Friday, October 31, 2008

Charlottesville - Albemarle Area Real Estate: Beware of "Comps" in a Market Where Prices Are Still Declining

Home prices are dropping nationwide.

home values have already declined 15-30%, depending on neighborhood. Because this area has been slower than many to deflate, and because the run-up has been so high, especially in the past five years, the area still has a ways to go down, ioho.

According to a survey by real estate site about three-quarters of U.S. homes lost value in the past year.

But perceptions are another story. Nationwide, about half of U.S. homeowners say their home's value has either increased or remained the same over the past year.

But for the first time, a tiny majority -- 51% of homeowners-- said their home had declined in value in the past 12 months. Of the rest, 32% think their home increased in value in the past 12 months, while 17% said they believe their value remained the same. This survey was taken in the first week of October.

What's the percentage of owners in the Charlottesville Area who think their home's value is unchanged or has actually risen?

We can't answer that. But we're going to go ahead and assert that most homeowners who are selling believe that the value of their house has increased.

And we're going to go ahead and assert that all Seller's Agents in this area think that their client's house values have risen even though the bubble here has been deflating steadily since 2006.

That is, Seller's Agents believe this until the house doesn't sell.
Currently, there's nearly 15 months of inventory.

Note to Buyers:

Seller's Agents are still showing their clients "Comps" -- comparable sold properties -- from 2007 and 2008 as a way to price their properties.

And Buyer's Agents are showing their clients "sold comps" from the past year as a way to come up with an offer on a property.

But what do these "comps" really mean? Do they mean the same thing they meant just last summer?

We doubt it. Unless you're seeing a "comp" from a house sold in the past seven weeks, you're likely to pay too much as a buyer right now.

We've pointed out that it's a buyer's market.
However, the entire financial landscape has changed--and keeps changing, almost on a daily basis. This includes the Charlottesville / Albemarle area, which is not "protected" or "insulated" from the rest of the world, which is in a recession.

And if an agent tells you differently? Tells you that this market will maintain its "value?" Ask to see their crystal ball. Experts and prognosticators have a different forecast.

The latest way the US financial landscape is changing is that existing bad mortgages--those in default or foreclosure, those that are "underwater,"--are going to be rewritten and guaranteed by Treasury and the FDIC in cooperation with major lenders.

Once these programs get going, property values will take a while to find their bottom, ioho. There will be more "reassessing" of properties whose homeowners are underwater but not likely to default, due to taxpayer outcry.

But you know us.
We're always discussing declining local values and national trends. So how about some local input about what is already actually happening?

To read about one assessment company's experience with local declining home values, see "An Apples to Apples Look at House Deflation." It's by Michael Martin, one of the loan officers at Crown Mortgage Services who, along with Jason Crigler, writes The Mortgage Buzz. The post discusses Absolute Appraisals, which does business in the Charlottesville and Richmond areas and surrounding counties.

Some excerpts:

Absolute Appraisal's "...experience in this market gives a clear picture of what is happening in our area with declining real estate values....[there has been] a 15-30% decline in housing values."

"...the most heavily declining areas are where there is excess supply. These days, that is in condos and in new construction neighborhoods. Builders who have gotten in over their heads have been dumping their excess inventory to the detriment of their previous customers.

Older neighborhoods have seen less decline.

Not only has this deflation led to less loan lead[s] to the uglier side of this bubble bust – foreclosures."

The entire post is available here.

Thursday, October 30, 2008

Affordable Housing in the Charlottesville Albemarle Area

The local Realtors' trade org, the Charlottesville Albemarle Association of Realtors (CAAR), had a series of Open Houses this past summer and a promo entitled "Affordable Again."

"Affordable Again" referred to a price tag below $250,000. We laughed at this, because the term "Affordable Housing" obviously means something much different to Realtors than it does to activists interested in equitable living arrangements for those with low incomes.

Do the math: a monthly 30 yr fixed on $250K is about $1,900 per month at 6.5%, including property insurance, taxes, and mortgage insurance. Annually, the payments are about $23,000. A responsible homeowner would allot about 1/3 of income toward housing costs. Thus, the income needed for this house would be about $70,000 per year.

Currently, sales are down 40% over last year in the County; about 10% in the City. But still, the prices remain idiotic, ioho. See what we mean by searching the Multiple Listing Service at Click on "Property" and fill in your parameters. What pops up are not Quarter of a Million Dollar Houses anywhere except a Bubble--or Charlottesville.

And we were reminded of all this when we drove down Nassau Street the other day. We saw "Affordable Again" signs posted proudly in front of 909, 911, and 913 Nassau (MLS #s 449103, 449105, 449104). 909 is the house pictured here. We're wondering what it was before? A tool shed? The machine shop? It's two rooms, and the listing says

"Cute 1BR, 1BA, LR, Kitchen, Minutes to UVA, Downtown Mall, & convenient to everything. Large yard, off street parking, close to part. Home sold as-is. Great for Investor!!!"

$99,900.00 - two rooms, 402 square feet

In all seriousness. "Close to everything" also means Charlottesville Livestock yards and the cement plant. It was a sorry sight; the properties were filled with junk. We were embarrassed for all Realtors.

This reminded us of recent Daily Progress stories about "Affordable Housing" in the City and the County.

A few days ago, it was reported that the City, County, and UVa formed a task force to deal with the issue of lack of affordable housing in an area whose cost of living is higher than the national average, according to the ACCRA Cost of Living Index. No progress was made--except to declare that more affordable housing is needed.

The City knows it needs more data, but doesn't know how to go about getting it. Is this any surprise? Charlottesville spent $2.1 million on affordable housing last fiscal year, yet the city has no record of the numbers of planned or completed affordable units.

What? Sometimes we think Charlottesville has gone through Alice's looking glass.

So what's the solution?

Of course we have one. Not only is there a nearly 15 month supply of houses in this area, but the new construction sector is in trouble here as it is nationwide. Hauser Homes is offering "discounts." And let's face it, some of those places at "green" "Belvedere" and "The Fields at Venable" aren't going to sell unless they, too, get "discounts," are they?

First, let's get these new houses reassessed to "reasonable amounts." Second, let's line up some nice citizens to get 97% LTV FHA loans while they're still available. Let's have the Builders guarantee the loans in lieu of "proffers" to the City or County. After about 6 months of payments, let's advise the debtors to stop paying. Default/Foreclosure in short order, right? Wrong. By then, the Federal Government will have stepped in, and will renegotiate the Principal and Interest on the mortgages.

Bingo. "Affordable Housing."

We wish we were kidding.

Wednesday, October 29, 2008

Fed Gov't Wants To Reduce Principal or Interest for 3M HOMEDEBTORS Facing Foreclosure

From WaPo:

Treasury, FDIC Crafting Plan to Rework Millions of Mortgages

Officials with the Treasury and the FDIC (Federal Deposit Insurance Corp.) are crafting a plan under which the government would guarantee the mortgages of as many as 3 million homeowners now struggling to avoid foreclosure, according to three sources familiar with the discussions.

Under the program being discussed, the lender would agree to reduce borrowers’ monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowner’s ability to pay.

It would cost between $40 billion and $50 billion, sources said.

Read here.

And from WSJ:

"Roughly 7.3 million American homeowners are expected to default on their mortgages between 2008 and 2010, with 4.3 million of those losing their homes, according to Moody's, a research firm." More here.

BTW? JANUARY 20 Can't Come Fast Enough To Get Rid of Treasury Secretary Comrade Paulson, One of the Premier Architects of the US Gigantic Budget Deficit.

Tuesday, October 28, 2008

Local Property Auctions Scheduled for October 29, 2008

October 29 at 1:20pm at the Charlottesville Circuit Courthouse
Property: 1053 Grady Avenue
Debtor: Michelle B. Allen
Amount owing: $140,000
Bidder brings: $11,000 or 10 percent sale price
Info: Draper & Goldberg PLLC 703-777-2448

October 29 at 1pm at the Albemarle Courthouse
Property: 2841 King Solomons Lane, Esmont
Debtor: Becky Sue McCauley
Amount owing: $55,000
Bidder brings: $6,000 or 10 percent sale price
Info: Draper & Goldberg PLLC 703-777-2448

Info courtesy of The Hook.

Here's a quick primer on how to buy a home at auction. Research & due dilligence required.

In a related note, nationwide foreclusures rose 71% in the Third Quarter of this year, compared to last year at this time. This is the highest number on record as home prices fell and stricter mortgage standards made it harder for homeowners to sell or refinance. Read more here. (Thanks to JH for sending this info.)

Thursday, October 23, 2008

Alan Greenspan 'Fesses Up.

Better late than never? Former Federal Reserve Chair Alan Greenspan comes clean.

Turns out that not regulating the free market was insane, he admitted at a Congressional hearing. He's "in a state of shocked disbelief."

We're in a state of (--Oh, wait--those words are unprintable here. This is a family blog.)

Thursday, October 16, 2008

Charlottesville - Albemarle Real Estate, October, 2008 - A Buyer's Market? Prices Dropping?

Is Now a Good Time to Buy a House?

The good news: We recently learned, thanks to The Mortgage Buzz, that mortgages are available. And 85% of them are now backed by the Federal Government.

Right now in our area, there's nearly 15 months inventory of unsold houses, which is much more than the national number of about 11 months. More properties come on the market every day.

Here's the bad news: The Charlottesville / Albemarle Housing Bubble persists. One reason it persists is because we have CAAR (Charlottesville Albemarle Association of Realtors') CEO Dave Phillips' lock on local media. Phillips is neither an economist nor a Realtor. Nevertheless, he's often quoted by the media. This "Spokesmodel," as one commenter termed him, opined a few weeks ago that "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.

These statements caused anger, derision, and scorn on this blog, the REALCentralVA blog, and in the Comments section following the story in the Daily Progress. Phillips attempted to explain his position in the above-linked post.

In the comments following the post, readers wondered, If the Housing Bubble had "burst" in 2006, and sales were slowing here, and everywhere, Why Do Housing Prices Keep Rising in This Area?

An October 13 Daily Progress article addresses this issue. The article is about "affordable housing"--housing for those who live below the median income level and need assistance to buy--but the statistics pertain to the local market. The Council for Community and Economic Research has a "Cost of Living Index." The ACCRA Cost of Living Index showed that for the Charlottesville Metropolitan Statistical Area — which includes the city and the counties of Albemarle, Greene, Fluvanna, Louisa and Nelson — the cost of living was 8.5 percent higher than the national average during the second quarter of 2008. The most recent estimates from the U.S. Census, from 2005, showed that 23.7 percent of Charlottesville’s population was living in poverty.

Using the DP's numbers, the local real estate market’s median sales price through September was $281,000, down 1.7 percent from last year’s median price of $285,935. Median sales prices in the year 2000 were $150,000.

That's a $131,000.00 or 87% increase in eight years. This would only happen in a housing bubble.

Is Now a Good Time to Buy a House?

We're in a worldwide financial crisis and the US Stock market had a slo-mo crash, having dropped 20% in one week. It's so bad out there that the Government is going to flood banks with cash.

Still, on Monday, the Market had the best day ever; but today, Wednesday, October 15, the Dow was down 733 points on wide concerns that the economy will continue to worsen for some time to come. A statement by Fed Chair Ben Bernanke was dark.

Is Now a Good Time to Buy a House?

Locally, Governor Kaine has announced statewide budget cuts to account for the coming $2.5 billion deficit. Here in the C'ville area, unemployment is at a six-year high, and the City and County are facing budget deficits due in part to lower property tax revenues from declining house values. UVa is cutting its budget by $10.6 Million and has lost nearly $200 Million in endowment investments duing July and August. Area consumers are cutting retail spending, and a local builder Church Hill Homes has gone under.

Is Now a Good Time to Buy a House?

Home prices, both nationally and locally, will continue to decline for months to come, according to JP Morgan analysts, the Case-Shiller Index, and leading economists--nationally and world-wide. Prices will continue to decline well into 2009, according to economists.

And The Wall Street Journal recently reported that one in six home mortgageholders is under water-- owes more than the house is worth.

But here's the big question: How much are prices declining in the Charlottesville area?

We see prices out in the Counties going down.
But in the City? Often, it's still Kool Aid time. Do a quick check of new listings for houses for sale--and whether you check daily or weekly, you'll see the same thing. Click backward on this blog and you'll find examples. Even during the month of September and into October, there are houses that have come on the market that are 30%, 50%, 100%, 200% more than when they last sold in 2004 or 2005. This would only happen in a housing bubble.

The DP also reports: "Though housing prices have declined in the area because of the national crisis, city officials said homes that cost around $250,000 are still out of reach for many residents. The U.S. Department of Commerce reported last month that the average price of a new home nationwide sold in August dropped by a record amount, 11.8 percent, to $263,900, compared with the July average of $299,100. The median price was also down, falling 5.5 percent to $221,900." Note that the difference between the national and local medians is about $60K.

But HERE'S AN IMPORTANT ELEMENT of the local bubble: What you get around here for the median v. what you get in other areas is extremely different. Here, for $220K you can buy an 800 sq ft. "cottage." Just an hour south, and for even less, you can buy a house (scroll down to see the comparison in the post).

In the comments section after Monday's post about mortgages, there were questions about mortgage assessments, including:

1. "What measures are in place to come up with decent comps for the appraisals?"

"If things were over priced 2-3 years ago what does an appraiser do now for lending standards? How are they seeing things differently?"

If the "comps" were inflated--houses that have already sold that are used as comparables for houses entering the market--then chances are, the new listing is going to still have bubble pricing.

So Is Now a Good Time to Buy a House?

It could be, if:

* You love the house.

* You plan to stay in the house for 7+ years.

* You're not buying the house primarily as a way to make a profit.

* You realize that the Asking Price is just that: A Question.

The Seller is asking You, the Buyer, if you'll cough it up. You, the buyer, since you have cash or the ability to get a mortgage, have the answer to that first question.

The initial answer, IOHO, is "No."

Your real "Answer" should be lower than "The Question" posed by the Asking Price.

But how much lower?

This is the question of the moment. How much lower should your offer be, and based on what?

Based on the fact that local sellers keep inflating prices? That what goes up must come down? That there's so much inventory available? That there are fewer qualified buyers now than ever before? That the country is in a recession? That there is--still--a global credit crisis? That you don't want to be one-in-six under water? That you have the power? What percentage lower? 10%? 20%? 30%?

It's a Buyer's Market.

This is the Real Question: What did the seller pay for the house, and what's a reasonable profit? Remember that between 1.5% (typical) and 5% (high) annual increase would be made on a sale in a non-bubble economy. So what's a "reasonable" profit?

It's not what was made during the bubble, IOHO. It's another number.

It's almost the year 2009. Regime change, of whatever stripe, is days away. Everything is Different now...and will be for a long time to come.

Monday, October 13, 2008

Charlottesville - Albemarle Area Real Estate Market - Q: Are Mortgages Available? A: Yes!

We're pleased to have a guest today: Jason Crigler from Crown Mortgage Services in Charlottesville. The blog this loan officer writes, along with another officer, Michael, is The Mortgage Buzz. It covers Central Virginia's mortgage landscape, but also has a regional take on the economy, in addition to noting and commenting upon global financial events.

As we've said before, the Bubble Blog isn't anti-owning. We're anti-bubble economy and pricing, and opposed to looking at a house as an ATM machine or profit generator. But we think owning a house is important for community--it gives folks a stake in their area, a sense of pride and belonging.

With all the blaring headlines about the world-wide credit crisis and financial institutions holding on to their cash, we wondered if the mortgage industry had ground to a halt. So we emailed Jason.

Crown Mortgage is an "Upfront Mortgage Broker," which means that they discuss their rates and approach before the mortgage is written. No "hidden fees." The association of Upfronts came about in response to concerns about mortgage brokers "taking advantage" of uninformed buyers; it's a consumer advocacy group.

We first began discussing mortgage availability over a week ago and, as Jason notes,

"In that time we have witnessed events that will have a significant impact on our economy and our lives for some time to come. The credit freeze and stock market plunge will undoubtedly change the landscape of financing. And while the mortgage business has remained relatively unchanged during the recent financial turmoil, it is still hard to say “how much and how wide”."

Jason continues,

"As I mentioned in a blog post from last week (thanks to your questions)[September 6 - BB], mortgage availability has changed little over the last several months. The federal government now controls 85+% of the mortgage market through Fannie Mae (FNMA), Freddie Mac (FHLMC), HUD, USDA & VA loan programs. And despite the lingering controversy surrounding the Fannie/Freddie bailout, the home financing system is more stable at this point than it would have been otherwise."

Speaking to the issue of guidelines: "I can say with confidence that there’s not a loan officer (or real estate agent for that matter) around that hasn’t dealt with the contraction of mortgage programs and loan guidelines. Before the credit crisis (Summer 2007), there were thousands of mortgage programs offered by hundreds of mortgage lenders and banks, and these were not Fannie, Freddie or FHA loans. These were subprime, low/no doc, and other alternative mortgage programs."

"A year later many of those lenders and banks are out of business and those loan programs no longer exist. While there are still a very few other mortgage products out there (even less over the last week), Fannie, Freddie, FHA (Federal Housing Administration), USDA (US Department of Agriculture) & VA (Veteran's Affairs) loans account for all or nearly all home loans currently being originated by your average loan offer. So with the alternative mortgage programs that many borrowers depended on during the refi boom and housing bubble now gone, there are millions that don’t qualify for the programs that are left. And Fannie/Freddie/FHA have had to tighten loan guidelines as well, which adds additional borrowers to the ranks of the unqualified."

A few examples of Fannie/Freddie tightening guidelines:

1.) eliminated 100% financing
2.) stricter DTI (debt-to-income) limits
3.) more stringent appraisal requirements

Now, let me get to your questions:

1. Qualifying, a bit more info:

Fannie/Freddie/FHA are still intact and there have been no funding issues for these types of loans. Lack of money for these types of loans is not the issue, it’s lack of demand (or qualified demand). If you qualify for a conventional or government loan you can get one. But there’s no question that there are a lot of folks who don’t qualify – one reason some go into foreclosure (can’t refi out of a subprime or alt-A into a conventional/govt loan).

2. What about interest rates?

There's volatility in the market. The MBS [Mortgage-Backed Securities, where mortgages are bundled then sold to investors -- BB] market has been extremely volatile in the last several weeks, and particularly last week. US bond markets (including MBS) are closed today [Monday, 13th] due to the holiday, but we’re probably in for another week of big swings [after Wall Street's Worst Week Ever - BB]. We were at a low of 5.75% (30yr fixed) on Monday and ended up above 6% on Friday.

The MBS market determines mortgage rates, not the stock market or Treasury Bills. Many folks try to determine what rates are or will do based on stocks or treasury bonds, but this past week was a perfect example of how that doesn’t work. The stock market tanked as did the MBS market, which led to higher mortgage rates.

The basic idea is that there is a flight to quality when there’s a stock selloff – investors sell stock and buy bonds (including MBS). What we saw was investors selling everything, including MBS and at times Treasuries (though there was still demand for Treasuries).

MBS act like other bonds. When prices go down (fewer buyers than sellers – high supply), the interest rate goes up. And when prices go up (more buyers than sellers – high demand), interest rates go down.

Rates, historically speaking, are quite low. I know that sounds like a quote from a REALTOR commercial. But it's true. The average 30yr fixed rate since 1978 is around 9.5% (Freddie Mac).

I don't have any statistics or other evidence to support this, but I believe many of the new homeowners who have entered the market in the last 5-6 years have a "standard" for mortgage rates that is way off. We've been so used to low rates for so long that anything over 6.5% is high. I say this because I'm one of those folks. Also, I've talked to a lot of borrower over the years, and when rates have been in the mid-6 range they cringe. Yet what many don't talk about is, "what if rates go back to 7, 8, 9+ ?"

2a. What about refi's?

Demand for refis is a function of rates and guidelines. If rates are low(er), then refis increase. But tightened guidelines can dampen the effects of a rate drop, since fewer borrowers qualify. Not to mention we just got out of a major refi boom 3-4 years ago, so many homeowners took advantage of the low rates (low/mid 5% 30yr fixed) back then.

3. Is 20% down going to become reality, or do you think now that there's a "bailout" there will still be 97% LTV?

Loans for 97% LTV are still available, but it’s just hard to say if that will continue to be the case. Fannie/Freddie’s 97 depends on private mortgage insurers to insure the amount over 80%, and some of these companies have already quit offering insurance to 97%. FHA, on the other hand, provides its own insurance and does not rely on private MI. But even FHA will be reducing their LTV in 2009 – max LTV of 96.5% goes into effect January 1st. And USDA still offers up to 102% of the appraised value.

Government loans are playing an unprecedented role and the US economy depends on them to help stabilize the housing market. While any lender balks at lending their own money out at high LTVs (90+%) in this market, I expect that we’ll still see them as long as the federal government feels that it needs them and is able to prop up the housing market.

4. Major Media outlets keep shouting about the "Credit Freeze" -- with good reason. Do you think local community banks are hanging on to assets as much as big banks?

I can’t speak to any bank’s internal operations, but I don’t think any financial institution is going to come out of this completely unscathed. Yet I wouldn’t be surprised if small community banks end up faring better through all this compared to regional & national banks. Many community banks originate loans like non-bank mortgage brokers – they sell/transfer loans down the line to larger banks or investors. Community banks certainly don’t have the exposure to all the toxic assets and investments of their larger counterparts. We have a number of strong community banks in the Charlottesville area, and I expect they’ll do quite well despite the national and global economic pressures.

5. Are you writing many FHA loans?

My company does not originate Federal Housing Administration (FHA) loans, although we do offer the other traditional govt programs –Veterans Administration (VA) & US Department of Agriculture (USDA). For us it was a business decision since FHA lender/broker approval requires significant financial investment on a yearly basis. In the nearly six years I’ve been in the business I can count on one hand the number of clients that have either requested or could have used/qualified for an FHA loan. Of those clients I helped, I was able to put each one into a conventional mortgage with the same or better terms (rate/points combination) than an FHA. But that’s just my experience. I know a number of loan officers who’s FHA volume is at least ¼ of their business and growing.

FHA loans are more popular now than ever. And from what I hear local FHA activity has followed the national trend. Generally, this is attributed to the demise of subprime and the increased authority provided by Congress over the last 12 months.

6. Can a USDA loan cover a "farmette" out in the county? What are the minimum criteria (acreage, production, being a business, etc)?

The USDA single family housing program (SFH), which is their most well known and utilized mortgage program, does not allow income producing land or structures, including hobby farms and farmettes. However, USDA administers a Business & Industry Guarantee Loan program which covers some income producing property.

USDA SFH eligibility is based on income (limit is 115% of median area income) and property location. There is no acreage or loan limit.

6. Do you have any observations about pricing (in the past, present, future), supply, and when the housing market will "stabilize" or where prices will go? This can be totally subjective.

Ah, the million (or trillion) dollar question – at what point will the housing market stabilize. Honestly, I don’t know what I think. I’ll leave that up to the experts, like Nouriel Roubini.

But I do subscribe to the school of thought that real estate is local – national trends don’t provide a true indication of how a local market will behave.

[Bolding, as usual, is ours.]

Many thanks to Jason for his time and knowledge. Be sure to check out his blog, The Mortgage Buzz.

And this is a timely topic, of course, with all the media attention paid to the economy. Check out REALCentralVA's post on mortgage availability.

Thursday, October 9, 2008

Church Hill Homes: Regional Builder Faces Mass Foreclosures

The Daily Progress reports that Church Hill Homes has failed to unload their properties and that they are "facing foreclosure on more than 20 properties worth a total of at least $3.5 million."

Just one month ago, The DP reported that 11 of the Builder's properties at the "green" Belvedere development were sold to Eagle Construction of Richmond, and that the two principals, Josh Goldschmidt and Jamie Spence, had become employees.

Each of the properties will be on the auction block in mid-October at various county courthouses.

Paul S. Bliley Jr., the trustee acting on behalf of Union Bank and Fulton Bank in the Church Hill foreclosures, said he has not been involved in such a large-scale foreclosure proceeding since the savings and loan crisis in the early 1990s.

At the end of the article, there was this: Jay Willer, executive vice president of the Blue Ridge Home Builders Association, said "Housing prices seem to be pretty much at the bottom. They’re not going up, but they’re not going down either.”

Sadly, Mr. Willer is wrong. We're not sure on what he's basing his information. (Perhaps a conversation with CAAR CEO Dave Phillips?)

Prices are still falling, locally and nationwide. This area is nowhere near its bottom.
There is too much supply, of new and existing houses, and nowhere near enough demand.

According to The DP, Church Hill’s properties now in the foreclosure process include:

  • Three homes at the Belvedere development off Rio Road in Albemarle County.
  • Seven vacant sites and two houses in the Wickham Pond development in Crozet. The Wickham Pond properties are assessed at a total of $990,000, according to tax records.
  • A $479,900 house under contract in the Old Trail development in Crozet.
  • In Charlottesville, two of Church Hill’s condominiums are facing foreclosure. One property is a $599,200 luxury residential unit in the ACAC complex on Monticello Avenue.
  • The other condo, assessed at $732,000, is in the same building.
  • The Fluvanna County foreclosures include two 4-acre vacant sites in the Centre Hill Estates development, as well as two small vacant sites and one house in the Fox Glen development.
  • The Greene County foreclosure is a lot in the Water’s Edge at Lake Saponi neighborhood and is assessed at $126,000.
Access the complete DP article here.

Saturday, October 4, 2008

Blast From the Recent Past: NAR Wants You to Know "You're Making a Good Move"

It's not that we don't like Realtors. It's that we don't like their Association's ads.

This National Association of Realtors ad made its appearance well into the decline. It tells us that 60% of owners' wealth comes from the equity in their houses.

In very fine print, you can read that this info is courtesy of HUD and from 1995. There's a tiny disclaimer: "Markets may vary." It just makes you throw up a little bit in your mouth.

CalculatedRISK warned last Monday about the growing numbers of homes with negative equity, based on US Census Bureau info and the Core Logic Foundation report. CR estimates that by the END OF 2008, 15.4 Million homeowners will have negative equity.

"Every market is different," the ad says. Yes. That's one way to spin it. It's along the same lines as believing Charlottesville's RE market isn't affected by anything beyond the County line.

Friday, October 3, 2008

House Passes Bailout

The House passed the Bailout on Friday afternoon.

Read Comrade Paulson's statement here.

And if you're unclear about how this Credit Crisis got rolling, check out this story about how the Securities and Exchange Commission screwed up.

Thursday, October 2, 2008

What Does a $1M Listing Look Like in Charlottesville? - 517 2nd Street NE

Here's a diversion before tomorrow's House vote on the Bailout, which the Senate voted "For" last night.

You have to appreciate the optimism of this new listing, which showed up a week ago in the middle of the Credit Crisis. P
erhaps they believe that what happens on Wall Street does not affect Charlottesville, following the lead of CAAR CEO Dave Phillips.

Phillips isn't an economist, nor is he a Realtor, but when he made this remark last week, it generated incredulity, anger, and many comments about Bubble pricing.

MLS #457856

517 2nd Street NE

2 Bedrooms, 2.5 Baths,
2,414 Sq. Ft.,
6 rooms total

The property falls into several niche categories: the $1 Million property; the necessity for a jumbo mortgage; the "modern" house; the need for only two bedrooms; no need for a yard.

The amount per square foot: $417.00.

History & Transfer:
Built in 1990
Sold in 1998 for $250K
Current Asking: $995K

This is a rise of $745K, or 300%, in 10 years. Is the rise due to aesthetics alone?

North Downtown is a nice neighborhood, but the density of residents is heightened by the presence of several condominium developments.

The listing notes that Richard Guy Wilson, Commonwealth Prof of Architectural History at UVa, called 517 2nd St NE "a masterpiece." But the listing gives no context.

Here's the context: the house was mentioned in Buildings of Virginia: Tidewater and Piedmont, published by the Society of Architectural Historians.

This is the mention, in its entirety, on pg. 147:

Van Groll House, Built 1990, Architect: James Tulley

"The very modern Van Groll House is International Style, or, more specifically, DeStijl, in its massing. The owner [not the current seller, but the Van Grolls - eds.] has a significant collection of De Stijl furniture. Tulley, who taught at the U from 1968 to 1994, was perhaps the most accomplished modernist to practice in central VA. He designed a number of important houses, most of which are inaccessible; hence this is a chance to view a real masterpiece."

You can read about the De Stijl movement, which informed the aesthetics of this house, here. (link has example of colors, not great erudition, btw.) For more about the neighborhood, click here. To try to find information about James Tulley, click here.

A potential buyer will note that the City Assessor gave this place an assessment of $650K, which is $350K below the Asking Price.

Here's the Mortgage Math, courtesy of US Bank Mortgage Calculator:

Loan amount - $895,000.00 (10% down)
Term of loan - 30 years
Interest rate - 7.29% (Current 30 year fixed Jumbo rate; changes daily)

Monthly payment - $6,129.78

Total interest - $1,311,719.04

Total payments - $2,206,719.04

Add in yearly property tax, property and mortgage insurance, and the figures are even higher.