Friday, March 6, 2009

332 Minor Ridge Road: Bank Paid $291,305. Now Listed For $182,900.

332 Minor Ridge Road is close to everything in the City, but technically in Albemarle County.

MLS #462842 - New Listing
4 Bedrooms.
2.5 Baths.
1,980 sq. ft.
Partially finished basement.
$92 per square foot.

This place is on the Western side of 29N, very close to shopping centers and restaurants in "Wynridge." Schools: Agnor-Hurt Elem., Burley Middle, Albemarle HS. It's a high-density area, with lots of condos.

The Current Assessment: $248,100
The assessment history is bubbly: $153K or 55% increase before falling this year:
2008 - $278,200
2000 - $125,800

Nothing appreciates like this. As we've seen.

The Bank paid $291,305 on January 15, 2009.
The Current Asking Price of $182,900 is $108,405 less than what the bank paid:
= a drop of 37%.

An Asking Price of $182,900 is in the realm of reality, folks. This foreclosure changes the comps. Or should, for savvy sellers and buyers. 332 Minor Ridge Road is now priced just above the area median of $173.5K in 2002.

Which is exactly the kind of price correction the Charlottesville MSA needs.
On another note, this place has a history, to say the least. It was most recently owned by Realtor Doug McGowan, whose property purchasing travails were detailed in C-ville Weekly's "A Tale of Two Foreclosures." We learn,

On May 31, 2005, he bought 332 Minor Ridge Rd. for $237,500. McGowan didn’t make any down payment to buy the 1,800-square-foot house. Instead, he got the money from Virginia-based* Resource Bank in the form of two deeds of trust (Virginia’s way of doing mortgages), one for 80 percent of the price ($190,000), the other for the remaining 20 percent. His interest rate? 7.625 percent.

Shortly thereafter, McGowan refi'd with a "pay option ARM," which had a fluctuating interest rate of 8-10% per month for $263,250. One property may have been manageable; but McGowan had three properties, for which he paid over $1.4M. At the time of the article, McGowan's two rental properties faced foreclosure (hence the title); since then, he has also lost his primary residence, 2385 River Ridge Road. Sad.

Some chatter on 332 Minor Ridge Road in the local blogosphere:

Realtor Pavel Dovgalyuk
thinks it will go quickly. (We don't doubt this. Sunday. Many people in Charlottesville want houses they can live in without having a perpetual anxiety attack over the monthly nut!)

In response to this assertion, broker Michael Guthrie, current Prez of CAAR,
says "We are in a very price sensitive market more than a crummy one. What do I mean? No matter what price range, I continue to see that once a property gets reduced to a certain point, THERE ARE IN FACT buyers that are ready to respond by submitting an offer. A crummy market on the other hand is when houses don't sell because there are no buyers to buy."

We're going to suggest that this market is a combination of "crummy" and price sensitive. There are far fewer buyers than there used to be in this area. For one thing, there are too many sellers trapped in their current houses because they overpaid in the past seven years. They can't unload the property in order to "move up." For another thing, there are many people who just lost lots of cash in retirement/stock market accounts. Additionally, there are hiring and wage freezes at UVA for the next couple of years, and every major employer in the region is having furloughs and/or layoffs. There are no new jobs headed this way. On top of this, Cville / Albemarle is one of the most expensive areas in the Commonwealth. Whereas the majority of the state has seen price "corrections," this area has not. Buyers are well aware of this pehnomenon. All of these factors = fewer buyers.

But Mr. Guthrie is correct about "Price sensitive." Today's seller's are not willing to make the same mistakes that bubble-years buyers made. When a property comes on the market with an asking price that actually seems "sane," it's not surprising that there are multiple offers.

New buyers don't want to join the millions of others who lay awake at night worrying about losing their homes. A house is not an asset. It's a place of comfort and refuge.

You can see Pavel and Michael (and many others) discussing.

But BTW? A few houses with multiple offers do not a "bull market" make. For every house that has multiple offers there are dozens that do not (more than a thousand properties available in C'ville/Alb alone). Every property that closed during January or February was replaced by dozens and dozens more for sale. And the weather hasn't even changed yet, which will bring out the "For Sale" signs in even bigger numbers. Still, this is a shift in the right direction....


Anonymous said...

Outstanding post, a grand slam! Finally, a glimmer of reality surfaces in this moribund market.

If prices here remain artificially inflated through the spring and summer, and the waves of ignorant, out-of-touch with reality buyers that sellers and their agents/accomplices are now counting on, fail to materialize, we may finally see the correction that is needed here.

and me, wag. said...

So if Gurthrie thinks this is a "price sensitive market," why isn't CAAR having seminars on pricing?


Anonymous said...

Here is another one, build in 2009 in Crozet, MLS# 462851; offered for $289,000, 'formerly priced in the low $400,000s'.
It's great to see some good value... finally.

In the Belmont Hood said...

Compare this with the "cottages" listed for the same price in Belmont and Woolen Mills. 800 or 900 sq feet for 10, 20 , 30, 40 thou more.
No consistency in pricing because the greed factor hasn't worn off yet. Still operating on the assumption that if its in town it's golden.
A pricing seminar offered by buyers would do realtors some good.

Anonymous said...

How about 1320 Kenwood (MLS: 462883), asking price is $1.1 million, assessed at $408k. Co-listed by Pavel. Maybe he can explain?

not anonymous said...

LOL, anonymous. Don't you know that "pricing" is "intellectual property"--?!

Besides, don't you want the "soul of SoHo" in the middle of Cville?

Thanks for the great laugh!!!

Nalle said...

A co-worker called about this house on Minor Ridge Road and was told that they had received 45 inquiries and that multiple people were viewing the house. My guess is that the bidding will take this house over the listed price and probably end up getting more then dealing with 1 or 2 low-ball bids on the original asking price. Regardless, if folks start pricing houses in order to attract attention in this way. . . prices will come down.

House Hunting said...

Nalle, that could be a good pricing strategy. But why was your coworker told there were 45 inquiries?

It's the same kind of group think as "Buyer activity is picking up!" Trying to make people think that they better rush out and buy a house or they'll all be gone. Or trying to make people not "fear" buying a house. That's a word used a lot on Real Central Virginia. "Fear." What Are You Afraid Of?"

As if it's a matter of being a "scaredy cat" if you're concerned that an overvalued house is going to lose value in the next two years. It's schoolyard taunting.

The house IS going to lose value. Maybe Jim and his crew don't mean it to come off this way, but that's what's happenoing.

The other scare tactic is ""interest rates might go up!" They might, it's true. But if a buyer isn't paying 100 grand too much for a house, a rise to 6 from 5 in interest rates isn't going to deter a sale.

My wife drove by the house. She knows every property in Cville / Albemarle at this point in every price range because we've been on the market so long. She thinks it's overpriced! :0)

But agree with you that this pricing strategy is far better than letting a place sit on market for ages.

The other thing is that many sellers can't set reasonable prices because they overpaid. Oh well.

And while I'm on this rant the othing about the "Sales are picking up!" line is that if sales got much lower, all the members of CAAR would have to lobby city hall for more section 8 housing, because they'd need it themselves!

It will be great when sales and activity are picking up. When the economy gets back to normal. We're not near the bottom here or elsewhere. Less so here than elsewhere.

I'm done now. :0)

Terrific post, BB.

Nalle said...

I don't think I'd be interested in that house (whatever the price), but I don't think that it is currently over-priced. At the same time that sellers are going to have to come down to sell. . at some point folks who need to buy houses are going to start setting prices in this new era. Hopefully those home-buyers will be wise enough to be honest to themselves (and the market) about what they should be paying for a house. However, its important to recognize that a house at 182,000 is pretty cheap. . with today's rates you are looking at $900 a month on a 30-year mortgage. Can you rent a house like that for $900? No. Does it make it the world's greatest investment? Not necessarily. . but please let me know if anyone has figured out what the safest or best investment is these days?

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

Hi, Nalle. Thanks for sharing the info about your coworker. We're guessing what you say is accurate, that the selling price will go up with multiple bids. Agree that this is a good pricing strategy.

We're thinking that your mortgage math is a little low. If you figure in a 10% down on the asking price, a buyer would need PMI, and also add in property taxes. This brings the monthly payment closer to $1450.00 for the first seven years. We used the mtg. calculator at Scroll down on the right sideblog. Of course, if an FHA loan is used, the numbers all change: no PMI, smaller down.

FWIW, we don't think that houses can be considered "investments" for years to come. The reason to buy a house is not as an "investment," but because you need a place to live.

This is what got the world into the current dire financial and economic straits: "housing will always go up!" It's going down right now, and will for some time until it evens out. Then it will increase in value slowly....

House Hunting, we hear you. We get a lot of emailers annoyed about the "mortgage rates might go up" line and "sales are picking up" idea. But as one commenter recently said over on RealCentralVA, it's Realtor noise. Just look at it that way. They're just trying to make a living. Generate some enthusiasm! Make it ok to look.

We have an upcoming post on what buyers fear, which addresses these two issues.

Because as Nalle says, what's a good investment? Some houses, maybe. But not many....

Anonymous x 3, thanks for commenting. Wag and Belmont, a pricing seminar would be eyeopening, wouldn't it. Often the commenters on this blog offer their own private pricing seminars!

Jim Duncan said...

"It's the same kind of group think as "Buyer activity is picking up!" Trying to make people think that they better rush out and buy a house or they'll all be gone. Or trying to make people not "fear" buying a house. That's a word used a lot on Real Central Virginia. "Fear." What Are You Afraid Of?""

House Hunting -
First, thanks for reading.
Second, I certainly don't intend for my commentary to come across as "schoolyard taunting."

I just don't think that fear in and of itself should be the primary motivator in any decision making process. Logic, data, and some emotion are what I strive to value the most when negotiating.

When I say things in text (print?) or in person such as "rates may (they will - eventually) go up" or note that buyer activity is picking up, I try to put those forth as facts, not fear-inducing statements.

When more people start showing up at open houses, what should an impartial observer conclude?

"FWIW, we don't think that houses can be considered "investments" for years to come. The reason to buy a house is not as an "investment," but because you need a place to live."

Yep ... but ... some houses could be considered as investments, but most properties should be purchased as homes - the intrinsic value must be seen.

Regarding the "sales are picking up" line - I searched my site for that phrase and only found one instance - and I didn't write it. :)

On the desire for the economy to get back to normal - I don't think we would recognize "normal" if it showed up tomorrow. "Normal" is a shifting definition.

Cville Buyer said...

Hi, Jim,

Since the appraisal mad mad real estate post got hijacked into a whose fault is this, Bush or Obama festival, I'm going to ask here: where can I find foreclosures that aren't yet listed, or REOs? When I followed the link to Charlottesville, it took me to your blog :0). Will there be more foreclosures showing up in your search feature?

FWIW, admire your blog, and really like the fact that you consistently show up on the bubble blog. The buyer activity is up post (or WHATEVER the phrase was) generated good discussion.

michael guthrie said...

You are absolutley right that pricing is important and we are emphasizing that to the Realtors in our association. Being brutally honest about what is happening in the market is not a fun conversation to have with a seller. My opinion is that we are doing a disservice to a seller when we allow them to think they can get a price that is unrealistic. As Nalle and the Bubble Blog shared earlier, getting the price right and then being a bit more aggressive can create multiple offers which in certain instances, will drive up the price. One of the hardest thing for a Realtor to do is say no to a listing but just as we need to be brutally honest with our sellers, we need to do the same to ourselves which means not taking a listing that we know will not sell at the price the seller desires. Ultimately, it is the sellers decision but a Realtor can say no allowing someone else to figure out how to get an overpriced listing sold in this price sensitive market.

Sasha said...

I assume you've seen this;

I just realized my original comment on this post from months ago about that home needing a ton of work was deleted. Why?

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


Your comment appeared on an update about this property, and is still available here:

As you might imagine, this blog has received a number of emails about this property in the past couple days :0) and it will be highlighted later this week....

I'd Really Like To Know said...