Monday, June 1, 2009

June 1, 2009 - Local Snapshots and National News

In some RE professionals' estimation, there's only one more month left of the Spring selling season. But other agents/Realtors, particularly in this area, believe the season is longer: that sales can continue at a strong pace through July and even have a surge in August before the school year takes hold again.

In any event, the beginning of this June, an important sales month no matter how you look at it, ain't startin' off so hot in the national news on mortgages and foreclosures departments. See below for links.

But first, some numbers snapshots from CAAR.

Why post this? Because it's the data readily available to the homebuyer.

The first set of numbers indicate June's sales reset to zero, along with the current inventory. The inventory refers to the entire Central Virginia Area. Beneath these are the last data for May.

By later in the day, however, the "Inventory" and "Listings sold", etc., had already changed: 3686, 7, $196,000, 67, respectively.

BELOW are the CAAR numbers posted on May 31, which indicated that there were 188 sales during May (top set). (These numbers are repeats of the second set from the above screen set, merely to catch the numbers as they appeared on screen).

188 = 58 sales more than in April (bottom set).


HOWEVER, there may have been more than "188" sales in May, and the numbers are not reflected in the "live" numbers (because they're not really "live;" some sales may be recorded later). This would be a 31% increase in May over April. To repeat, the actual increase is most likely more.

Note that for these posted numbers, the median price went up about $30K; the DOM stayed approximately the same.


LINKS


The Good News

The up-to $8K tax credit is now monetized and may be used to help with closing costs, not downpayment. HUD Press Release. Housing Wire article. (Wait a sec. Why would a buyer be paying closing costs?! Oh. Yeah. It's Charlottesville.)

The Troubling News

Mortgages: The U.S. Federal Reserve's program to keep mortgage rates low by buying securities and Treasury bonds so far has been costly and seems to be having a fleeting impact. Last week, Mortgage Rates Surged, sapping hope for recovery. "Catastrophic Time" for this. Check out the graph that explains why attempts by Treasury and the Fed to manipulate low mortgage rates are failing.

Defaults/Foreclosures: Credit-report provider TransUnion.com said the number of borrowers at least two months behind on their mortgage rose for the ninth quarter in a row, hitting 5.22%. The first-quarter national average is 14% higher than the fourth-quarter average and is up 62% from a year earlier, when the average was 3.23%. Read more.

In the opinion of the Mortgage Bankers Association, Housing Prices Won't Stabilize Until Q1 2011.

Home price declines spread to stable markets.

The $4Trillion Housing Headache: Prices are at 2002 levels (though not here in Nirvana, despite slowest sales in a decade) but mortgage debt hasn't deflated.

Related Reading:
It's All About the Prices: A Sample of New Listings

It's All About the Inventory - CAAR Blog
10 Reasons There Aren't More Move-up Buyers

April 09 Detached Home Sales
Cville MSA Contracts Jan - May 09

48 comments:

craigger said...

I think I've capitulated. I've been looking in this market for 4 years in the 400-600k price range and I don't see a catalyst for any precipitous decline in prices in the Cville region. Foreclosures have only been trickling in and ARM's are resetting into the best interest rate environment we've seen for 50 years. Inventory is high, but I don't think many sellers have to sell. And people are still getting great pricing on crappy 3/2 home in or near the city. So many people that moved here from DC came with a lot of equity and don't want to move. Many are listing at Zillow "move me" prices. Many builders have been able to extend their loans because they are getting good volume on sub 300k offerings. Everything is overpriced by any reasonable metric (rent, replacement value, income multiple, etc.) but without a catalyst there is a good chance that inflation is going to bail everyone in a perverse way over the next 5-7 years. This is slightly upsetting because I would love to get a good deal on a house, but I don't know how we get to the similar price decline other metro areas have seen in over the past 2 years. All I can do is rent. C'est la vie.

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

You may be right Craigger--reasonable metrics may not prevail in this area.

Besides what you mention, there are also builders--at Belvedere, at Hollymead--with mortgage rates at 3.99%.

But it might be a tad too early to capitulate. You should at least give it to September.

Here's how selling prices can come down this summer:

1. Above the 520K level, there still aren't many buyers.

2. Pending sales that have buyers who didn't lock in their mortgage rate for a 30 yr fixed and are closing shortly are, to use a word, ****ed.

Roughly 10% was just added to the selling price on a 30yr fixed. Will the seller agree to a 10% "discount" so the sale doesn't fall apart?

Some of these sales are no doubt going to fall apart.

3. There may be more waffling in the days ahead. What will a buyer who hasn't signed yet do now? Lock in a rate in the hopes that rates don't go higher? Yet what if they go lower? That's quite a quandary.

4. The $8k tax credit doesn't extend very far in this area.

There's still a drumbeat in this town: "Buy now or be priced out forever."

That drumbeat has been loud since at least 2002.

As more markets decline, will Cville remain an expensive island?

It's possible.

Median prices in Albemarle rival LA and SF; while this area has its charms, it's not a City. The urban ring around DC is in a state of further collapse. And due to recent financial layoffs, NYC is having its own private nosedive.

All of which is to say that people who migrate here from major metropolitan areas are likely to wonder at the prices...just like natives.

Another sign of slow sales: Cross check Craigslist. It's already begun: sellers trying to rent out their unsold houses.

It ain't over 'til the Fat Lady sings. She ain't singin' until round about Sept 1.

wahoo said...

Inflation fears are overblown.
If things weren't selling in May/June this market would be completely dead.
There are more houses for sales then buyers. This isn't changing.
Even w good rates on the ARMs readjusting many of those owners never planned staying more than 5yrs which is why they did 5/1 in the 1st place.

Craigger if you do continue renting you'll have lots more cash than anybody you know who owns.

The jobs just aren't here for the prices. There's money here that doesn't come from jobs (trust funds etc) but not as much as in the past. A few years ago it was cheaper to live without a job. Now your nestegg shrinks faster if you want a house.

Anonymous said...

Biggest percentage of detached homes sold in Cville Alb for May were 299K and less. Like last month.

craigger said...

I don't think inflation fears are overblown. Inflation is directly proportional to the money supply. and the presses have been humming:

Terrifying:
http://research.stlouisfed.org/fred2/series/AMBNS?cid=124

Chile, Brazil and Germany come to mind.

Anonymous47 said...

Real C'ville - The Bubble Blog said:

"Median prices in Albemarle rival LA and SF; while this area has its charms, it's not a City."

Is that really true about median prices? What are the numbers? If it is indeed true, it's partly because the declines have been much greater in LA and SF.

In addition, you get much more for your money in the area of Charlottesville, which yes actually is a city. The basic way to measure that is $ per sq. ft. The metric is $150-$200 per sq. ft. here vs. $300, $400 or more elsewhere--a big difference.

This is why your statement below also is dubious:

"All of which is to say that people who migrate here from major metropolitan areas are likely to wonder at the prices...just like natives."

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

Anonymous 47,
Check out the list of median prices for detached single family homes in the 20 metropolitan statistical areas covered by the Case Shiller Index.

These are the median prices for the first quarter of 2009.

It's the first chart in the post:

http://globaleconomicanalysis.blogspot.com/2009/06/case-shiller-and-car-housing-declines.html

We've compared Cville/Albemarle and other areas of VA in the past to these 20 cities as well:

http://realcville.blogspot.com/2009/03/median-homes-prices.html

Much as we all love Cville, it is not a major metropolitan area. It might have incorporated itself as a "city," but that doesn't mean it's a "City" like DC or NYC or LA or SF or even Richmond.

Cville is/was a "college town."

Craigger,
That St. Louis Fed graph is terrifying.

There's been some popular material recently (in MSM) on how the money will be withdrawn to forestall inflation. We'll dig up the links.

Anonymous 9.04,
do you have info to share?

Wahoo,
calls to mind the post on renting v. owning in this area
http://realcville.blogspot.com/2009/04/charlottesville-albemarle-real-estate.html

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

Also, anon47, the % increase in "values" and "asking prices" in this area also rivals any major metropolitan area. The decline doesn't.

"yet"--?

Anonymous47 said...

Interesting numbers, particularly as to when markets peaked and the declines since then.

The home-price declines have been terrible. But the numbers you provide show LA median sales prices at $303,000 and SF prices at $402,000 in March. For C'ville, the number is $199,000 in January. For Albemarle, it's $242,000. Hardly comparable to LA and SF.

Also, these are sales prices. As observed many times, it's the lower-priced properties that are moving. Actual median home values are considerably higher.

Key point: You did not address my comments on $ per sq. ft.

Of course, you are that this is a college town, not a major city. But that is why prices have held up better.

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

Anon47,

The Q1 Median Price for a DETACHED SINGLE FAMILY HOME:

Albemarle: $347,500
Charlottesville: $247,000

Numbers courtesy of Realtor/blogger Jim Duncan, www.realcentralva.com

You seem to be quoting the median for ALL property types: houses, condos, townhouses. Case Shiller reports on detached single family homes.

This is the SOLD median we're quoting, NOT the "Asking" median, which is much higher.

The US MEDIAN is now down to $169K for a detached single family home.

There aren't jobs and income streams to maintain the kind of prices in this area exactly because this is a college town. Too, there's an oversupply of new and existing homes.

You don't have to believe a word OF OUR OPINION on the area's bubble; clearly, you don't.

However, you may want to familiarize yourself with the VIRGINIA HOUSING DEVELOPMENT AUTHORITY and their DATA of the pricing in this area as compared to historic metrics, plus their forecast for the future:

http://www.scribd.com/doc/13671313/CAAR-Conference-VHDA-Economic-outlook

As for price per square foot: And?

BTW, there is sales data going up on Realtor websites, for May. We're in the busiest part of the year. That people are buying doesn't mean this area isn't bubble priced. By any historic standard (price to income, run-up in pricing over the past decade, price-to-rent) it is. May sales mean--among other things-- that people need homes, the FTHB is here, and that this is the time of year for buying. AND that some people have found prices they can live with. You'll surely have your own opinions on what May sales mean, too.

Anonymous47 said...

Bubble Blog, You say:

"You seem to be quoting the median for ALL property types: houses, condos, townhouses. Case Shiller reports on detached single family homes."

Actually, I got the numbers from the link you provided:

http://realcville.blogspot.com/2009/03/median-homes-prices.html

You also say:

"You don't have to believe a word OF OUR OPINION on the area's bubble; clearly, you don't."

Don't worry, I don't share your apparently low opinion of your own views. It's just that I don't believe EVERY word.

In fact, I don't deny there's a bubble. But it's not as big as you think. And all those metrics of income, job growth, etc. relative to home prices are hardly unique to Charlottesville.

You also say:

"As for price per square foot: And?"

I previously explained that, as you surely know. For example, if a 3000 sq. ft. house costs $900,000 in a higher-priced location but $450,000-$550,000 in Albemarle, then people who migrate here from major metropolitan areas are perhaps not as likely as you think to "wonder at the prices" locally. They can get a lot more for their money.

anonymous2009 said...

Anonymous47,
Maybe you could try a new thing here. Discuss some new listings maybe. Here's one from today in Glenmore development in Keswick

3645 Worcester Lane
Assessed: $519K
Asking: $599,900K
Bought $545K in 2003

Why is asking price $70K over assessment?

FWIW, there's a diff between median for detached homes v. median for all properties. Theres also a diff between prices for one month versus prices for entire quarter. Third quarter obviously combines two more months of pricing than January. Case Shiller, NAR, Census Bureau give monthly reports on sales of existing (already built) homes as its indicators of economic activity. They give quarterly reports on sales of existing homes for same reason.

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

Anon47,
The prices you were using from an April post are from the March Case Shiller. The March numbers are for January. Case Shiller has a two month lag time.

In Cville/Alb, there were 7/17 house sales, respectively, for January.

Using Q1 medians may be more reflective of action, agreed?

In the price range you seem to be interested in, along with commenter Same, there is currently in Cville and Albemarle this kind of availability:

$550-580 - 23
$599K - 23
$699-$900 - 118
$900-$1M - 22

For a $700,000 mortgage at 6%, with 20% or $140K down, plus PMI, and Property Tax, that's $3,700 a month.

That's $44,000 a year in mortgage payments.

If somebody moves here from a major metropolitan area, they might think that housing in comparison is "cheaper."

But the median income for a family of four in Cville is $48K; in Albemarle, it's $56K. US Census.

This economy does not have jobs to support this kind of mortgage.

If somebody comes here with money or remote access career, that's great. But the income streams available here don't support this kind of housing.

The income here, as everywhere, has changed just slightly in the past 8 years. But housing prices have on average risen 70+% (CAAR, HUD).

The numbers don't correlate.

Anonymous said...

I can tell you firsthand, as someone who has relocated here from a "major metropolitan area" that has historically been much more expensive than Cville, that the prices in this market right now are absolutely ridiculous. The suggestion that houses here might seem cheaper to an outsider is absurd, unless that person is moving here from Monte Carlo. Everyone in Albemarle seems convinced that they have a million-dollar house. Anon47 must still be living in the 1980s.

Anonymous47 said...

Real C'Ville,
I fully agree with the basic point that C'Ville prices generally are too high based on pretty much any measure. However, there are numerous specific exceptions for a variety of reasons.

Your latest post contains at least two built-in fallacies.

First, you cite the local median income. OK. But then you cite a $700,000 mortgage. Those two have nothing in common because the median income earner will look at a home that's much less expensive.

Second, the vast majority of people buying a higher-priced home have equity from a home they've sold. So they will or can put down much more than 20%.

As an aside, most of the houses with selling--not asking--prices above $600,000, say, arguably are too big anyway. A lot of big, expensive, overpriced houses deserve to stay unsold indefinitely.

Anonymous47 said...

Dear Anonymous,

If you actually did relocate from a "major metropolitan area that has historically been much more expensive than Cville," then how are the prices in this market right now "absolutely ridiculous" by comparison?

How is the "suggestion that houses here might seem cheaper to an outsider...absurd" if that person is moving from a considerably more expensive major metropolitan area?

I'll ignore your ignorant comment that "Anon47 must still be living in the 1980s."

not anonymous said...

"Second, the vast majority of people buying a higher-priced home have equity from a home they've sold. So they will or can put down much more than 20%."

anonymous47, if a buyer is downsizing they might have equity. otherwise you're living in 2006 (if not the 80's). do you think there are so many unsold houses here?

the 600-900,000 market is dying a slow death exactly because of the median income. those prices especially at the lower end are on their way down.

if you just bought that's unfortunate. if you haven't bought yet maybe you should wait. you seem pretty desperate to convince yourself that there won't be a big decline here.

michael guthrie said...

interestingly enough, i know of a property that is well priced around
$700K that has multiple offers on it. .if it goes under contract, i will share the address. I also know of a property that was listed over $600K that went under contract in less than 30 days. maybe the 600-900K priced property isn't dying as "not anonymous" is predicting

Anonymous47 said...

To not anonymous,
In my post 6/5/09, 9:39 AM, which I guess you didn't actually read, I was clearly responding to examples given by somebody else in a previous post. I also clearly stated my view that the market is overvalued. So obviously I am not "pretty desperate to convince yourself that there won't be a big decline here," as you unwisely characterize my position.

Anonymous said...

Michael Guthrie,

since the second of the homes you spoke about is already under contract - can you identify it for us?

Thanks.

michael guthrie said...

it is supposed to settle in the next few days so I would rather wait to see what it ended up selling for. I will keep you posted.

Seriously said...

YES! The anecdotal "multiple offers" line lives on!

There are 141 properties available $600-$900,000 but TWO MIGHT SELL.


HOOOOORAAAAAYYYYYYYYY!!!!!

Jim Duncan said...

Seriously - regarding "multiple offers" - it's not a line. It's a fact.

http://www.viddler.com/explore/JimDuncan/videos/24/

I'm not saying anything other than multiple offers, while not common are not unheard of by any stretch.

(and there are 144 properties active in CharlAlbemarle b/t $600-$900k) :)

Seriously said...

I'm sure there are multiple offers on this and other properties. So what? When the buyers whose offers fail run over and
1. make offers on other properties in the price range
2. and the sales actually close
then it might be time to get excited.
2 of 144 properties is about 1/3 of 1 percent sold of the inventory. Not dead but in critical condition at this moment.

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

Michael and/or Jim -

Two questions:

1. When there are multiple offers on one property how often do outbid buyers NOT move on and bid on others? Is this dependent on price point? (For instance, someone bidding on a house in the lower ranges who's outbid, but can't find another house that suits)

2. Is anybody hearing about problems (that you'd like to share) with buyers who didn't lock in a mortgage rate? Are buyers being urged to lock?

http://www.calculatedriskblog.com/2009/06/rising-rates-next-fed-meeting-will-be.html

same said...

anonymous2009: speaking of trying something new, why not try explaining some sales near or above assessment for houses in the Cville perimeter (as opposed to houses 20 minutes out in surrounding towns)? Here are a handful from the last few months:

1. 2010 Hessian
2009 Assessed: $970K
Sold on: 3/6/2009
Sold for: $1,020K
Sold Price/Assessed Ratio (SPAR): 105%
Prior sale: $1,010,000 (2005)

2. 209 Devon Road
2009 Assessed: $792k
Sold on: 03/27/2009
Sold for: $860k
SPAR: 108%
Prior sale: $430k (1995)

3. 507 Kellogg Dr.
2009 Assessed: $715k
Sold on: 02/03/2009
Sold for: $860k
SPAR: 120%
Prior sale: $630k (2007)

4. 103 Tally Ho Dr.
2009 Assessed: $826k
Sold on: 04/23/2009
Sold for: $845k
SPAR: 102%
Prior sale: $468k (2003)

5. 1526 Dairy Road
2009 Assessment: $646
Sold on: 5/15/2009
Sold for: $635k
SPAR: 98%
Prior sale: $530k (2008)

6. 1336 Hilltop
2009 Assessment: $934k
Sold on: 5/13/2009
Sold for: $900k
SPAR: 96%
Prior sale: $332k (1996)

The larger point here is that we can all cherry-pick examples, though there are at least a couple dozen more that look like these.

(BTW, I tried to post this yesterday, and I'm not sure why it didn't go through. But maybe the moderation is losing comments -- not purposefully, but nevertheless?)

cha said...

New Listing
MLS 466337
304 Montebello Circle City
4bd/2ba

Asking $695K

Assessed: $540,200K

$155K Frank Hardy, Inc

One picture

Cha said...

New Listing
MLS 466106
3340 Harrison Forest Lane
4bs/6bth

Asking $770,000

Paid 2005 $676,344

Assessments declining:

2009 $674,800

2008 $$707,100

2007 $760,00

Cha said...

MLS 466183
3489 Devon Pines
Keswick
Glenmore

Asking $654,000

Previous Sales
2007 $640K
2004 $544K

Assessments far below asking and declining

2009 $489,300
2008 $545,700
2007 $605,300

cha said...

New Listing
MLS 466333
732 Russet Road

$419

Previous owners
2008 $417K
2007 $410
2003 $291,208

Asking prices saw big jump but are now steady while
Assessments declining

2009 $361,800
2008 $376,600
2007 $389,200

Anonymous said...

"1526 Dairy Road
2009 Assessment: $646
Sold on: 5/15/2009
Sold for: $635k
SPAR: 98%
Prior sale: $530k (2008")

"Flip"
Asking price $750
On market for 10 months

Anonymous said...

Same said,

are you an RE agent?

Anonymous said...

same said,

are you an RE agent?

Anonymous said...

Craigger,

take heart - check out the new Albemarle county sales listed for May 8 -20. Several homes sold in the range of $500k-$1M. All of them sold at or below assessment. In two cases significantly below assessment. All significantly below asking price. I believe the price correction has begun and will pick up speed...

same said...

anonymous 10:18: 1526 Dairy was a flip, in which the sellers made $105k over their purchase price. I considered that house, which was priced at $689 for most of the season. Sellers got 98% of assessment and 90% of asking. You wouldn't flip for that?

anonymous 8:25: hard as it may be to believe, I'm not an agent. If I was, I'd have access to the MLS and city data, and I'd be posting that here, too.

same said...

anonymous 8:34: Your May 8-20 parameter is a little too convenient, since there are at least a couple sales earlier in May that are well above assessment. And there is this:

770 Flordon Dr.
2009 Assessed: $1,076,000
Sold on: 05/15/2009
Sold for: $1,200,000
SPAR: 111%
Prior sale: $700k (2000)

In any event, and as others have noted, we're dealing with small numbers.

Anonymous said...

I think we're all seeing and saying the same thing: unrealistic, inflated list prices with a few sales occurring at or near assessment. Everything I've seen (VHDA report, Case-Shiller, etc.) strongly suggests that sale prices are headed below assessments this fall. Patience will be rewarded.

Anonymous said...

Agreed! And don't forget lack of buyers. Sales closed detached homes City of Cville Jan-June 1 down 45% over 2008. County down 25%.

But one more.
MLS 463835 1503 Oxford Road
Charlottesville
Price has dropped to $525K
Assessed $375K

Assessments are the weakest link in pricing a house right now IMO.

Anonymous said...

Same said,

if you are not a RE agent how did you obtain the city data you listed above? Did you search each address individually on the city website? Is there a way to search by sales date period? I have been unable to figure out a time friendly way to track sales in the CVille city area and would appreciate hearing how you have done this.

Thanks.

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

WHEW!

Whose head isn't spinning from all the addresses and numbers?!

Does it seem obvious that asking prices and assessments can be wildly divergent?

Does it seem obvious that there have been sales at, below, and above assessments?

Does it seem obvious that some buyers care a lot about assessments and some buyers do not?

Does it seem obvious that some sellers care a lot about assessments and some sellers do not?

And no doubt there are some obvious observations that we'll have obviously left out.

same said...

Anonymous 2:44,

Most of the data I have listed (in various threads) is from the county. For the city listings above, I had to look them up individually, and I only know about those listings because I looked at some of them when I was buying. Unfortunately, I don't know an easier way to do it. I've been told you can get the data from the city (anyone confirm this?), but I don't know if it comes in a useable or searchable format. The county has definitely done buyers (and sellers) a favor by making its data easily available in a format exportable to Excel. No reason why the city shouldn't do that -- it would help a lot.

Anonymous said...

Thanks for the info Same!

same said...

"And no doubt there are some obvious observations that we'll have obviously left out."

Feeling better now, are we? Obviously ...

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

same, don't really understand your last comment, but it seems off topic. We're providing you a space to post your numbers. Like most bloggers, we have an ID and filter capacity plus ability to delete comments. We've never used these. But perhaps we should if comments are directed at the "bloggers" instead of at the numbers.

same said...

Yikes -- that was only meant to be a tongue-in-cheek response; no hostility intended. Though I will say it's hard to gauge the level of snark/saracasm tolerated here. I do sometimes get the sense that it's more acceptable when it from bubblers. My comments are almost entirely focused on the numbers, explaining and interpreting them as best I can. I think it's fair to say that's not true of many of the responses. But no complaints. As far as the blogosphere goes, it's way under par.

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

Same,
sending you an email.

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

Same,
no longer have your email.

Re snark: its usually not toward individuals per se. You & Scott Pershing seemed to engage in personal snark on a previous post (recovery). Whatever? Whatever.

In terms of City records: you can get assessment records. For $. You can also use the computer in the Assessors office to search sales in neighborhoods. From your own computer you can search entire streets at one time. You can't see the whole street all at once or download the info, but it's easier than entering different addresses.

At the address screen you leave the number blank, then type in just street. Once you're on the first property, you select the tab screen you want to see for the next property (say, "Transfer"). Then you use the inner nav arrow to go to the next record. This isn't as easy as the County's downloadability, but it's better than nothing.

For phone & Assessor Office phone, address, hours, go to Charlottesville.org, Click on Services,select A-Z, select Assessor.

same said...

Bubble: email here is samecville at yahoo.com. I've been told that the city will put its prior data on a disk for you, but I don't know if it's searchable (and you'd have to update periodically). Since all the numbers are there, it'd be nice if they made it exportable online, as the county does. It would be a big help to buyers, especially out-of-towners.