local housing market and what was not as important. I said it was important to look at interest rates and inventory levels, and jobs creation, and imigration policy and consumer confidence. I said it was NOT important in this context to watch wall street, the national nightly bad news, the presidential race, the financial crisis, foreclosure rates and the latest investor bubble (oil). My point was that all these things will be irrelevant to our local housing market in a few months. They are short term issues (in terms of their affect on housing) that are NOT important, in my humble opinion, to a local persons decision to buy or sell there home. My one caveat was when one of these situations directly affect you such as being employed in the financial sector.

Of course I understand that there are lots of affects (long and short-term)these issue have on our lives, but the local housing market is largely unaffected. We do not have a local unemployment problem, money is still available for loans with reasonable terms and the world economy is NOT going to fall apart.

By the way, I also predicted that oil would be at $80 a barel by the end of 09 and that the Cubs would win the World Series this year. I also fully disclosed that my "gueses" were as good as anyone elses.

Again, thanks for questioning me on this. It keeps me honest. Call me stupid if you want, but these were my informed opinions and I would be happy to debate them in a less abstract forum.

Anonymous said...

I don't know why everyone is coming down on Phillips for his views. Did everyone forget that he's a REALTOR, not an ECONOMIST? REALTORS are SALESPEOPLE. The only expertise they have is in selling your house or selling you a house. And Phillips is THE salesman for the largest sales group, aka CAAR, in the area. Really, what do you expect? Unbiased information? Comments that could negatively affect the home sales numbers?

Any expertise a REALTOR claims means nothing, unless they have an advanced degree in that particular field. Do you go to an attorney for health advice? Of course not. Why would you go to a REALTOR for FINANCIAL ADVICE.

If anyone is to blame for the dissemination of Phillip's point of view it's the DP reporter. The reporter went beyond using him as an EXPERT HOME SALESMAN and used him as a EXPERT MICRO-ECONOMIST.

The problem isn't that REALTORS say these things and hold these views. It's that people take them as more than SALES PITCHES. Granted, REALTORS can be wise about various subjects like anyone else. But get real. No matter what any of them say - they are in the business to SELL YOU REAL ESTATE, not to NOT SELL YOU REAL ESTATE. Any "advice" they give you may or may not be helpful, but it will ALWAYS be biased for their own purposes. It's called JOB SECURITY.

REALTORS will always be the housing bubble's best CHEERLEADER.

Montpellier said...

Dave -

I'm not sure it's really worth the effort to type this, but really, stick a sock in it. Just be glad the MLS Dues-Payers haven't suffered greater attrition yet than they have. CAAR and the REW do require some minimal staff levels, so at some point the board will figure it's time to savage you rather than the remaining underpaid clerical staff.

You are an idiot (in addition to being a cheer-leading sales-slime): the credit markets are not irrelevant to the local Real Estate market.

I know you'll never admit it - you're paid not to - but for anyone else out there considering the housing market, consider this:

Let's just posit, for the sake of argument, Dave's premises: the local economy is stable, gas prices don't matter and local job creation remains positive.

Now, ask yourself: how many people do you know, even with good jobs, who can pay for a house without a mortgage? One? Two? Lotta buyers there!

The national financial crisis centers on credit! Specifically, it centers on mortgage backed securities! - even our dumbass psuedo-hick President admitted it! What wonders the CEO presidency has wrought for our financial system!

If people can't get a mortgage, they can't buy a house!

Really, Dave, STFU. I, for one, figured you wouldn't be dumb enough to keep trying to trot that crap out. Shameless is the word that comes to mind. I suppose you're putting that background in classic rhetoric to good use.

matt. s. said...

Oh Dave Dave Dave, you just set yourself up for even more abuse. I would ask people to go easy on you, but the anger people have against the real estate industry for its complicity in redistributing their wealth to those at the top of Wall Street is very real and legitimate.

I have no interest in heaping abuse on you, I am not in a position to judge your sins, but I do need to say that you are persisting in being wrong. I also will say that the bubble blog was wrong recently when they said:

"As any adult with a pulse knows, now is the time to pay attention to personal finances, when we're in the worst economic crisis since the Great Depression."

Many adults still do not know, or are not understanding the seriousness of our situation, and you Dave can now serve as Exhibit A. There is nothing wrong with being an optimist, in fact we will be much in need of optimism, but blind uninformed optimism can be counter-productive, even dangerous, to people who have to make crucial decisions about their finances.

There is truly no significant good news out there. Every bit of good news that comes out is quickly compromised. For example, the NCGIS. You discovered that only 30% of the employees they are bringing to our area are interested in buying a house. Some are not even moving as they are within commuting range. It would not be surprising to see that number get revised downward, as are most numbers in housing and finance these days, with the exception of inflation, unemployment, and interest rates.

Two pieces of good news we had in the last couple months were that the decline of the dollar was halted and dramatically reversed, with a corresponding fall in oil prices. Now all that hard work done by Paulson and Bernanke, which I have been careful to give them credit for, is undone.

Your attempt to blame the media won't wash. You can look in trade publications and investor websites and see the fear and shock everyday. Or you could listen to public radio for a few hours, try RadioIQ ( radioiq.org - local broadcasts at 89.7 and 91.5 FM ), they have experts on constantly from across the board, finance, business, economics, real estate, politics. The mood and tone is consistently one of shock, fear, anger, and bewilderment--you can hear it in their voices. Wall Street feels like hurricane Ike hit them, but they are only in the eye of the storm, they are waiting for it to start raging again.

Oh, but Wall Street is not relevant to Main Street (Mall), in your 'context'. OK, let's look at your relevant issues then:

"I said it was important to look at interest rates and inventory levels, and jobs creation, and imigration policy and consumer confidence."

What is the data regarding those? Uniformly negative and continuing to get worse. Why? The "financial crisis" which you dismiss in your next line as "NOT important". How can you make predictions when you do not even look at the financial crisis, much less understand it?

You don't trust the media reports? Well it is not hard to search out the opinions of true experts, such as Steven Roach:

"Japan’s experience demonstrates how difficult it may be for traditional policies to ignite recovery after a bubble. In the early 1990s, Japan’s property and stock market bubbles burst. That implosion was worsened by a banking crisis and excess corporate debt. Nearly 20 years later, Japan is still struggling.

"There are eerie similarities between the United States now and Japan then. The Bank of Japan ran an excessively accommodative monetary policy for most of the 1980s. In the United States, the Federal Reserve did the same thing beginning in the late 1990s. In both cases, loose money fueled liquidity booms that led to major bubbles. "

http://www.nytimes.com/2008/03/05/opinion/05roach.html?_r=2&ref=opinion&oref=slogin&oref=slogin

It is doubtful that there is an economist anywhere who has not looked at Japan's history and present situation (they still have not fully emerged from their difficulties). They refer to Japan's 90's as "The Lost Decade." And Japan had a great advantage compared to us-- Japanese had vast personal savings, while we have only debt.

You call these "short term issues" that will be irrelevant in "a few months". That depends on your definition of short-term and "a few months" I suppose. Short term in this case would be two years, in the more likely case that these are not actually short-term issues but rather a major structural failure this is likely to take 5-10 years to work out, at best.

Then you say "We do not have a local unemployment problem" (not yet), "money is still available for loans" (are you sure? seen anybody lock-in a mortgage in the last week? I've been asking around about that.) "with reasonable terms" (oh yeah? checked interest rates this week?) and the world economy is NOT going to fall apart (that is not what the rest of the world is saying).

"HONG KONG (MarketWatch) -- Chinese regulators have asked domestic banks to stop lending to U.S. financial institutions in the interbank money markets to prevent possible losses during the financial crisis, the South China Morning Post reported Thursday. The China Banking Regulatory Commission's ban on interbank lending of all currencies applied to U.S. banks, but not to lenders from other countries, the report added, citing a source. End of Story"

Yes, end of story, ouch. The Chinese govt. now denies this story, thats politics for you. George Bush was recently spotted personally begging the Chinese to keep buying Treasuries, much like his trip to Saudi Arabia to beg for lower oil prices.

To reinforce my point about the very real fear in the markets, I will quote some comments from yesterday and today by a bond trader who blogs. A very experienced and expert trader who other bond traders read daily for important information. These guy are in a very stodgy and conservative business and are not given to hyperbole. (Sry I am not going to give a link as he doesnt need J6P's on his site.)

"As I mentioned this morning the money markets are dysfunctional but not to the levels which manifested themselves last week in the panic."

"There is a new issue corporate bond today from Caterpillar and the pricing of that issue is troublesome. Quite troublesome, and reflective of the dire straits of the credit market and the dysfunction which has engulfed the corporate market. ... This is very disturbing because Caterpillar is an industrial company, unsullied by association with the credit crunch. If it takes that much concession to sell a solid stable industrial, what might the outcome be when a large financial seeks to tap the market. Rest assured that the result will be gory."

"With the press and the markets understandably focused on the financial crisis, there has been little fanfare about the real economy. The labor market remains weak as reflected in the weekly claims data and the upcoming labor report will show that business once again shed workers. Consumption has been soft and the weak labor markets as well as the generalized turmoil evident in the system will do little to inspire Mom and Pop to open their collective wallets. Look for weak consumption to continue. The recent turmoil in the financial markets will further restrain bank lending with deleterious effects on marginal borrowers seeking funding."

"Economic data released overseas overnight was less than festive. Surveys of business confidence in Europe are noteworthy for their lack of confidence. The German IFO fell to 92.9 in September from 94.8 in August. French business confidence dropped to 92 in September from 97 in July. Business confidence in tiny Belgium took a real header as it dropped to minus 14.4 from minus 5.9"

"The money markets are in disarray again. It has not reached the crisis proportions of last Wednesday and Thursday but the situation is very ugly."

"I am going to write this differently this evening because the market is in overdrive and the price action is frightening once again. The 2 year note has breached the 2.00 barrier again and trades at 1.93 percent. That is lower by 15 basis points on the day. That is in spite of the Treasury selling $34 billion 2 year notes at 100PM New York time.The movement in swap spreads is frightening. The movements are fast and furious so by the time you read this it may be rather stale and I apologize for that. Two year swap spreads have blown out by an amazing 27 basis points. Earlier they were wider by as much as 30 basis points. Five year spreads are wider by 15 basis points and 10 year swap spreads are wider by about 5 basis points."

This is very very very very real.

......................................


Well, I see some others have piled on in the time it took me to write this up. The time I put into this is somewhat expensive for me actually, but you made it necessary to counter your mis-information, which is actually hazardous. I really don't see how you could stand up to a debate. This is not a matter of keeping you honest, but rather getting you to BE honest.

Montpellier said...

Wow...Matt S.: well done. I have nothing to add to that!

Fred said...

I'd like Matt S. as my financial advisor.

I'm wonde what realty firm anonymous works for?

cville realtor said...

We are indeed in challenging times and that is without question. As a Realtor, I think it is important for us to look at each client and help them navigate when or when not to buy and sell. Although I agree that the overall economy impacts the ability to buy and sell real estate, I don't think Real Estate should be looked at a national, state or even local level. Instead each person must decide whether "now is the time" to buy or sell real estate. Depending on the circumstances, it may be a good time for your neighbor to sell and it not be a good time for you. Should you buy now? Again, for some depending on what they are trying to accomplish, how long they plan to stay, and where they are financially, the answer could be yes. For others, given these same circumstances, it would be best to wait. In answer to Anonymous, A Realtor who wants to be successful and and make this business a career has to know when to say yes it is or no it isn't a good time to buy or sell. That way, the folks who take the advice and choose to wait will come back to that Realtor when they are ready in appreciation for their honesty and hopefully refer others as well.

Dave Phillips said...

Thanks for all the kind comments. As always you folks on the edge...er...bubble are too good to me. I feel like I just yelled "go Hoos" in a bar in Blacksburg.

You folks are obviously smarter than me and can not stoop to my low level to even consider what I am saying. I agree with Matt's detailed analysis and accept Monty's name calling, but I still think this will all be fine in a few months. Are we on the edge? Sure. Do we have deep problems? Sure. Is the entire world economy going to collaspe and make the great depression look like the good 'ol days? No, but if it did I sure would miss blogging.

Take care. I'll see you on the other side.

Ed said...

cville realtor,

There's still ridiculous bubble pricing going on here in C'ville, even though in most of the country everybody else, buyers and sellers alike, understand that the bubble is burst and prices are declining everywhere.

Aren't realtors primarily responsible for the pricing of a house? Shouldn't they be advising sellers on how to price a house?

Case in point: a new listing, 316 Meade Avenue. This is a 900 sq ft cottage on a very busy street.

Purchased in 2005 for $75,000. Listed THIS WEEK for $144,000. That's almost a 100 PERCENT INCREASE in THREE YEARS.

This happens around here at EVERY PRICE POINT. I've seen examples on this blog of TWO HUNDRED, EVEN THREE HUNDRED PERCENT INCREASES in a space of 3-6 years.

Can you explain the reasoning behind this kind of pricing?

You don't have to address the specific property. Just the "trend." This is certainly a "local" and "regional" trend. It's not a national trend.

Cville Realtor said...

Ed,
Sellers ultimately set the sales price. Obviously, at the end of the day, it is their house and they can price it wherever they want. That being said, a Realtor should provide as much information as possible to help the seller make the best decision on price. As I said in my earlier post, the property you mention may have features that allow for them to ask the much higher price where another 900 sq ft house in the same area might not mean their home will sell for less. If not, therein often lies the problem. the seller thinks they should be able to get a certain price no matter what their Realtor tells them. Some Realtors will walk away from that listing because they know the price is way out of line. Other Realtors will take the listing "hoping" that a buyer will offer the unreasonable price or that they will be able to talk the seller down on their price after a certain amount of time. The reality is the seller market of 3 years ago has quickly become a buyers market and the sellers who realize this and price their home smartly have a much better chance of getting their home sold in a reasonable amount of time.

Michael said...

Matt S. is correct.

"there is no significant good news out there"--

instead of allowing it to fail, the FEDS have stepped in, *again*, and brokered a deal *tonight* so that JPMorgan Chase can buy Washington Mutual.

Otherwise, the FDIC wouldn't have been able to *afford* the biggest bank failure *ever.*

And as of Thursday night, there's *still* no bailout plan that the two parties can agree upon...because the one currently proposed by the Whitehouse is such a load of sh*t that even Republicans and their constituents don't want it.

There have been bank runs in Asia. When will they start here?

Main Street not affected? Montpellier suggests that Dave Phillips will be "savaged." Maybe then he'll believe that the credit crisis affects *everybody.*

The spokesmodel for the association that represents the salesdrones for the largest purchase people make in their entire lives should really have a better script to follow than the blather he's currently promoting in the local newspaper.

Not just "shameless" but "shameful."

And cville realtor? You couldn't answer your way out of a paper bag. The correct answer is "greed." That's how we got to this point in the history of the US Economy, and that's why Housing Bubble prices keep floating ever higher in Mr. Jefferson's Country.

He's rolling in his grave, I guarantee it.

Cville Realtor said...

Wow. I have never heard greed defined as making a smart enough investment that when you sell you make a profit.

brooklyn bob said...

you're missing the point cville realtor. is this part of the requirement for being a realtor? to not 'get' it?

here's one mistake you're making. a house shouldn't primarily be an "investment." investment was a big part of the bubble: sell for a profit. but it was fake money and inflated value.

a house isn't supposed to be a big profit maker. in years past, typical appreciation was 3% per year. a house is supposed to be a "haven." that's why you and your kind call them "homes."

the "greed" is what makes this area have more than 14 months of inventory right now. this is such a ridiculous number its even in this blog's description.

the nationwide inventory is 10.4 months.

protected market? yeah. protected into a stall.

Anonymous said...

Ed and Bob are absoluteley right. Prices may finally be declining here (although personally, I've seen little evidence of it in listing prices), but in the rest of the country prices have already declined 25% or more in just the past two years, and continue to fall. So, moving to C'ville means having to first take a big hit on your current house. As for that curious "protected market" theory -- how many more employees can UVA hire in our spiraling economy?

Meanwhile, sellers here expect a substantial premium on houses bought just two or three years ago, which makes absolutely no sense! Those who have owned their houses for years cling to prices at which they might have sold at the market's peak in 2006. So, these overpriced houses seem to just sit on the market, while potential buyers stay on the sidelines waiting, hoping for prices to drop to a more rational level.

If local realtors don't face reality and start talking sense to these sellers that 14-month inventory figure will surely grow (I just can't believe cville realtor's suggestion that virtually every seller here is having his/her way and pricing their house much higher than their professional realtor suggests). And how many more people have decided to keep their home off the market for now?

I share Bob's concern that the result might be a stall or freeze in the local real estate market similar to the one the country is now experiencing in its credit markets. Recovering from such a situation will certainly prove more painful to local realtors and homeowners than if the market here had simply been allowed to function properly and reflect the economic realities along the way.

Cville Realtor said...

No, Brooklyn Bob, you are missing my point. As much as you want to put the blame on us, Sellers ultimately determine the price. We obviously can't force a seller to price it where we thing best. In fact, The Realtors only recourse (which I believe is a good business practice) is too walk away from a listing if they can't get the seller to be reasonable about price.
When you put your home on the market, will you put it on the market for more than your Realtor says it is worth? I would hope not given your comments but there alot of sellers who think the Realtor is only suggesting a lower price to get it sold quickly. As I said in an earlier posting, if a seller prices it too high, they can expect to be on the market for alonger period of time and probably have to reduce their price to get is sold. Recent stats show that today's sellers are finally realizing it is not 2005-2006 any longer and that the market has shifted from a sellers market to a buyers market. Days on Market has gone down amongst properties that have been listed within the last 60 days or so. time will tell if that trend continues. I do agree that folks should be buying their home as a place to live rather than seeing it as an investment. My comment on it being an investment was made assuming that the Meade property was bought, fixed up, and then placed back on the property by a real estate investor.

Anonymous said...

sldblEXHIBIT A -- (A "new listing" just posted at MyCARR.com) Beautiful home, prestigious area, on 2 acres, but just 3 bedrooms/3 baths, 3,300 finished square feet. Sold twice, once in 5/06 and again in 3/07, for $1.2 million. New owners add a porch and garage, and the listing price is NOW (drum roll please) . . . $2.1 million!!

It's a fantastic porch and garage, but is this house really now worth $900,000 more than it was just 18 months ago?! In this real estate market and in this economy?!

I think the sellers can take their time packing, because this one won't be going anywhere anytime soon.

sebastian said...

but anonymous, that's probably FSBO - "For Sale By Owner."

Because surely a REALTOR wouldn't list something at that inflated of a price....

right, cville realtor?

;0)

Fred said...

Cville Realtor,

Isn't the simplest solution for Realtors to show their clients this bubble blog? :0)

Or any other bubble blog, economics blog, Nouriel Roubini...so sellers see what buyers know?

I think anonymous is right about buyers waiting on the sidelines. There's no rush to buy when there are so many houses AND when mortgage rates are still high AND when the economy is in crisis AND when there's about to be a presidential election AND when the holidays are so close.

A buyer has to have a really great reason to buy right now, such as "value pricing."

Cville Realtor said...

Fred,
I totally agree with your concept of value pricing. Buyers on the side line with the ability to wait are the exact reason why sellers have to price their home effectively.

Anonymous said...

And, I assure you, we're out there, waiting, waiting, waiting . . .

Anonymous said...

I'm a little late to this thread, but I have to comment. I followed the links in the post to the Daily Progress article and to the Real Central Virginia blog.

I'm first of all shocked that the Real Estate guy (who "Michael" calls a "spokesmodel" isn't even a Realtor himself (found this out from a comment made by these bloggers over on the Real Central Virginia Blog). You'd think that the Realtors would want one of their own.

And then all the shenanigans with the "I was misquoted" and "You can't believe everything the press tells you" Whoa. Then don't talk to the press. Just STFU, as "Montpellier" said.

I sincerely appreciated the long commentary by "Matt S" about the state of economics. He's correct when he says that not every adult knows what's going on, which is what makes the Phillips guys' comments "dangerous."

That being said, however, the 10 year old son of my neighbors knows what's going on. He's explained several points to me when he's found me reading the newspaper on the front porch. And he's very interested in the election.

But the real estate spin? It's creepy.

"cville realtor" made a valiant effort to defend pricing here--placing it all on the seller. But you know what? I don't believe it, and neither do the commenters (or the silent readers, I suspect). It's across the board overpricing, and you have to think that this is because realtors here are stuck in a time-warp and are not advising their clients correctly.

I'm not from this area, moved here just two years ago, but have continued to be shocked as prices here rise. I've spent time on other bubble blogs (it's really fascinating reading if you have the time) ones that are national and local (there are links in this blogs sidebar and the other bubble blogs always link to even more bubble blogs). I really have to say that based on my reading, Charlottesville Albemarle is really a case unto itself. The combination of the big inventory, the rising prices, and the refusal to accept reality is classic.

But you can see why when the "spokesmodel" yammers like he does.

I wonder if the "business leaders" at the original presentation believe him?

I have a stash of cash specifically reserved for a large downpayment on a house. I'm holding it for a while.

Montpellier said...

Last Anonymous -

I will say that I suspect a good part of the pricing problem isn't just relitters...I suspect a great many of them now, even though they'd not say it publicly, know just as well as we do that many of these properties just aren't going to move at current pricing.

I do not believe the majority of current sellers are really just obstinate either. I think the truth is, many of the people still actively listing cannot lower their prices: they'd have to show up to closing with a huge pile of cash - one they didn't have for the down payment at the first closing!

If these sellers could afford their mortgage - they could afford to simply take the house back off the market and wait out the downturn. Alternately, if they actually owed less...prices would come down. That has happened - those are the only properties really moving.

The ugly truth is: the only way this correction will move forward is when the foreclosures move through and the banks take the hit, after ejecting the current debt-serfs. The bailout will not stop this macro-economic trend either.

Anonymous said...

Interesting points MontP. Q: Don't the realtors have to pay for advertising their listings week after week? Sounds like a very slow race to the bottom.

Cville Realtor said...

Montpelier,
Reading your last post, I would now say that we are on the same page. If you read my earlier postings, I said many homes on the market @ their current price will not sell which will mean at some point they have to reduce. I also agree that some folks just can't reduce because of their mortgage amount which puts those sellers in a miserable place. the thing I can't figure out is why some of those who have posted here think the Realtor can some how force a seller to price their home at something less than the seller sees fit. Again, if the seller wants to be unrealistic in pricing their home, the Realtors' only option is to walk away from that business which some are beginning to do or hope that after awhile the seller will see that the Realtor was right and price the home where it will sell.

Real C'ville - The Bubble Blog said...

Cville realtor,

You may be right that some Realtors would walk away from a deal.

In any business, there are folks who aren't ethical, no matter what the code of ethics. But is it a question of ethics, or delusion, to accept a seller who is obstinant about a price?

Conversely, the market is such that there are agents who aren't making any money and will be leaving the profession (we're thinking of the REALCentralVA 3Q report, which listed sides for agents; bleak picture).

It seems that what folks are observing in the comments section is that the price inflation appears to be *systemic* in this area. While other places are falling closer to "normal", Cville/Albemarle still has its 800 sq foot cottages coming on the market, almost weekly, at a quarter of a million dollars. And the ranchers are $350-500. And sometimes the pricing above these figures seems to follow the model of "Pick It Out Of A Hat."

Here's a link and analysis to the JPMorgan pricing predictions:

http://tinyurl.com/3pg52m

The price inflation isn't doing anything positive for the local economy...the 'new buyers' have no incentive to hop in.

And now with the Bailout debacle? Today's mortgage rate--if you can even get one--is 6.5%. For a tiny $250K house, or one of building material that ain't gonna last til the chilluns are grown, that's nearly $1,900.00 a month.

We have observed on this blog that we believe Bubble pricing was still at full speed here in 2007, despite slow sales...that's much longer than anywhere else we know of in the country. In fact, Bubble pricing kept up through Spring 2007, though the credit crisis began nationwide in August of 2007. Now that prices are falling, sellers tend to "chase down the market," as Montpellier periodically observes, with 5-10% cuts, after the property has been on the market for several months.

There's a lot to see in this market. In the past three weeks more houses came on the MLS every day. Many of the sellers have disconnected themselves from the wider world...as if following, intentionally or not, the words of DP, which generated this post last week.

Anonymous said...

Reading this during my lunch break, yes lunch break for us overnighters.
Can anyone tell me if any of those well priced 728sq ft Belmont cottages have sold. And if they have, what they sold for.
Thanks

Anonymous said...

You can check listings by going to mycaarDOTcom and clicking on "property" on the left then typing in the MLS #. OR by putting in a price range. In this case, put in $150-250 then specify Charlottesville and the houses should come up as result of search.

I haven't checked on these but would be very surprised if they sold Even if they were part of the local realty association "Affordable Again" program for who are they affordable?

Someone who needs an FHA loan and downpayment assistance shouldn't be buying a 200 Grand house except during an insane Housing bubble.

JMHO.

Anonymous said...

Anonymous Lunch Breaker, all of those places are still available. Want one? Why don't you offer $50K? Thats what theyd be sold for if they weren't in Hellmont.