Friday, September 12, 2008

What Gets a $750K Asking Price in Charlottesville?

Along the lines of the NYTimes column, "What You Get For...", we're looking at several houses with the same Asking Price.

Here's an interesting element of the C'ville/Albemarle Post-Bubble Market: the seeming ability of sellers to Pick An Asking Price Out Of A Hat. There're conflicting ideas, we've noticed, about what constitutes a $300K house, a $500K house, and so forth. This isn't verified by hard science; it's an opinion.

But here's a good example. Remember 708 Park Street? That place had an Original Asking of $829K. After months on the market and several price "adjustments," it finally sold in May for $470K. Huh? Huh.

Here's a thought: is it possible that the people who are least likely to have a realistic idea of what any house anywhere should cost are Realtors and professional assessors? These types are so used to bubble prices that now that property values are declining--even here in C'ville--they've lost their ability to discern nuance or, in some cases, to realize that a house is not primarily a cash cow.

Let's start with the numbers. Since all of our lives have recently been improved by the Federal Government's seizing of Giant Mortgage Losers Fan and Fred, we're going to go ahead and calculate a mortgage on $750K, using the optimistic but soon realistic 30 year fixed of 5.75%. And since we're responsible borrowers, we've put down 20%. (Fannie Mae's new guidelines only require 15%, fwiw.)

Using the USBank Mortgage Calculator, these are our figures:

Loan amount $600,000.00
Term of loan 30 years
Interest rate 5.750%
Monthly payment $3,501.44
Total interest $660,515.75

Total payments $1,260,515.75

That's One Million, Two Hundred and Sixty Thousand, Five Hundred and Fifteen Dollars and Seventy Five Cents.

THESE ARE THE PROPERTIES:

108 Kenwood Circle


This is a Mid-Century Rancher located in Meadowbrook Heights.

You can check it out at the Charlottesville Albemarle Association of Realtors by clicking on "Property" and entering the MLS #456805.

This brick house was built in 1953, has four bedrooms, 2 baths, and 2100 finished square feet.

The listing states, "The existing house, while functional, could use some updating." Which of course is a Red Flag to prepare the buyer for--whatever. Stasis? Moldering carpet? Kitchen ca. 1960?

The house sits on two lots, for a total of 1.47 acres, most of which is wooded. The listing continues, "Numerous options available," but then offers just two: "The house could be torn down and the front lot subdivided into 2 lots (check w/ the City)." That is, no one connected to the property has bothered to determine whether this is a realistic proposition. And the second option? "...a new house could be constructed on the combined property providing privacy, seclusion and ample ground." Well, we're not the City, so we can't say whether the lots could be subdivided. But we have been to Kenwood Circle. "Seclusion?" Depends upon what you mean by "Seclusion."

Transfer History: 108 Kenwood Circle last changed hands in 1999 for $146+K, without the second lot. So let's do the math. Let's say that in 2001, when the lot was added, it cost $80K. We're looking at a base, then, of about $222,ooo.oo.

Now that the Asking is $750K, the place has "appreciated" in seven years by 250
+%.

"Location, location, location" you say? Location shmocation. Nothing has happened to this neighborhood in the past fifty years--except that there's far more traffic on both Meadowbrook Heights Road and the Bypass. There still aren't even sidewalks, in case somebody wants to take a stroll.

1613 St. Anne's Road is a quick car ride or an iffy bike ride away.


1613 St. Annes Road
MLS #452162
3 bedrooms, 4 baths
2700 sq ft
ca. 1940.

A lovely location with a house in move-in condition, also in Meadowbrook. The listing says, "Set on one beautifully landscaped acre: lovely stone walls, terracing, gardens -- w/ screened porch, deck & 2 terraces to enjoy a private setting/gardeners' paradise. Owner added large, light-filled LR w/ garden & forest views."

We've been to this house: lots of curb appeal. Not only that, but the listing could go on singing the praises of this place, and it wouldn't just be the usual "endless possibilities," "corian counters," or "stainless appliances"--all of which are usually Uh-ohs.

Though this road also does not have sidewalks (a "quirk" of the era during which much of the original development took place) the traffic is primarily that of residents--no cutthroughs. This makes for nice walking.

1613 St. Anne's Road has long-term owners of about 25 years. One interesting point about the pricing is that real estate ads are often quick to mention what the tax man believes a property is worth, especially when they can note that the property is "well below recent assessment!" We all know that the tax assessment often has little to do with the price of a house. But a prospective buyer is certainly going to notice that the taxes for this property are based on a figure much lower than the asking.

At any rate, we're in a down market and this beauty sat unsold through the summer.

751 Park Street is another long-time-owner house listed for sale.

751 Park Street is aka "The Keller House," so-called after the original owner, a local merchant. The current owners have owned the place since 1972, when they bought it for $39K (those were the days).

MLS #457177, 2928 finished square feet, .49 acre, ca. 1900. 4 bedrooms, 2 full baths, kitchen, living room, dining room, library. Annual City taxes: $6566 (2008).

This is a grand house that one can't help but notice heading south on Park Street or coming off the Bypass.

In June, the house was listed for $769.9K. By August, the sign was gone and we assumed that 751 Park Street had sold. But no: we found the website, where 751 Park was listed for $739.9K.

Last week, the beginning of September, the place showed up again on the Charl/Alb Association of Realtors Multiple Listing Service--with a new MLS and a new Realtor.

The Current Asking is $669.9K--a Hundred Grand less, just a couple months after original listing.


The house's website reports that the City of Charlottesville Landmarks Survey says, “The only frame Colonial Revival residence on Park Street … is an extremely important example of Georgian Revival style so popular at the turn of the century.” Check out the website for pictures.

We feel for the sellers of the 1613 St. Anne's Road and 751 Park Street (but the Kenwood offering? IOHO, not so much). These are the type of classic, emblematic-of-The-Hook, comes-with-an interesting-provenance kind of houses that a local--or an interloper--would have paid big coin for even as late as the Summer of 2007, before the national credit crunch kicked in around August. Though the national and local markets had peaked and we were already much slowed, house buyers around here were still drinking the Kool Aid. And these houses are long, cool sips of goodness. Too bad.

6 comments:

matt s. said...

Thanks for link to the FNM doc. Looking through it, I still see 95% LTV loans, and I hear that people are still getting 90% LTV at least.

15% down minimum would make news I would think.

Anonymous said...

Regarding 1613 St. Anne's Road -
$750,000 for a 3 bedroom home?

Seriously?

What does $500,000 get you in Bubbleville - a 1 bedroom with a 1/2 bath?

Anonymous said...

that ranch house looks like a $150k house with some extra land. obviously they don't need to sell.

Park Street used to be the place for great houses. Now it's interspersed with small brick capes, far too much traffic, and the incredibly busy bypass too close to this house. Plus, the house is an "old fashioned" four over four, not to the taste of everybody these days.

bubblers are right about too bad it wasn't on the market one or more years ago.

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

Matt,

You're correct on that. The newer guidelines will be a 15% down for investors purchasing homes, or cash-out refinancings of owner-occupied homes.

FM LTV remains at 95% for owner-occupied homes, w/mortgage insurance required for loans over 80%.

Thanks for clarifying.

everybody knows said...

A few years ago, 2004 or even 2005, these houses would have been eye-poppingly expensivo for C'ville if they were $500,000. And the same is true if they'd been for sale for $250,000 in 2002.

Yet in 2008 with the economy in shreds and getting more raggedy by the week, we now have NOVA prices.

WTF?

Sometimes I wonder where I live. It doesn't seem like the good old Hook anymore.

Jason said...

"Frannie" guidelines still allow up to 97% LTV for owner occupied, though not every lender will do them (or MI company will insure them). Fannie markets 97s under the programs "Flex 97" and "My Community". Haven't heard if they're pulling it any time soon, but I wouldn't be surprised if they do now that Treasury has taken over (and since FHA is going to 96.5%).