Monday, June 30, 2008

Bubblicious Houses Across the Country

Real C'ville - The Bubble Blog has a couple of pals from both New York and Los Angeles who sincerely believe that C'ville is just one of their suburbs. So to humor them (especially you, George) we thought we'd offer a look at bubble properties in other cities.

Here's a look at some individual homes in California. All of these houses are jaw-dropping in terms of price. But if you scroll down to #3, you come to a house in the little City of Santa Monica. Santa Monica is part of Los Angeles, and is much like C'ville in terms of residents, politics, restaurants, coffee houses, shopping. It even has a Downtown Mall equivalent, called the Third Street Promenade. The biggest difference? Santa Monica just happens to be right on the Pacific Ocean. The pic on this post is of the famous pier at night.

Enjoy looking at the shacks. Courtesy of Dr. Housing Bubble.

Sunday, June 29, 2008

Dave Phillips: Anatomy of an Overpriced Listing

Dave Phillips, CEO of CAAR and a frequent welcome commenter on this blog, has an astute post over at the CAAR Blog about how to accurately price a property in this laggard market.

He notes that every property has a "magic price"--the one at which it will sell. The Bubble Blog fully agrees with this. Part of what we hope we're doing is "encouraging" sellers to find magic prices, to get more people into houses and to keep our local economy moving.

Dave Phillips' post gives a great example of a house that was on the market for one year, from March 07 to March 08, and details the history of its dropping price and how the house finally sold.

Additionally, the post details DOM for the houses sold through the end of May 08, and names the categorizes in which they belong.

Of the 1128 homes that have sold this year:

"Aggressively Priced" - 272 sold in 30 days or less.

“Realistically Priced” - 223 were on the market between 31 and 90 days.

“Wishfully Priced” - 112 sold properties were on the market between 91 to 120 days.

“Unrealistically Priced” - 521 properties took longer than 120 days to be absorbed into the market.

This is a realistic analysis of prices. What we find, though, is that often the Fairy Dust Syndrome, which we mention in this post, often keeps Sellers and Seller's Agents in a "2006 Mindset." As Dave Phillips observes, the market is always moving and changing, based on a variety of factors.

Be sure to read the complete post.

Are You Registered to Vote?

Are you registered to vote?

What are your candidate's views on the Economy and the Housing Bust?

Thomas L. Friedman says, "Our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, consumer debt has climbed from $8 trillion to $14 trillion.

But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.

My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working." Read his complete NYTimes Op/Ed here.


Cleaning up
this housing mess will be left to the next Administration. There are around 10 million households with negative equity. Currently, three million + borrowers are in distress; analysts are forecasting a couple million more will fall behind on their payments in the coming year as home prices fall further and the economy weakens.

But the Bill that's been making its way through congress this Spring/Summer is too little too late...and can't help everybody. (Nor should it, many folks believe.) Read an article about the Bill in today's NYTimes, entitled "As Bill Evolves, Mortgage Debt Is Snowballing."

Saturday, June 28, 2008

1606 Grove Road - Open House



MLS #444991
3 Bedrooms, 2 Baths
Year Built: 1953
Sq. Ft.: 2,130
Acre: .50


Open House: Sunday, June 28, 1-3pm.

This brick Cape in Meadowbrook Heights has been on the market since before 2008 began, as we told you at length in this post a month ago.

The Asking Price has been reduced from $380K to $360K, from the original $410K.

The current Listing states that this house is "back on the market" because "Purchaser failed to perform."

Um, O.K.

We're going to stand by our initial impression that this house should have an Asking of 2004's Median Price, which is $240K. We guarantee this would cause a "bidding war"--and seller would make a little coin.

But of course the opinions of Real C'ville - The Bubble Blog are occasionally just plain silly.

Thursday, June 26, 2008

Fire Sale on Rugby Road!


Holy HELOC, Batman!

Is this what's necessary over here in the Rugby Road area? Invoking a superhero to save the day?

If you've driven down beautiful Rugby Road extended lately, you've been surprised when you reached the 1300 block. Here, and down Rugby Circle, and further on to the first branch of Dairy Road, a number of houses are for sale with prices ranging from 650K to 1.6M.

Several of these properties have not changed hands for decades. Yet they still have 2006 price tags.

How to explain these prices? Renovations? HELOC? Optimism? Bad advice from a Seller's Agent? Not being up on "Current Events"? Believing one of the greatest fictions--"Charlottesville is a protected market"--?

Ah, yes: this is how to explain the prices: Bubble. But browse around: perhaps you'll find your next home here. We're going to guess that once you do the owners the courtesy of Showing Your Financials, Offers Will Be Welcome.


MLS #452065


1325 Rugby Road - $1,600,000.00

Does 1325 Rugby Road have robots and 18K bathroom fixtures?


(No current MLS for house, below)



1329 Rugby Road - $998,000.00 (from $1.2M)

NB: 1329 Rugby Road appears to be off the market, in just the past couple of days, after being available since March, 2007. If you were aware of this property, you also noticed that very couple of months the Realtor sign changed to a new company. 1329 Rugby Road also had its own website, which is now becoming commonplace in Charlottesville. At present 1329 Rugby Road is For Lease for $2,600.00/month via D.M. Rothwell company.


MLS #452359



1524 Dairy Road - $899,950.00

Why can't 1524 Dairy Road just be listed as Nine Hundred Thousand Dollars? Psychology, that's why. At any rate, Precision Builders will be happy to sell you floorplans and this yard--er, 1524 Dairy Road--and build you a house similar to the one in the artist's rendering, above (and you know how much Real C'ville - The Bubble Blog loves it when a yard goes on sale).


MLS #451929



1332 Rugby Road - $699,000.00

We'll say it for them: 1332 Rugby Road is available for Seven Hundred Thousand Dollars. And across the street and down the lane on a beautiful cul-de-sac, you'll find:


MLS #448010


1705 Rugby Circle - $695,000.00

1705 Rugby Circle
, like 1332 Rugby Road, is trying to pretend it doesn't cost Seven Hundred Thousand Dollars. Nobody's buying this ruse--or 1705 Rugby Circle, alas.

Some of the CAAR listings mention the City Assessor's numbers--as if this has anything to do with sale price. In fact, we know several residents in this area who have actually challenged their Tax Assessments. Just because the Bubble was driving up sales prices to fictional highs didn't mean they wanted to fork over more dough to the City. And for what it's worth, these homeowners prevailed.


MLS #454344



1726 Dairy Road - $689,000.000

The adorable Brick Cape at 1726 Dairy Road is not visible from the street. But rev up the driveway and you'll see that, though just off the 250 Bypass, it's nevertheless in a "park-like setting."

If you search these properties online, you'll also find that there are many more, at price points ranging from under $200K to over $1.6M in a three-mile radius.

To see a graph of how properties are selling per price range, click here. This vivid graph is courtesy of the finest RE/Agent blog in the area, REALCentralVA.

Wednesday, June 25, 2008

903 Rougemont Avenue - $179,900.00
















MLS #451157
2 Bedrooms, 1 Bath
Sq. Ft.: 720 ($250 Sq. Ft)
Year Built: 1952

The Bubble Blog has watched this price "drop" since January--$10K.


This South Belmont property near Quarry Park has appeared on Craigslist so many times that one of Real C'ville's crankier pals flagged it for overposting. In fact, you yourself have seen 903 Rougemont on Craigslist so many times that you already know all about it, right? We thought we did, too, until we discovered who owned it, and what other perennial Craigslist RE ad this individual has going simultaneously. Interesting.

903 Rougemont is an example of what we think of as "The Fairydust Syndrome" --which happened during the Boom: if a property is anywhere in C'ville, It's Magic: Not only is the property thus subject to overpricing, but also to having its virtues extolled as if it's the greatest thing since sliced bread.

COMPARE THIS HOUSE TO:




MLS #452879
$169,900.00
1745 Link Road
Lynchburg, VA 24503
3 Bedrooms, 2 Baths
Sq. Ft: 1800
Nice Area of the Nicest Zipcode
Across from the Oakwood Country Club links

And Lynchburg has been listed by Moody's Economy as #1 on The Top 20 Highly Overpriced Housing Markets in the Nation.

903 Rougemont is in what began as a neighborhood for the working poor--tiny lots with aluminum-sided, miniature houses. "The Working Poor" can't afford this any more. Nowadays, the neighborhood has some McVictorians in it, as well as nearby developments. But to call this a starter or 'single-family' 'home'? You and your kitty-cat could wedge yourselves into this place. And $250/sq. ft.? Seriously? That's what 833 Locust Avenue is going for.

Somebody's going to suggest we move to Lunchbag and commute to The Hook in our Prius...but that's not the point, is it?

No, no, no.

2.2% Intend to Purchase in Next Six Months; Prices Dropping

Across the U.S., potential house buyers remain wary: they know the bottom of the market is not in sight.

An accurate view of the housing market here and elsewhere factors in excessive supply combined with the credit debacle and wage rate relative to home prices: these are the must-haves for significant price drops.

As we all know, there's a huge supply of houses in our market. And we all know what the median income is in both Charlottesville and Albemarle. Sure, there's "outside" money--but that money isn't interested in the "lower priced" houses glutting our market. So we have a problem.

If the historic trending downward continues, home values will decrease much more from the 2006 level. Every day new listings appear on CAAR. Folks wouldn't be listing if they didn't really have to sell.

If you really want to sell, you really have to drop your price.

Real C'ville - The Bubble Blog believes there will be double-digit declines in our future. In fact, you can quote us in that future (or laugh at us). Additionally, we're asserting there will be an unprecedented acceleration in decline rate for Q3-Q4 2008--when the panic sets in. Charlottesville/Albemarle and environs have been slower than many to correct, but the center cannot hold.

Nationally, just 2.2 % of poll respondents say they intend to purchase a home in the next six months, a 25-year low, according to the Conference Board, a New York-based business research group quoted daily in the WSJ and NYT. As we've all read in the past 24 hours, home-price declines accelerated in April, which you can read in data released Tuesday.

Prices of single-family homes in 20 major cities dropped by 15.3% in April from the year before and are now back to 2004 levels, according to the Case-Shiller Home Price Index released by Standard & Poor's. Of course C'ville isn't part of this Index. We're looking at things from a nat'l perspective here, and most economists and analysts agree this Index is the best picture for projecting the nationwide trend.


Yet there are still realtors in Our Fair City who actually suggest that Homebuyers should not be greedy. This is so out of touch with reality it's almost admirable. Ruby slippers, anybody?

Meanwhile, back at the Ranch--er, laptop--driven largely by the surge in foreclosures and declining value in the housing market, some sad news:

Americans are renting apartments and houses at the highest level since President Bush started a campaign to expand homeownership in 2002.

The percentage of households headed by homeowners, which soared to a record 69.1 percent in 2005, fell to 67.8 percent this year, the sharpest decline in 20 years, according to census data through the end of March. Read about it here.

Sunday, June 22, 2008

"Sweet Deal for Homebuyers" - Daily Progress


We love a good read with our morning coffee. And today we learned something.

"Homebuyers should not be greedy," says Keller Williams Real Estate Agent Arlene Yobs.

This sage counsel was offered to Real C'ville - The Bubble Blog and thousands of other readers in the Sunday Edition of The Daily Progress, in a story subtitled Sellers turn inventive with unusual incentives.

"Be reasonable and try to be fair," Yobs added.

The article tells us that as of Friday, June 20, 2008, there were 3,753 properties on the market and that with so much inventory,
sellers often have little choice but to sweeten deals with incentives.

In other parts of the country, property prices are falling as sellers realize the market is in chaos. But here in C'ville, often late to national trends, RE Agents are apparently just starting to wake up and suggest to sellers that they offer "extras. "

Our balloon is made of helium, apparently, not just hot air.

Realtor Marjorie Adam’s firm has drawn up a “menu of concessions” for Seller clients, which have included offers by the seller to pay for swing sets, interior paint jobs and moving expenses.

A couple of agents interviewed for the article also concede that "Home sellers are often willing to knock a few thousand dollars off the listing price."

But we all know that little gifts are a lot more appropriate in this fun inflated market.


Real C'ville - The Bubble Blog has a little gift for sellers: we refer you, of course, to our own Info, Tools & Tips for Bubble Buyers & Sellers.

But we're full of ideas here at the Bubble Blog. So we want to share with you some more "incentives" we've come up with for Sellers to toss in to the sale of some properties we've visited on this blog:

626 Booker Street - $149/9K



What could be better than some new lawn furniture?


1606 Grove Road - $380K



A nice brick Cape in Meadowbrook Heights, this house has a backyard that would be perfect for a hand-made croquet set. So thoughtful!


935 Belmont Ave - $375K.



This Belmont Beauty has an arbor with an old grape vine on it in the yard, which was originally for sale separately. Since the "two" properties are now being sold as one, a course in Winery Design and Equipment from PVCC would be quite thoughtful.


1614 Oakleaf Lane - $349.9K



This little bungalow in the Greenbriar neighborhood has been "done" to the hilt. There's little else to add to this property except an in-ground swimming pool.


833 Locust Avenue - $549/9K


This beauty in the Locust neighborhood needs to make good use of its double lot. Some organic gardening is in order, and for the serious plant enthusiast, some lessons in sacred plant traditions.


702 Belmont Avenue - $519K



This Belmont stunner has everything you could ask for--except land. A large flatscreen TV for the bedroom would allow the new owners to watch DVDs of nature documentaries, so they remember what it's like to be among grass and trees.


606 Lexington Avenue - $329K





This little gem in North Downtown is already conveniently located near the Downtown Mall. The perfect little gift-with-purchase would be a Segway.


Seven Oaks - $12,500,000.00



Of course the only "logical" gift-with-purchase for Coran Capshaw's place is a guaranteed annual appearance.

611 Avon Street - $494,000.00


611 Avon Street, which Real C'ville - The Bubble Blog brought you on May 24, has a bright red bubble attached to the Real Estate - III sign. It reads "Open House." This is the only info we can find on the topic, however.

BTW--the owner of 611 Avon Street will pay $10K toward closing.

Which makes Real C'ville wonder: Is this in addition to dropping the Half Million Dollar Asking Price to what 611 Avon Street is actually "worth"?

Mortgage Rates Up in Past Week

If you're (thinking about) buying a house, do you know how many fees are associated with Closing Costs? Typically, it's more than 20.

Which costs are fixed, and which ones can be negotiated? And what's a HUD-1 Settlement Statement? To begin discovering answers to these vital questions, click here.

And know that you need to track numbers. The 30-year fixed-rate mortgage averaged 6.42% in the week ended Thursday, up from 6.32% last week. The mortgage averaged 6.69% a year ago; the last time it was this high was the week ended Sept. 27, when it also averaged 6.42%.

Application volume was down 21% compared to same week in 2007, the Mortgage Banker's Association said. To see more of the past week's mortgage numbers, click here.

Saturday, June 21, 2008

At the Beginning of the Bubble....


At the beginning of the Bubble, buyers used to offer sellers "gifts" with their bids. Now it's the other way around. Want a new little something with your new little house?

Check out this offering.

Friday, June 20, 2008

833 Locust Avenue - $549,900.00








MLS #454312







5 Bedrooms, 2 Bathrooms
Sq. Ft.: 2,200
Acre: .49
Year Built: 1928

This nice brick Colonial on a double lot in a good neighborhood went on the market June 15. The listing says there's a "newly finished terrace level, new gas furnace, cac, electrical and plumbing."

Real C'ville
ran right out to look. We wanted to see what a HALF MILLION DOLLARS for 833 Locust Avenue looks like, as compared to the Half Mil Askings over at 702 Belmont and 1316 Oxford Place.

When we did our homework, however, we got dizzy. These sales numbers for 833 Locust Avenue are recorded online:

1997: $123,000

2000: $187,500
= a difference from yr. 1997 of $64,000
increase of 52%

2005: $420,000
= a difference from yr. 2000 of $232,500
increase of 124%

Between 1997 and 2005--eight years--833 Locust Avenue gained 241% in "value."

That the OFHEO had already declared Charlottesville overvalued by 25% in 2004 is entirely irrelevant here.

The Asking Price is 30% over previous sale. Even with the "new" this and that in the listing, our eyebrows are raised. So Real C'ville is wondering: Were robot maids installed? Or was our other fave home improvement added, 18K bathroom fixtures?

Hello? Has anybody connected with 833 Locust Avenue picked up a newspaper, surfed the 'net, flicked on the cable in the past year? It's 2008. We're particularly intrigued, given the identity of the Current Owners.

Though maybe the asking is savvy: this is the kind of house the "foreign money" goes for--the New Yorkers--when they're not slummin' over in Belmont.

Tell Real C'ville what we're missing here.

Thursday, June 19, 2008

Arrests, Criminal Charges: Subprime Debacle & Mortgage Fraud


The FBI announced Thursday that it had arrested about 400 real estate industry players since March — including dozens over the last two days — in its crackdown on incidents of mortgage fraud that have contributed to the country's housing crisis, credit crunch, and global economic instability.

Read about two Bear Stearns hedge fund execs here, and hundreds of other arrests here.

Wednesday, June 18, 2008

Now. Taking. Comments.


Dave Phillips, CEO of CAAR, has been Asking for Comments. So have realtor/blogger Jim Duncan, and some commenters over at REALCentralVA.

And many of new Email friends want to add their two (or 2,000!) cents. So the latest "home improvement " to Real C'ville is the Comments capability.

We actually began taking comments with the previous post, "Aftermath: Info, Tools & Tips for Bubble Buyers & Sellers," so if you're new to this blog, be sure to check it out.

We've had a number of people email about frustrating RE searches, skyrocketing pricing, mortgage issues, and economic fears. There's also been a great deal of info floating into our inbox about properties we've already covered, and other properties "trapped" in the Bubble. We'll share much of this in the coming days.

Thanks for reading, and thanks for commenting.

Tuesday, June 17, 2008

Aftermath: Info, Tools & Tips for Bubble Buyers & Sellers

Today is the final installment of the Wash Post's Bubble: Anatomy of a Meltdown. Don't miss Part III, Aftermath, as it details the "ripple effect" of the housing collapse and credit crisis.

After reading these articles and thinking about the national and local economies, the following will be covered today:

I. June Market Report (May Numbers)
II. Info for Bubble Sellers
III. Tools & Tips for Bubble Buyers

I. JUNE MARKET REPORT (MAY NUMBERS)

2,600 = Number of houses for sale in Charlottesville and the counties of Albemarle, Fluvanna, Greene and Nelson in May, 2008. Sales were down 35% compared with one year ago. The median price dropped from $287,000 in May 2007 to $274,000 this year.

Breakdown of Days on the Market:

312 properties have been on the market for more than one year.
908
properties have been on the market for more than six months.
1406
properties have been on the market for more than three months.
2059
properties have been on the market for more than one month.

These numbers have been compiled from the CAAR MLS by RealCentralVA blogger Jim Duncan, who notes that the information is only as reliable as the people inputting it into the system.

II. INFO FOR BUBBLE SELLERS

Duncan says, "IF YOU PRICE YOUR PROPERTY WELL, IT WILL SELL. [His caps.] You may, however, come to realize that the price at which you can sell your property is either a) less than you expected/hoped for and/or b) less than you owe on your mortgage. What you need to make is irrelevant to the fair market value." [Our red bolding.]

Sellers should heed this candid observation in order to move their houses and our economy. Besides financial need--having a mortgage that's "under water" or a maxed-out HELOC--there are also psychological and emotional issues tied to why sellers won't drop prices. The New York Times' "Economix" Columnist, David Leonhardt, addressed this issue in "Be It Ever So Illogical: Homeowners Who Won't Cut the Price."

Real C'ville encourages Sellers to read this (and other RE/bubble blogs) to get an idea of what many Buyers think and know.

III. TOOLS & TIPS FOR BUBBLE BUYERS

In his report Duncan also says, "Be aware that well-priced properties are occasionally seeing multiple offers. If you are buying - look at the data, days on market, condition, external uncertainties and uncontrollable factors that may affect resale."

Good advice. We've compiled a list of tools Buyers have at their disposal. Please note: the following list doesn't include Mortgage info because we're assuming that anybody entering the market has Good-Excellent Credit, an acceptable Debt-to-Income Ratio, and a Down Payment--the basic requirements Buyers used to meet before Insanity came to Main Street.

1. Know the history of a property's sales. For Charlottesville, you can access that information through the City Assessor's Office. For Albemarle County, you may access the information here.

2. Read Duncan's entire June Market Report at REALCentralVa.

3. Use the US Bank Mortgage Calculator to discover the actual cost of a property over the life of the loan.

4. Use the "Own v. Rent Calculator" to compare the cost of buying and renting equivalent properties.

5. Know that "Lowball Offers" are on the rise.

6. Consider using a version of Ron Leiber's "Letter to Seller Explaining a Lowball Offer" when going to the table.

7. Talk to neighbors, friends, acquaintances when considering the purchase of a property. You'd be amazed at what people with absolutely no connection to the owners or the house know about condition, improvements, problems, pricing, history.

8. Get a Buyer's Agent whom you trust like a spouse or parent. We heartily recommend this unless you've bought and sold houses several times before; you're a lawyer or your sister is a lawyer; or you have supreme business acumen and/or an MBA. Besides, in this market, in most cases the Seller Should Be Paying Buyer's Costs.

9. Read this blog (and others, linked to the side). We are now Taking Comments. If our email is any indication of what kind of material people will leave, folks know what's what out there in Bubbleville.

Monday, June 16, 2008

WASH POST: Anatomy of a Meltdown

The Washington Post Continues with its front page series: The Bubble

How homeowners, speculators and Wall Street dealmakers rode a wave of easy money with crippling consequences.

Part II: The Bust

Sunday, June 15, 2008

Dynamic Maps of Nonprime Mortgage Conditions in USA


Here's a Mapping Tool courtesy of the Federal Reserve Bank of New York. Our previous post links near this tool, but we're highlighting it in its own post to emphasize the visual of the information about Subprime and Alt-A mortgages.

Are you as shocked by Virginia's numbers as we are? The percentage of late payments in the past 12 months? The percentage of ARM mortgages that will be resetting in the next 12 months?

WASH POST: Anatomy of a Meltdown


The front page of The Washington Post announces their Three-Part series, entitled

The Bubble
How homeowners, speculators and Wall Street dealmakers rode a wave of easy money with crippling consequences.

Today: The Boom
Monday: The Bust
Tuesday: Aftermath

Click here to access the story.

Friday, June 13, 2008

626 Booker Street - $147,900.00


MLS #454183
Sq. Ft: 700 ( = $211.00 per square feet)
Year Built: 1920
Acre: .09 (& about 36" from the shack to the left)

We throw the word "shack" around a bit on this blog, as liable to use it to refer to Seven Oaks as to the lowliest pile of bricks.

But there's no other word to describe this particular offering except "Shack." You might add the adjective "Shotgun."

The MLS listing is optimistic in suggesting "Great Lot, you can tear down house and rebuild if more space is need. Property being Sold "AS IS."

Three other properties on the street have been rehabbed. They didn't start as shacks, however; they started as two story houses.

If you're a landgrabber, you need to do your homework about the area and pricing. And history: It's been a Black Neighborhood since just after the Civil War.

Do you really think the families who rely on the neighborhood for community and for affordable housing want you coming in with your Volvo and your Green Building Supplies?


Short Answer: No.

Foreclosure Filings Up 48%, Repos Double


Banks repossessed twice as many homes in May and foreclosure filings rose 48% from a year ago as falling house prices trapped borrowers in mortgages they couldn't afford, RealtyTrac Inc. said in a report today.

According to RealtyTrac, one in every 483 U.S. households either
*Lost the home to foreclosure
*Received a default notice
*Or was warned of a pending auction

Albemarle County is not immune. Click here to see the color-coded map of Virginia foreclosures by County.

Read the full story on Bloomberg News.

50% Price Drop: the Frightening Forecast for Some Markets


It's Good to Live in the Hook

We're glad we live where the Bubble is smaller--because the chaos that ensues when prices fall this far--loss of equity, loss of home, loss of consumer buying power, loss of career and social mobility--it's a bad situation.

According to CNN Money, house prices are plunging by more than 30% in some markets, and bargain-hunters are ready to "pounce."

But it may pay for buyers to wait. Many housing experts say that the worst-hit metro areas have even farther to fall, and could see total drops of as much as 50%.

"The housing boom was unprecedented in U.S. history," said Michael Youngblood, a portfolio analyst with FBR Investment Management, "and the correction will be as well."

Prices vs. Wages

Another point covered by this article is the house price v. wage issue. The current nation-wide correction was inevitable, in Youngblood's opinion. Home price gains had simply out-paced income by far too much to be sustained.

Historically, house prices have averaged about four times wages. Whenever homes got significantly more expensive, people could not afford to buy and home prices fell back.

But local price-to-income ratios are still out of whack even after steep price declines, which means prices have further to fall.

We'll be posting more about the wage v. pricing discrepancy here in C'ville.

For now, to read the entire story about wages v. pricing and current projections for the hardest hit metropolitan areas, click here.

Thursday, June 12, 2008

Coming Soon....


While we stepped away from the blog for a few moments earlier this week, withering in the heat rather than the glow of the laptop, we appeared elsewhere in the blogosphere.

The venerable David R. Phillips, President of CAAR, whose CAAR Blog we've quoted earlier, mentions us.

And a RE Agent whom we greatly respect, Jim Duncan, whose blog REALCentralVa we read, posted about us.

We'll discuss some of their comments, Jim's excellent May Market Update, and some reader email, in forthcoming posts.

"The Great Seduction"


Writer David Brooks' Op-Ed column has appeared in The New York Times since 2003, and The Washington Post has called him "The Right's Ambassador to the Liberal Establishment."

He is the author of one of our favorite books, "Bobos in Paradise: The New Upper Class and How They Got There," about the convergence of Bohemian and Bourgeois cultures, and those who live this lifestyle, "Bobos." (C'ville is one of the leading contenders for Capital of BoboLand--we say this even though some of our Best Friends are Bobos.)

In a recent piece, Brooks asserts that the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money. He says:

"The United States has been an affluent nation since its founding. But the country was, by and large, not corrupted by wealth. For centuries, it remained industrious, ambitious and frugal.

Over the past 30 years, much of that has been shredded. The social norms and institutions that encouraged frugality and spending what you earn have been undermined. The institutions that encourage debt and living for the moment have been strengthened."

Brooks cites many culpable parties in encouraging financial decadence: state government, payday loan outfits, credit card companies, Congress, the White House, and Wall Street, via investors who were eager for the Mortgage Products which became the Mortgage-Backed Securities and Collateralized Debt Obligations that led to the current Credit Crisis (click here for a very clear explanation by David Leonhardt, if you're still hazy on this topic).

We're all about financial stability, sane spending, and accurate valuation here at this blog, so of course we're anti-financial decadence.

To read "The Great Seduction, a compelling, and brief, Op-Ed, click here.

"By July 1, it's definitely over..."


...So say RE Agents trying to get their homeowners to realistically assess the market, the economy, their potential buyers, and, of course, their properties.

You don't want your house to stall in the current selling season, where nationally 40% of annual sales take place...and if your house is still without a new owner after being listed at the beginning of the May season, well...you could be heading into the next season, unsold.

Read about a slow market here. While the article concerns New Jersey, the stories sound familiar: buyers waiting for lower prices while sellers refuse to go lower because of their own financial commitment in the property or blind optimism about a market turn or sometimes, sadly, just because they loved the house so much....

Tuesday, June 10, 2008

West Nile Virus & the Housing Bust



Seriously.  

All those vacant properties?  Without homeowners and/or gardeners?  They're creating perfect breeding grounds for mosquitoes, many of which carry West Nile Virus

So besides a tanking economy, lots of pocketbook pain and social upheaval, the Bursting Housing Bubble may now be producing a health threat.

As Our Friend Fred says, "Oy!"

Watch this video, courtesy of Housing Doom.  

Monday, June 9, 2008

Seven Oaks - $12,500,000.00



MLS #448948
"Seven Oaks"Year Built: 1847
Greenwood
4 bedrooms, 4.5 half baths
Sq ft: 6870
Acres: 100

What? Still No Buyer?

But how can that be? It's been on the market since February!

Among the dependencies are four tenant houses and a 2,870-square-foot pool house with outdoor kitchen, home theater and vanishing edge pool. A studio, gym, stables and vineyard are part of the package.

DMB's incredible manager Coran Capshaw bought the mansion and 100 acres in 2000 for $2.25 million. The property, protected from development by a conservation easement, is currently assessed at $4,380,800.00.

Seems like a steal!

U.S. Equity at Lowest Point in 63 Years


Mortgage debt rises in 1Q to $10.6 trillion.

The equity Americans have in their most important asset - their homes - has dropped to its lowest level since the end of World War II.

A homeowner's equity is the market value of a property minus the mortgage debt.

Homeowners' portion of equity slipped to 46.2 percent in the first quarter from a revised 47.5 percent in the previous quarter. That was the fifth consecutive quarter below the 50 percent mark, the Federal Reserve said yesterday.

The total dollar value of equity also fell for the fourth straight quarter to $9.12 trillion from $9.52 trillion in the fourth quarter, while Americans' total mortgage debt rose to $10.6 trillion from $10.53 trillion.
Homeowners' percentage of equity has declined steadily even as home values surged during the housing boom because of a jump in cash-out refinancing, home equity loans and an increase in 100 percent financing.

Read the whole sad AP/Baltimore Sun story here. And since some of our fave transplants come from NYC, see the New York Housing Bubble Blog on this topic.

Saturday, June 7, 2008

WSJ: "Little Indication" of Housing Bottom

We read, and enjoy reading, Real Estate blogs by both Agents and Bubblers and Economists (see our side blog).

Sometimes, though, even if you're an average citizen (not one of us here at Real C'ville who's afraid for the local (and national) economy) you have to wonder what some of the REAs are thinking.  

Below are examples of misinformation to be found on local RE blogs, AND what Economists polled by the Wall Street Journal have to say on the same topic.

Agents suggest buyers "View each real estate market as unique." Of course this means Agents would like buyers to view Charlottesville/Albemarle as a microeconomy untouched by what is known everywhere else, nationwide, as a "collapsing housing market."

While it's true that markets are unique, most economists suggest viewing markets as "Regional."

WSJ: The only region where sales declined last month was in the South, also a region with below-national-average prices. The Case-Shiller index, out earlier this morning, controls for these regional mix-shifts and shows continuing rapid declines in house prices.
–Michael Feroli, J.P. Morgan

On local blogs, you'll find natter such as this:

"During the boom, people forgot about fundamentals and started seeing real estate as a single market. Everyone (media, consumers, analysts) lost sight of the uniqueness of each marketplace."

While it's true that nowhere else has the University of Virginia, Rugby Road, the Downtown Area, the nearby Blue Ridge, TJ's home & influence, it's also true that all real estate markets, and economies in the United States, are connected and impacted by each other.

WSJ: Inventory of existing homes is still very close to its record high so prices will continues to fall rapidly. Since its May 06 peak the Case-Shiller index is now down 15.7%; we expect the peak-to-trough drop to reach 25-to-30%. –Ian Shepherdson, High Frequency Economics

And there's this:

WSJ: Despite the sharp drop in home prices, housing demand has remained depressed, leaving a huge overhang of homes on the market for sale. In addition, rising foreclosures puts downward pressure on home prices since foreclosed homes typically sell at a discount to the market clearing price. As such, we expect home prices to fall another 10% through the end of 2009 as the market slowly, and painfully, clears the hefty overhang of homes on the market for sale. –Michelle Meyer, Lehman Brothers

BUT on a local blog you'll find ravings such as this: "Mortgage rates are still low, the economy nationally is growing, and jobs and incomes are gaining."

This is from a post created in late May 2008. If you have a pulse, as we apparently do here at Real C'ville, you know just from glancing at headlines that this is absolutely false.

And if you actually read the paper during the first week of June, you'd know that Unemployment hit 5.5%, and Oil prices surged to a record $138.00 per barrel, forcing local gas prices over the $4/gallon price.
These factors further diminishes the buying power of the average home shopper.

Additionally, it can be difficult to get a mortgage, which you can read about here.

And then there's this: as the economy has weakened and home prices have fallen in many parts of the country, even homeowners with better loans are also falling behind. The most famous example of this is Ed McMahon. Sadly, he's not alone.

We believe in blogging. But we don't believe in misleading readers.

Read the more reputable, and informed, perspectives quoted above, here at the Wall Street Journal.

Friday, June 6, 2008

Market Stats for May

We're waiting for the conscientious and reliable Jim Duncan, a local Agent, to post his Market Overview for the month of May, coming this Monday, June 9.

While RE blogs are "selling tools," Jim's offers a plethora of useful info, and it's not a "hard sell." We like this. He also periodically, and metaphorically, wrings his hands at the state of the economy and the market. We always find something interesting on his blog, REALCentralVA.

Of course, Jim's much much much more optimistic than we are here at Real C'ville about the state of the local RE market. And he's not as appalled as we--and many other residents--are about locally inflated prices. But we're both just doing our jobs.

While Jim's blog moniker "Real" refers primarily to the market, our "Real" refers to a number of other C'ville elements. You'll see what we mean in the coming days, and especially in the Fall.

For now, in prep for Monday, take a look at the stats he compiled for April, and earlier median home prices for the Region by clicking here.

Thursday, June 5, 2008

708 Park Street Appears in The Hook


That sad little figure of fun, 708 Park Street, which we regaled on Wednesday, May 14, appears in this week's The Hook (June 5, 2008).

The house is in the "Still Available" feature, which focusses on houses that haven't sold but which were previewed in an earlier Hook. 708 Park appeared in the October 25, 2007 issue.

The current Hook story, however, has some incorrect information. It doesn't mention that

a) the house is under contract (though technically it's still available, since it hasn't closed)
b) it states Current Asking is $559,000.00, when actually it's $529,000.00;
c) it states the Original Asking was $699,000.00.

Actually, Original Asking was the laughable $852,000.00, if you believe Loring Woodriff's MLS listing, which screamed in caps, "PRICE REDUCED $323,000.00"--as if that kind of initial irrational exuberance was something to be proud of....

We're just saying, is all.

1 in 11 Mortgageholders Face Loan Problems

About 1 in 11 American homeowners with a mortgage faced foreclosure or fell behind in their payments in the first three months of the year, according to a report released Thursday, a figure that offers a look into the toll caused by the collapse of the housing market.

The period from January to March marked the worst quarter for American homeowners in nearly a quarter-century, according to a widely watched report put out by the Mortgage Bankers Association, a trade group.

All told, about 8.8 percent of home loans were past due or in foreclosure, or about 4.8 million loans. Only a third of American homeowners do not have mortgages.

Both the rate of new foreclosures and late payments surged to the highest levels since 1979. (The delinquency rate includes Americans who are more than a month past due on their home loans.)

To read the full report, click here.

To read The New York Times article by Michael Grynbaum, which puts the issues into further perspective, click here.

Here's "Affordable" For You




MLS #454027
100 Surrey Road
$249,900.00
4 bedrooms, 3 baths
Sq. Ft.: 2438
Acre: .34
Year Built: 1965

This listing appeared on www.mycaar.com just today.

Technically, the house in Albemarle County, not Cville, but it's Zip 22901, just up Barracks Road from the 250 Bypass and the Shopping Center. The price is "right," though none of us here at Real C'ville have yet checked out the place and for all we know, it could be constructed out of cardboard.

The Listing tells us it's a "corner lot," as if this is an asset rather than what it really means, which is that there's lots of traffic as people flee out to the beautiful farmettes that dot Barracks Road, past Foxfield and into the County.

The listing also proclaims that the Asking Price is $100,000.00 less than the last sale price.

Yes, you read that correctly: $100,000.00.

Hello?
What's going on here? Does this mean from the last time it was on the market recently? Is it a Desperate seller? A Short Sale? A shift into the Fourth Dimension? Or are the robots taking over?

We'll share when we discover. Meanwhile, we'll let Dave P. know....