Wednesday, August 19, 2009

Price Reduced. Again. And Again. And....

We've all heard of "chasing down the market." But then there's being chased down by the economy, the fact that it's 2009--and the lack of buyers. Today, a peek at recent price reductions. Several of these properties have had several price cuts.
  • Is it true that every house will find a buyer at the right price? Probably not. There's just too many houses vs. buyers, especially in Albemarle County and some of the more rural areas of the MLS.
  • RE ain't what it used to be: buying and holding for 5-7 is the "safe" and the new norm.
  • There's a lack of lateral ("Why bother?") buyers and move-up buyers.
  • The mid- to high-end of this market will remain slow for years to come.
  • And finally, going forward, the area's unemployement and underemployment are the big Unkowns. Consider UVA's coming distress and the monthly closings (sometimes weekly) of area stores and small businesses, and the latest in the Commonwealth's woes...and then there's GE Fanuc....
And recent sales? The Charlottesville MLS had the second lowest pending sales in Virginia in 2009 Q2, behind Danville, which has a 14.4% unemployment rate.

Additionally, pending sales in July were less than in May and June, which means that going forward, closed sales will be even fewer. HOWEVER, in the lower price range, things are still moving: which is a nationwide phenomenon, as the pent-up demand for lower-priced housing is now achieving something of a "feeding frenzy" as folks scramble to find something to buy in order to qualify for the up-to-$8k tax credit.

This federal tax credit expires on November 30, 2009. In order to hit that deadline, a buyer must have a house under contract (in most cases) by around September 30. Just six weeks away. (See REALCentralVA's nifty countdown widget.)

Below are some sellers who are cutting their prices, again and again. Are they cutting enough?

106 Minor Road - $775K (includes an "additional lot" (aka "the yard").
$825K to $775K
What with President John Casteen leaving and preparing everybody for job cuts as the budget is pared by millions, this Lewis Mountain Road neighborhood house, which is basically on Grounds, may not tempt any UVA profs or administrators even with the "discount."
Assessed at $531.6K; no purchase price recorded.

Below, two houses on Hilltop Road, which runs near to Dairy and Barracks Road, hilly and with the feeling of seclusion. A neighborhood with some of the most bubbly prices in the City. Consider the following ca. first half of 20th Century 3-4 bedroom cottages:

MLS 462629 - 1308 Hilltop Road - $749K
$839.9K to $749.9K
Listing says: "HOME WAS APPRAISED FOR $7770K IN JUNE 2009." That's right, screaming in caps. Ouch.
20+ year owners; appraised at $736K.

MLS 462928 - 1403 Hilltop Road - $749.9K
Two Price changes, $839 to $749.9
Longtime owners; assessed at $666K

MLS 451057 - 464 Ragged Mountain Road - $6,900,000
3 price changes = -$1.6 Million since 1/09
Off Dick Woods Road in Ivy, western County.
Owner is RE agent with other estate properties that have also been for sale for the past couple years. Interestingly, at 5932 Blenheim Road: price recently went up to $6M, from $750K less in 10/08; in Scottsville, southern County.

MLS 464923 - 1613 St Annes Road - $589K
Two price reductions in the past year, one recently of -$90K; $729K to $585K
This blog first looked at the house in September 2008.This house is across the 250 Bypass from the Rugby Road area, in Greenbrier, City.

MLS 461691 - 1121 Pheasant Xing - $449
6 price changes since Feburary, starting at $529K
Owners paid $291K in 2000; assessed at $419K
Newer Subdivision in Carrsbrook area, County.

MLS 457293- 1101 Little High Street - $495K
1 change this month, -$100K, since listing 9/08
Last sold for $226.5K in 2000; assessed $359.7K
Near Downtown Charlottesville.

MLS 463882 - 106 Cannon Place - $465K
4 changes = -$100K since 4/09
Owners paid $262K in 1998; assessed at $421.9K
Hessian Hills, off Barracks Road. City close, County taxes.

MLS 464447 - 1833 Fendall - $595k
Priced at $742K in 4/08; appraised at $570K
Owner is a RE agent.
In Rugby Road/Venable neighborhood in City.

MLS 464503 - 1008 Calhoun Street - $445K
4 price changes, $510K to $445K
This house is on a street that "T's" off Locust, which has some grand houses. Problem: the little street has a number of low-end rentals, and is such a popular cut-through that it has speed bumps.

MLS 465225 - 309 Monte Vista - $285K
Just one cut However, an adjacent empty house was listed for foreclosure auction last Fall; prospective buyers may want to look into ownership and future plans on this property.
Owners paid $227K in 2003; assessed at $290K
Fry's Spring in Charlottesville.

Various land parcels from 4-40 acres (here's one example) at "Ivy Estates" in the "heart of Ivy" have recently been dropped 20-25%, in the hopes of attracting buyers for homes in the $850K-$1M range. Western Albemarle County.

Need a condo? Prices are dropping in the -$25K range at Glenwood Station on Rio Road, but they're still in the mid-300's. (Hmmmm....Who owns that place?) Lots of condo short sales and foreclosures and plummeting prices, as well, in the City and County.

Related Reading:
Sales Listings Indicate Lack of Move-Up Buyers
The VHDA August 2009 Forecast
Cville MLS Compared to Rest of Virginia in Sales
Half of All Mortgages Underwater by 2011


the new black? said...

$500K+/- is a popular price. $700K+ houses are dropping into the $500's around here. But houses that should be listed in the $300's still have bubble prices in the $500's. How many houses are actually selling in the $500K range?

Debaser said...

Hi the new black?,

Pam Dent has a nice graph of year to date sales by price range that looks to be updated monthly. Here is Charlottesville and Albemarle (purple line is 2009).

I think they clearly show that the 2009 sales decline vs 2008 is coming from higher price homes.

craigger said...

Cville unemployment is at a 20 year high - 6.4%

It will take a while for this to flow through to foreclosures, but the arm wave will be fierce here, especially since we have standard conforming mortgage amounts here.

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

Craigger, a comment of yours from a few months ago seemed to indicate you were throwing in the towel on house purchase....So....

1. With high unemployment (new numbers due tomorrow, too)
2. Today's announcement of record (rising) defaults/foreclosures (over 13% of all mortgages according to Mortgage Bankers Assoc)
3. Foreclosures expected to continue rising and peak at end of 2010 (MBA again)
5. Plus the lack of inflation for foreseeable future
6. Plus continued slow market
7. Plus price reductions....

With the caveat that your own job is secure, have your future purchase plans shifted to "go" again?

Debaser, thanks for the links. Pam Dent also has pie charts of house prices that are useful, which present the whole MLS and all kinds of properties. click on "blog."

the new black, have noticed similar. Anecdotally. And/or if not selling in the $500k range, likely to be pulled and turned into a rental b/c the rent may be managable by someone w/decent job, whereas the mortgage/down payment cannot.

craigger said...

Well, for the right price I'll buy anything. But I'm not too optimistic for the rest of 2009 or even the first half of 2010. The only catalyst that would cause near term price decreases is foreclosure. Over a longer time period the price / income ratio of this area will converge to other areas, but without a catalyst like foreclosure, the price can languish, just like value trap stocks on the cheap side or overvalued fad stocks on the expensive side.

It takes a lot of time for unemployment to flow through to foreclosures, since you have to blow through your savings, then you have at least 2 months until your home goes to foreclosure in VA. And even then you have to wait for the property to go through the banks drastically overwhelmed REO department. ARMS here will be a problem, but they don't really start hitting until half way through next year. And for the housing bulls out there inflation will be their biggest friend in 2012 and beyond.

So if i stop blabbering, then I would say yes, I'm still looking, but there's not really any value right now.

Anonymous said...

It's 2006 for these sellers and new listings:

MLS 468774 1888 West View Road $1.2M

MLS 468786 517 NE 2nd St $900k

MLS 468797 7707 Northwood Ave $850k

Pride of ownership blinding these sellers. West View Rd is a redo, bought for pocket change in 01. 2nd St: this is a small price drop from the $1M original asking a year ago and the 3rd MLS number. Northwood: how many houses have actually sold at this price in this neighborhood?

Real Estate Intervention said...

Every time I see the show Real Estate Intervention, I think of listings I've seen in Cville or Albemarle.

HGTV 10.30 pm Thursdays

Last week's show had a gal with an Option ARM. The loan was already 20,000 more than when she bought the house in 06. And her house was worth much less. Monthly payments were scheduled to rise by $800 each month any second. She had just suddenly clued into the fact that this was the kind of loan she had. Her house was listed at $260,000 (ie what she owed) and the host told her that it should be $209,000. Nightmare.

More Price Reductions said...

114 Middlesex Dr $149k from $230k Foreclosure Is this the best price for a house in need of reno's and 20 yards from 250 bypass?

811 Cabell Ave: $404k to $389K - mls 467319 Nice house but price not indicative of neighborhood

301 Gillums Ridge down $30k to $485 MLS 467180 Too much competition at this price point

1621 Bruce Ave -- The flipper house that was posted here a few months ago, down $20k MLS 466461
House two doors down is still less

3045 Waverly Drive $915k to $879k MLS 466464 Is this a big enough price drop for this price point?

MLS 447214 reduced $100k down to $450k As is brick house on acreage on the market since last fall

304 Montebello Circle $695k to $649k 466367 Listing says it has 45 windows and all youu think of is how much $ it will take to heat or cool

Anonymous said...

Serious Buyer,

Hard to reconcile the scope of price reductions in C'ville with what has happened nationally and at the price points the industry views as a possible bottom.

Per commentary this week: "According to Ivy Zillow, the lowest tier of the housing market has seen prices fall 45%, the mid tier is down 33%, but high end prices are only down 27%."

C'ville sellers have only begun to drop prices. Judging from recent listings of midpriced homes, realtors/sellers are still seeking profits and the greater fool.

MLS469123 1829 Clay Dr, Crozet, listed at $369,900. Last transfer of $247,500 in 2003. Implied gain of 49% in 6 years or 8.24% per year simple.

MLS468280 428 Cranberry Lane, Crozet, listed at $439,900. Last transfer of $328,500 in 2002. Implied gain of 34% in 7 years or 4.84% per year simple.

Of course anything can happen with government intervention, so I certainly wish these homeowners the best. However, I will continue to search for value in what I believe to still be a grossly overpriced market.

Seriously said...

An expectation of profit seems to be the norm in Cville and Albemarle County despite what's happening everywhere else and despite the fact that houses priced over $375 upward are incredibly slow to move. "Everywhere" includes surrounding Counties and MLS's.

The inventory that's moving the most at the moment are attached townhomes. IMO like a new car these babies are going to lose value the very second the new mortgagedebtor takes the keys. How many buyers know this? How many agents are honestly telling clients this?

Or is the "American" dream of ownership still such a pull that paying for the privilege of renting too much money overrides common sense?

I'm thinking it's the latter.

Buying a place at the lower end of the market is government subsidized and therefore a new kind of bubble.

Sales will stall again in this area in October and onward and inventory will rise.

Anybody who is trying to beat the Nov 30 closing deadline for the up to $8k tax credit is doing themselves a dirty. The same house will be less, will be listed for less and sold for less, after Nov. 30.

Unless the tax cred is extended or rises to $15k as the NAR wishes. Then it'll be bubblicious again!

Jim Duncan said...

"Buying a place at the lower end of the market is government subsidized and therefore a new kind of bubble."

Buying a house at any level is government subsidized, same as if you're buying a new car now and taking advantage of the cash for clunkers program.

I'm not disagreeing with you, but nearly everything in this market is government subsidized.

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

Craigger, wonder what the coming months will bring in terms of pricing.

Serious Buyer and Seriously, there are certain segments of the market, and some sellers, that no longer expect profit, but are just hoping not to lose. Or who have priced a loss into their asking.

Nevertheless, it remains surprising to find properties on the market that do not seem, to buyers, to be competitively priced. But the asking price may have more to do with being "over leveraged"--having taken a HELOC or re-fi'd at bubble peak--than actually hoping for a profit.

Re: Government subsidies:
Calculated Risk has a post on the cost for car and house subsidies, as well as impact on sales:

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

More Price Reductions,

Thanks for adding the properties.

Price reductions may be discovered at (select "price reductions" from the left menu) or at REALCentralVA's IDX search.

Anonymous said...

Serious Buyer said,

Yes Bubble, you are correct that a high list price does not always reflect the unrealistic expectations of a seller, but rather circumstance.

With the absence of near term inflation, large inventory overhang, and deleveraging of loans -- one can only speculate when/if sales prices will meet one's expectation of not taking a loss. From a buyer's perspective these are also the reasons not to fall in love with an 'overpriced' house or delay a move if already a homeowner.

There are areas outside of C'ville, like Lake Monticello and Louisa, that have some good values now.

Seriously said...

Who sets price? Seller or Agent? What if they're the same person? Loring Wodriff has one of her own properties for sale. Like several of her firms listings (Park St Dice St Graves St and a cottage out in Keswick come to mind) the asking price has that "expectation of profit." 206 5th st sw #a. mls 469221 $329,000

Purchased in 2005. Ring ring. Hello? 2005 is calling to let you know that everything was overpriced then.

downtownenvy said...

Can we have a brief recap on the topic of assessment vs appraisal. Sorry for any misspellings, I am typing on two gin and tonics here.

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

DTE, must be nice.

What kind of recap are you looking for? The percentage of sales price to assessment ratio?


Jim Duncan said...

1) Appraisal done by the bank to determine their risk level and what they are willing to lend. Appraisals are also looking, to a greater degree, at the (immediate) past.

2) Assessment that is, by code, supposed to be 100% of market value – this is, and has been, with regards to true market value, irrelevant, as it is not a up-to-date as a market analysis reflecting currentmarket value, as they are done once yearly. Up until last year, they were done, in Albemarle, every two years. Nelson does them every five, I believe.

3) Market value – as determined by a ready, willing and able buyer and seller having a “meeting of the minds.”

I see there as being three different valuations -

Government’s assessment is a take on fair market value, but is less accurate, in my opinion, as it is subjected to less critical analysis and not subject to the open market.

downtownenvy said...

Thank you Jim and Bubblers. I think that it is important to clarify that now and again because it seems like people think that one is synonymous with the other which is clearly not true.