Wednesday, September 24, 2008

Daily Progress: Home Prices & Sales Declining in Charlottesville/Albemarle: Supply v. Demand

The Daily Progress reports "Area's Housing Market Remains Cool." Their assessment? "A bit hellish."

The majority of information and quotes come from the President of CAAR, the Charlottesville-Albemarle Area Association of Realtors, Dave Phillips.

From the article: "In 2009...the region’s housing inventory will continue its gradual shift down to a more balanced level."

The area currently has over 14 months of inventory.
More houses are added every day. What's going to be so magic about 2009?

The article notes that this is the slowest market in 7 years. In other words, this is the slowest market since the beginning of the Housing Bubble.

Phillips blamed any economic concerns on the part of consumers not on actual facts, but on perception. From the article: '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.”'

From the article: "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.”

This statement is so uninformed that it hardly needs additional commentary.
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.

Experts disagree with Phillips.
Click around just a few of the links, below, to get an idea of the scope of the crisis, and what it means for "Main Street."

*Consider buying a house only if you'll stay in it 7 YEARS or longer, here.

*For some useful graphs and the math tools to figure out for yourself why Charlottesville/Albemarle's average 70%+ 5-year increase in house prices is now declining, go here.

*For accurate information on national housing prices, go here.

*For info on how the credit crisis may affect you and loved ones, click here.

*For answers to questions about your Money Markets, IRAs, 401(k), mortgage, savings, CDs, etc., go here.

*For additional accurate information on this credit crisis, open any national newspaper.

*To read The Daily Progress story, click here.


Anonymous said...

it's all negative spin by the media.

yeah, Henry Paulson wishes that were true.


Montpellier said...

I suppose it's time to give Dave another virtual bitch-slap again? He doesn't seem to have shown his face around here again for quite a while.

Really, it's very simple: this has almost nothing to do with real estate itself - it has to do with the credit bubble. That bubble is now over - whether or not we have a 'bailout'. The most the bailout will accomplish is a return to pre-bubble lending - that means at best, buyers will only be able to buy at 36% DTI (total DTI, BTW) with 5%+ down.

That gives you an idea where median prices, based on local median income, have to go. Transaction volumes will remain low until seller capitulate and accept that pricing - if they can! Many owners can't - their lenders won't approve the short sales.

The Alt-A Option-ARM resets are going to start picking up pace though, and that means banks will replace 'homeowners' as the sellers. The banks will capitulate. You can see it in foreclosures at "The Lake" now.

Reality is not what REALTORS sell tho...and reality has a well-known liberal bias.

Anonymous said...

Why is it that so many realtors in this town seem to be in a coma? The days of $300,000 homes selling for $800,000 are over for quite a while.
The only agent who ever seems to acknowledge the depths of the problems in our market is Jim Duncan, but I don't have to tell you guys that.

Anonymous said...

What a buffoon. Who would hire a guy like Philips to sell their house when he's so clearly out of touch with reality?

sebastian said...

Look at mortgage rates. There are lots of jumbo loans necessary around here--$415K and above.

Wells Fargo now has a 9% interest rate. Sure, they do a lot of biz in California--but that's not an anomaly.

And the current 30 year fixed conforming, according to, is 7.15%.

For anybody to agree to such a ridiculously high interest rates, house prices have to be palatable.

To put it mildly.

Anonymous said...

I'm reconciled to the current US housing market and have recently listed my home in another very desirable part of the country (NOT CA, Fl, etc.) for about 25% less than it would have brought just 2 or 3 years ago (even though I have made several substantial, expensive upgrades in that time). Yet, in C'ville, there are many homes on the market now that people bought in 2005 and 2006 that are now listed for 25% to 50% more than what they paid?! I know a few of these homes may have been upgraded/renovated, but it seems that prices here are simply ridiculous. Apparently, many local realtors think new people coming to the area are complete idiots. Is there something in the water here??

Brooklyn Bob said...

It seems like the "something in the water" is the deluded notion that "Charlottesville is a protected market." This idea comes from UVa pumping tons of cash into the economy and bringing in new employees, so house values can only go up. This idea only intensified during the bubble.

And with that mouthpiece Phillips telling lies on the front page of the local newspaper and sellers desperate, you can see how people would list for too much.

Well guess what? It's NOT a protected market. Which is why there are so many houses available and people are losing equity right and left.

There have been recent property posts on this blog (sorry I don't have time to link, but scroll backwards) that show the percentage change from each buyer up to the current asking price. You're right about the % increases. Crazy!

And now there's the hope that there will be buyers to "save the market" coming from new jobs at NGIC. That doesn't happen until 2011. MORE THAN TWO YEARS. And it's not very many buyers when you big picture the problem.

Anonymous said...

I'm sure that tonight in his address to the nation, our venerable President will explain how the current financial crisis has been affecting the entire country EXCEPT Charlottesville, Virginia - an enchanted place where you can "walk to downtown" from a $300k 2BR/1BA brick rancher.

Ted said...

If I were a realtor I'd be embarrassed about that story in the DP.

It's almost like that Phillips guy was set up.

Does the reporter have something against him?

Or is he really such a jackhole?

Anonymous said...

John McCain wants to suspend campaigning for President in order to concentrate on getting the bailout passed and "helping Americans."

Phillips should invite him here--should invite all of Congress for that matter--to show them what a community is like that isn't affected by the Wall Street crisis.

The story in the paper version of the DP appeared below a story about how UVA and PVCC have to submit revised budgets to the Commonwealth--and layoffs are possible.

And nearby was a story about the Nat'l Assoc of Realtors, which reported that home prices fell NATIONALLY by 5.3% in July.

Meanwhile the Richmond Times-Dispatch has a banner headline about the state's 3 BILLION dollar shortfall.

Every tragedy needs its clown.

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

We're waiting to see what our missing-in-action Leader of the Formerly Free But Now Committed Socialist World is going to say in his address tonight at 9pm.

Perhaps it will be as inventive as Dave Phillips' comments in The Daily Progress?

Montpellier points out that Mr. Phillips hasn't been on the blog much lately. True: he disappeared from the comments section sometime in July, around the time Merrill Lynch had its own private fire sale of real estate assets, which was approximately the same time that Comrade Paulson announced that a bailout was "possible" for Giant Mortgage Losers Fan & Fred.

Sometime after that, we visited the CAAR blog, and saw we were no longer on the blogroll.

Understandable, but too bad.

Anonymous #4 wondered if there was something in the water in this area that made sellers believe a 25% or 50% increase in Asking price was rational.

Periodic commenter Brooklyn Bob has, we think, identified one thing that's in the water, which is the idea that this area has a protected market.

Another "thing" in the "water," we think, are HELOC's: Home Equity Lines of Credit. Tax assessments grew, and banks followed suit in believing that these were actual valuations. There are many sellers, we suspect, who want to not only pay off a mortgage, but pay off a HELOC, AND make some money when selling a house.

To them, we simply say Good Luck. It still happens--occasionally.

This comments section doesn't contain the only ire toward Dave Phillips remarks. There are also several comments on The Daily Progress site itself, and one reader over at REALCentralVA was so annoyed that he strayed from the topic of the post to elucidate exactly why Phillips is wrong. You can see the post, and comments, here:

Dave Phillips said...

I have responded in the post above, on the DP and Real Central to explain myself. I understand your dismay at the DP article, but I only ask that you give me the little credit I have earned in my real market reports. Ted was right, it was a set up, and a nice one.

While I disagree with you guys and gals about the impending end of the world, I respect your financial analysis and agree that this is a pile of poo we have stepped in. I was glad to hear that the FBI is finally looking into freddie and fanny.

Sorry to be absent for roll call on the bubble blog for so long. I have been keeping a low profile since July and moved on to some other projects. I still stop in from time to time to see if Monty is bitch-slapping me (deserved or not). Thanks to everyone for keeping me grounded.

GeorgieGirl said...

Well Dave's a nice gentlemanly kinda guy to step in and claim his virtual bitch slap. As a former Hookvillian now living in Hell A, I gotta say youse kids have it easy peasy pie in that little poopy paradise y'all live in. I'm lucky that my Hell A house is still worth more than the sickly inflated price I purchased it for, but all my local pals are brinking on suicide. What happened when they socialized Russia and China? Oh yeah, millllllions of people died. Gettin' a goat, gettin' a gun, building a cheese cave & goin' off the grid....