Thursday, April 30, 2009

Bank Forecloses, Then Resells for 50% Less Than Original Price

A reader sent this foreclosure and resale. Unit 8 of 2651 Barracks Road, aka the "Barracks West Condos," was repo'd at auction, then sold quickly: 50% off what the original owner paid.

Condo ownership in many markets is collapsing. Thus there are many "good" prices on condos now, even in this area. (Tighter lending standards, however.) To generalize: many apartments were converted into condos, too many new condos were built, many mortgageholders wouldn't have qualified for loans except during the years when all that was necessary (seemingly) was a pulse, and prices got too high.

In many instances (but not all) banks are eager to unload repossessed property. Banks don't have the personnel, time, or property management skills to keep property. They can write off any "losses."

Previous Owner FEDERAL NATIONAL MORTGAGE ASSOCIATION
Owner END-IRA INC, F/B/O MARIE O PEALER IRA
Sale Date 03/18/2009
Sale Price $54,000
Deed Book/Page 3706/509
Validity of Sale Foreclosure

Previous Owner XXXXXX
Owner FEDERAL NATIONAL MORTGAGE ASSOCIATION
Sale Date 01/23/2008
Sale Price $91,700
Deed Book/Page 3542/130
Validity of Sale Foreclosure

Previous Owner CHEETAH PROPERTY OWNER LLC
Owner XXXXXX
Sale Date 08/25/2006
Sale Price $109,900
Deed Book/Page 3278/436


Cheetah Property Owner LLC is an arm of the Hunter Craig empire. County records available online here.

Other foreclosure posts:
US Foreclosure Filings At Record High Q1 2009
Location, Location, Location. Foreclosure.
4886 Dick Woods Road
332 Minor Ridge Road - Bank Lists at 37% Discount

1404 Westwood: Listed By Bank at $315K, Sold for $239K
A Tale of Two Foreclosures And Other Properties Nearby

Wednesday, April 29, 2009

Location, Location, Location. And Foreclosure.

Foreclosures can happen in any neighborhood, at any price point. Both sellers and buyers need to know about foreclosures (public notices found here), as they impact price.

The following properties are within "spitting distance" of each other in a neighborhood that is close to UVA grounds. Some were mentioned in Comments after the CMA/recent posts.

A. 1810 Winston Road - Scheduled for auction afternoon of 4/29 Charlottesville Courthouse steps. Owing: $333.7K. Owner paid $460K in 2004. Auctions are subject to change w/out notice.

B. 809 Winston Terrace - MLS 461693 - $795K. Owner Paid $515K in 2006.

C. 1833 Fendall Ave. - MLS 464447 - $697K (from $742K week ago). Owner paid $227K in '97.

D. 1841 Fendall Ave. - MLS 464906 - $525K. Owner paid $900K in 12/2008.

Go to maps. google.com to input addresses.

All are similar in size and lot, but some have more upgrades than others. Besides the potential foreclosure, one seller, who bought less than six months ago, is changing the comps.

Saturday, April 25, 2009

Late April Links

Housing Prices

WaPo
Nice Place, But What's It Really Worth? The quandary that arises when recent comps aren't available.

Clusterstock
Five Reasons Why House Prices May Never Recover - Includes the link to Charles Hugh Smith's longer version.

The Housing Chart That's Worth a Thousand Words - Economist Robert Shiller's History of Home Prices.

Why a 50% Drop in Housing is Not the Bottom - Charles Hugh Smith, again.

The Big Picture
"The Elusive Housing 'Fair Value'" Be sure to follow the links at the bottom of this post; Barry Ritholtz consistently nails spin and takes a macro perspective on the numbers in housing, stock markets, financials.

Calculated Risk
Home Sales: The Distressing Gap - Home prices will stabilize when the gap between new and existing home sales closes.

New Home Sales in March New Home sales may have bottomed.
Existing Home Sales in March Down YOY.


Foreclosure Crisis


Mish's Global Economic Trends on Soaring Fannie/Freddie Delinquencies. Especially troubling are the recent prime (excellent credit) mortgage delinquencies, up 70% between Nov 08 and Jan 09.

SF Chronicle: Nationwide, banks have an estimated 600,000 foreclosed houses, and are not currently reselling them. Massive shadow inventory can further depress prices. The data is from RealtyTrac.

Bloomberg: Fannie Mae Creates Housing Mirage With Bum Loans

Economy

Rising home vacancies will depress rents nationwide, which give Fed Chair Bernanke plenty of time to withdraw all the printed money from the economy--no worry for a while about inflation.

WSJ: What makes a global recession?

Realty 2.0

The Email Handshake Negotiating via email.

Auctions for Distressed Property Loans Go to the Web

Blasts From the Past

Harper's Magazine, May, 2006: The New Road to Serfdom - An Illustrated Guide to the Coming Housing Collapse. Economist Michael Hudson proved prescient.

The Hook, May, 2006: Has Charlottesville Jumped the Shark? Writer Dave McNair gets some opinions.

Friday, April 24, 2009

"The Only Way To Know What Your Home Will Sell For"

From the Charlottesville Area Association of Realtor's 2009 First Quarter Market Report:

The only way to know what your home will sell for is to have a REALTOR or appraiser prepare a comparative market analysis (CMA) for your property. This market is changing very quickly and to be up-to-date, you need to do a CMA every two weeks. Pricing a property correctly is the best way to sell it!

Related Reading:
Cville Area Q1 Sales Significantly Down; Area Median Home Prices; CAAR Report Via BB; DP on CAAR; VHDA Area Economic Data; No End in Housing Downturn; No Bubble - 2006 Hook article

Spence, Goldschmidt, Church Hill Development: More Foreclosures

This isn't the first time these names have appeared in The Hook's Property Auctions column since last October's $3.5M worth of foreclosures. Will this be the last time?

April 24 at 3:45pm at the Albemarle Courthouse

Property: Lot 6 Murray Dick Woods Road
Debtor: Church Hill Development Co., James B. Spence III, Joshua A. Goldschmidt
Amount owing: $200,000
Bidder brings: $20,000 or 10 percent sale price
Info: Samuel I. White PC 757-457-1460

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

Wednesday, April 22, 2009

1833 Fendall Lane - Charlottesville - $742K














MLS 464447

$742K

1833 Fendall
4 bedrooms, 3 baths
2200 sq. ft., ca. 1952
Assessed: $570K
Paid $225K in 1997
10.6% annualized appreciation
Owner is RE agent

1920 Red Hill Road - "Unique Opportunity" in Albemarle County

MLS# 464694 - 1920 Red Hill Rd - $1,375,000

6 Beds, 6.5 Baths, 8,000 Sq Ft, built in 2009. Design: "Brick Manor House." No pictures available.

Listing: "Unique opportunity to purchase a classic Virginia plantation-style home in the development phase. Spectacular panoramic views of both the Blue Ridge and Ragged Mountain. 21 acre farm with new spring-fed pond, cleared site for barn, 2 wells and 8,000+ square foot home under construction. Home is for sale as is. Plans are available as well as builder bids for cost to finish. Two finish options available - 8,000+ square feet and 11,000 square feet."

From County Records
Previous Owner SYCAMORE CREEK LLC
Owner MORRIS, ANDREW S OR STEPHANIE L
Sale Date 07/05/2006
Sale Price $550,000
Deed Book/Page 3243/435
Validity of Sale Valid Land

Freddie Mac Official Dead in Apparent Suicide

David Kellerman, 41, was a longtime exec at the giant mortgage loser, and named acting CFO last September after the government seized control of the company. Freddie Mac has had billions in losses. WaPo article.

"For Housing Crisis, The End Probably Isn't Near" - NYT

In this NYT article, David Leonhardt visits foreclosure auctions around the US and concludes, based on the low prices, unsold inventory, and more distressed properties that will come on the market due to Fannie Mae and Freddie Mac foreclosures, that the end is still some time away...nationwide. Leonhardt discusses prices dropping then ends by saying,

[T]he great real estate crash is not over....So if you are part of the 30 percent of American households who rent and you’re trying to decide when to buy, relax.


The market is still coming your way.

Read here.

Tuesday, April 21, 2009

Goldman Sachs Sues Blogger "GoldmanSachs666.com"

Finance Whiz/ CNBC commentater Barry Ritholtz of the blog The Big Picture (linked in our sidebar) suggests that if you're a blogger, you add GoldmanSachs666.com to your blogroll. Here's why.

Another finance website/blog, the Mortgage Lender-Implode-O-Meter has also recently been sued. Add them, too.

And of course if you're a local blog, you want to have Waldo Jaquith's cvillenews.com on your roll and be supporting them, as they're currently fighting the good fight for bloggers and readers alike on the Internet, fighting a subpoena to reveal private information about readers/commenters.

Monday, April 20, 2009

Blast From the Past: 2006 Hook Article, "Bubble Trouble? Real Estate Market Slowing"

Here's a trip down memory lane courtesy of local weekly The Hook. It's dejavu all over again as you read writer Courtney Stewart's article from November, 2006, about the slowing real estate market in the Charlottesville area.

In 2006, sales were down 18% from 2005 figures. This must seem like the proverbial walk in the park now, with current First Quarter Sales down:

2009 sales -33.9% in the region (Charlottesville -40%, Albemarle -18.7% ) from 2008.

Sales have been declining for several years:

2008 sales -27.4% in the region (Charlottesville -7.1%, Albemarle -40%) from 2007.

2007 sales -15% in the region (-24% in Charlottesville, -16.4% Albemarle) from 2006.

And yet, some of the article sounds very familiar. This is it in its entirety; the bolding is the BB's.

Bubble Trouble? Real Estate Market Slowing

by Courtney Stewart

Remember the good old days-- last year?-- when you could buy a house in Charlottesville for $100,000 one day and then put it on the market a couple of weeks later for $250,000? Okay, things might never have been that good, but there was a time not long ago when some home sellers made extraordinary profits seemingly overnight, and some real estate agents earned enough in one year to retire.

Take one of the condos at Solomon Court on Hydraulic Road just over the county line. On June 2, 2005, that condo sold for $99,500. Two months later, on August 12, the new owner sold it for $148,000-- an increase of nearly 50 percent. All over town, similar flips were occurring, with double-digit profits padding pockets of speculators.

It doesn't take an economist, however, to see that things have changed in the housing market on both the local and national level. Because local listings have tripled in the last two years while net sales have dropped by nearly 18 percent, the words "bubble," "burst," and "buyers' market" roll off tongues around town-- with dismay or glee depending on the speaker.

Has it really happened? Is it still smart to buy a house in Charlottesville? Will people who paid those princely sums for a house over the last several years ever see their money again?

Everyone needs to settle down, say several market watchers. They acknowledge things aren't as raucous as they used to be, but they insist the market still works.


Yes, there are more listings. A lot more. Eighteen months ago, the multiple listing service offered 1,100 properties, says Charlottesville Area Association of Realtors CEO Dave Phillips, who tracks local real estate statistics. And as of press time this week, there are approximately 3,000 listings in Charlottesville and Albemarle, a nearly [200] percent increase. The number of transactions completed or pending in Charlottesville or Albemarle during the third quarter of 2006 is down about 18 percent from 2005 figures. [Currently, there are 3633 properties for sale, median $266K. Nearly 1000 single family homes for sale in Cville/Alb alone. The other number is all property types in the area, combined.--BB]

Also of note: the days on the market from the time a property is listed to the time it sells have risen from 37 days in Albemarle in 2005 to 63 days in 2006-- a 70 percent increase-- while days on the market for Charlottesville rose from 47 days to 63 days-- a 34 percent increase. [
Average DOM 152.-BB]

But Phillips says those numbers don't add up to doom. When considering days on the market, he explains, "The rule of thumb is that anything less than three months is good. Three months is the dividing line between a market that's slow and one that's still hopping."

Phillips says upper-end properties-- those over $500,000-- are moving more slowly than properties under $300,000, but he says it has always been that way. Then again, one $850,000 house sold in just three days earlier this month.

"It really depends on the property," Phillips points out. He also says that while prices aren't climbing the way they used to, local real estate will hold its value thanks to the economic insulation provided by UVA.

"Are properties overvalued? No, they're not," he says. "If they were, we would see median price go down." The median price of Albemarle homes actually rose almost 7 percent in third quarter 2006 to $309,000 from $290,000 in third quarter 2005. The Charlottesville median price dipped slightly from $256,000 to $249,450, which Phillips attributes to the increasing number of condos sold in the city.

Though the real estate markets in Northern Virginia, the Northeast, and on the West Coast have shown some slippage of median price, Phillips says that overall the market nationally is "flat."

Property appreciation has "moderated" locally, he says, but that had to happen. "We were at an unsustainable growing rate in terms of housing," he says.


Jim Faulconer of McLean Faulconer Inc. agrees with Phillips' assessment, and says media reports have fed the public's fear.

"The press has done a number on the housing market nationwide," he says, and that has bred more caution than necessary among buyers. But there are still plenty of people willing to plunk down hefty chunks of change for homes in this area.

"We've had people from Florida, South Carolina, Pennsylvania, DC," says Faulconer. "We're still so attractive a location that we're going to continue to have a pretty good housing market here."

Realtor Jim Duncan says buyers and sellers need to get into a new frame of mind to deal with the current real estate climate.

"There's a lot more on the market this year than last year," says Duncan. "Things are not selling as rapidly." But, he adds, "I don't term this being a bust by any stretch; it's just a return to a more normal state of mind for everyone."

While the last few years saw a flipping frenzy-- speculators buying and selling houses within weeks, often making hefty profits-- those days are over for now, he says.

"In the last several years, people had gotten away from the 'buying smart' mentality and were just buying," he says. "I don't want it to sound like it's a scary thing. It's a really good time to buy, it's just a very different market." [Good advice: "buying smart" remains true.--BB]

Among his tips: if you buy, plan to stay in the house a while. "Buy smart and hold it for three to five years," says Duncan. "If you don't do anything to the house to hurt or improve it, you'll probably make money when you sell."

To those who suspect that agents are just feeding the public a line to keep their own heads above water, George Overstreet, associate dean at UVA's McIntire School of Commerce and an expert in real estate investment, says that's not the case.

"People think we're in some sort of bubble, so they're on the sidelines," says Overstreet, "but interest rates are still down, and the demand has shifted back to the left. So prices have dropped."

Overstreet says he believes real estate in most places in Charlottesville is a good investment, but particularly in neighborhoods adjacent to the university such as the Lewis Mountain area, where several properties have recently sold in the million-dollar range. [Anecdotally, haven't seen a sale, or resale, like this in quite some time in this neighborhood.--BB]

And he says even if the market slips a little further, now isn't a bad time to buy. "I wouldn't try to catch the bottom or the top," he says. "The fewer buyers there are, the better received they'll be."

If all this news is actually good for the real estate market, there's one group who may be doing some teeth gnashing: the agents themselves. In the last five years, the number of realtors in the Charlottesville area has risen from 800 to 1,200, a 50 percent increase, according to Phillips, who says he expects to see that number begin to shrink.

"If you do the math, the number of transactions we do and the number of realtors we have, it's less than two transactions per realtor," says Phillips.

Duncan says a realtor needs to have 15 "sides," or closings, to make a decent living.

"There's a bursting of the agent bubble," says Duncan, who is on the board of directors of CAAR and is glad to see the competition stiffen. Having real estate agents "who do the job as a hobby," says Duncan, "detracts from the professionalism." Duncan would like to see the real estate profession populated with full-time sellers. "It's not something you can do well without doing it all the time," he says. "There are so many changes on a daily basis, you have to do this every single day."

Among those changes are new housing developments that seem to be creeping onto every developable inch of city and county land. So how will planned communities like the south side's Biscuit Run, with hundreds of new homes, affect the market?

"Biscuit Run is years away from even being started," says Phillips, "and as much as a decade away from being a real factor in the housing market." Builders won't build if the housing climate's not right and buyers aren't there, he says: "You're not going to have builders building houses hoping more people move to the area." [Biscuit Run is on hold indefinitely--BB]

Phillips points out that the growth rate in Albemarle County is actually quite low-- under two percent-- compared to the 15 or 20 percent growth in some places in Northern Virginia.

"Right now we have a nice steady demand and sustainable growth rate," he says. "We should be very happy with what we have right now because we're a very healthy economy and a healthy community."


See Courtney Stewart's article in its orignal here. Sales numbers from CAAR.

Several notes:
  • 1. Most people missed the bubble as it hit its peak and started its decline, even experts.
  • 2. Nobody can call a bottom until it's about 18 months behind.
  • 3. That being said, reviewing current data shows this area is still slouching very slowly toward its bottom in inventory and price correction. An upcoming post will explain why.

Thursday, April 16, 2009

No End Yet For Downturn in Housing: New Data

Sales in the Charlottesville Area (City, Albemarle, surrounding counties) for the First Quarter were down 33.9% from the same time last year. In the City sales were down 40%; in some of the Counties, down 50+%.

Still, it being Spring and "the season," people are looking. And there are anecdotal/data reports
of properties around the $240K and "under $300K" price points that are selling right now (see Related Reading below, and go to links that indicate the post includes comments; look for Pavel Dovgalyuk and Greg Slater). This makes sense, as a buyer who qualifies for a mortgage of this amount will also be able to qualify for the first-time homebuyers tax credit of $8k, which has a salary limit of $75K for an individual, $150K for a couple.

But nationally, the news remains bleak. Yesterday
, Chase, Wells Fargo, and other large banks announced that they would no longer delay foreclosures, which they'd done so borrowers could take advantage of the Obama Making Home Affordable program.

Bloomberg reports that despite the moratorium,

U.S. foreclosure filings rose to a record in the first quarter as employers cut jobs in the recession and temporary programs to delay action on defaults came to an end.

  • A total of 803,489 properties received a default or auction notice or were seized, 24 percent more than a year earlier
  • A flood of bank-owned properties is hitting the housing market as the U.S. recession deepens
  • Mortgage applications declined last week for the first time in a month [11% decline--BB], a sign that even with borrowing rates below 5 percent may not be enough to spur a housing recovery.
All of this comes at a time when "Continuing jobless claims rose to 6 million for the week ending April 4, an increase of more than 100 percent from the same time last year" and new construction is significantly down, according to the NYT.

What does this mean for this area? Time will how national data might impact sales...will local buyers continue to expect area prices to drop? And how much will foreclosures rise and impact pricing? The VA Housing Development Authority has said it expects foreclosures filing to rise in this area, at all price points, through 2011....

Meanwhile, here are some numbers, which despite sales, increase daily:

Area Housing Inventory - Currently listed on MLS
Cville: 202 single family homes
Albemarle: 695 single family homes
For the area, combined single family, townhouses, condos: 2430+/- (doesn't include Nelson, Staunton, Waynesboro, "The Valley," Buckingham, etc.)

Related Reading:
Foreclosure Filings Climb to Record High in First Quarter 2009 - Bloomberg
Six Banks to Receive up to $9.9B for Mortgage Mods - CalculatedRisk
No End Yet For Downturn in Housing, New Data Suggest - NYT
VA Housing Development Authority on Cville Economic Outlook
Posts:
The DP on CAAR's Q1 Report (Many comments from buyers and Realtors)
CAAR First Quarter Market Report (Many comments from buyers and Realtors)
Area Sales Significantly Down (Many comments from buyers and Realtors)
Median Home Prices in Cville, Alb, compared to 20 Other Markets
Gen Y Priced Out of Cville Market

Tuesday, April 14, 2009

The DP on CAAR's Q1 2009 Market Report

The Daily Progress' McGregor McCance has an article on CAAR's First Quarter Market Report. Realtors Michael Guthrie and Greg Slater, who have recently added comments and data here and here, are quoted. The article gives the hard numbers but no spin; just the hope expressed that first-timers will take advantage of low interest rates and the $8K tax credit.

Sunday, April 12, 2009

CAAR First Quarter Market Report 2009

Q1 YoY sales are  down 33.9%. Putting the word 'only' in quotes was what CAAR CEO Dave Phillips did as he good-naturedly corrected our numbers. (Welcome back, Dave, long time no blog.)
The Charlottesville Area Association of Realtors First Quarter Market Report will appear on the CAAR blog on Monday. However, it's already available on the internet.

NUMBER SOLD - Includes single family homes, condos, and townhouses

There were 403 homes sold in the Charlottesville area during the first three months of 2009, which was down 33.9% (-207 sales) from 2008.

All local areas were down from last year:

Charlottesville -40%
Albemarle -18.7%
Fluvanna -32.4%
Greene -50%
Louisa -59.6%
Nelson -51.2%
Orange – 36.7%

"Home sales" numbers are as follows, with 2008's number first and 2009's second:

Charlottesville 110/66
Albemarle 171/139
Fluvanna 71/48
Greene 40/21
Louisa 52/21
Nelson 41/20
Orange 30/19

Again, the above numbers represent total sales of single family homes, condos, and townhouses combined. Single family home sales were detailed in an earlier post; Charlottesville -47% YOY, and Albemarle -34%.

Toward the end of the CAAR report is this: "The most important factor in the housing market and the overall economy is consumer confidence." IOHO, the consumer who intends to buy might have more "confidence" if house prices were more in line with the historic home price-to-income and home-price-to-rent ratios, wouldn't they? And the consumer didn't, therefore, fear paying "too much" for what could possibly be a "depreciating asset," yes?

To see the complete CAAR 2009 First Quarter Market Report, go here or here. Reminder: Realtor Jim Duncan at the RealCentralVA blog posted that he'd have a market report up on Monday, April 13; this report typically includes different info than CAAR's.

Related Reading:
Cville/Albemarle Single Family Home Sales Significantly Down Q1 2009
Median Home Prices in Cville, Alb, Compared to Other Markets
Va Housing Development Authority on Cville Area Economic Outlook
Gen Y Priced Out of Cville MSA
Cville Area Unemployment Doubles

Wednesday, April 8, 2009

Charlottesville Albemarle Area Real Estate Sales Down 50%, First Quarter 2009

The other day we looked at the YoY decline in sales of single family homes. Today, we look at combined sales.

The following chart gives sales numbers for single family homes, townhouses, and condos combined for Q1 2002 to 2008.



First Quarter Sales 2009, for the entire area = 278

Q1 Sales Down: -50%.

Lowest of the Century. Lowest in 10+ years.

We arrived at this number by combining CAAR's 'live' website data, using the area total "solds" of January: 55, February: 89, March: 134.

What should
sellers do?
Drop the prices. ASAP, because every day that passes, prices are going to get lower. Get yourself sold before everybody starts the downward cascade. And if you doubt this little piece of wisdom? Educate yourself about the Charlottesville MSA by consulting information offered to local Realtors by the Virginia Housing Development Authority

BTW? The local Realtor's association has been telling sellers to price aggressively since at least 2007. But some Realtors are't listening...they're not helping their clients to aggressively price, since they need to make as much money as possible on fewer transactions. And sellers who overpaid during the bubble years are also least likely to want to cut prices.

What should buyers do? Lowball. Make significantly lowball offers. If you don't, you're spending far too much. And we mean far too much. You're going to find yourself in that proverbial "boat" that millions of home"owners" find themselves in--Underwater--with no Obama Bailout.

Prices are only going to get lower in this area, and if you buy right now at what is in many cases still bubble pricing, you're going to be "under water" the instant you sign. This area has more than proven itself not to be an "insulated" or "protected" market simply because UVa is a large employer. Currently, there are wage and hiring freezes. BTW, since this is a university town and there are a number of buyers and sellers on the four year cycle: if you're looking at a property that changed hands four years ago, that seller already paid a bubble price. Proceed carefully.

The official Charlottesville MSA Market Report for the First Quarter will be written by Dave Phillips, CEO of the Charlottesville Area Association of Realtors. It will be released, as it always is, on the 15th of April. It will be available on the CAAR website (from which the above graph comes). All market reports are available for reading/downloading on the CAAR website; look in the upper right hand corner of your screen for the link.

The First Quarter Market Report will also (no doubt) suggest that it's a great time to buy, and express a hope that the market will turn this summer. It may be a great time to buy with a lowball offer, but the market's not going to "turn" --achieve a lower inventory and price point-- until 2010 or later.

For examples of realistic pricing on local houses, visit the blog Worth More Or Less? Be sure to check out our earlier post this week, the significant decline in sales of single family homes for Q1 2009 YoY.

Related Reading:
Winners and Losers in the Housing Slump - WSJ
Median Home Prices in Cville, Alb
Gen Y Priced Out of the Cville Market
Sellers Trapped in Their Homes
16 Million Homeowners Owe More Than House is Worth

Monday, April 6, 2009

Charlottesville Real Estate Market Update: Q1 2009 Single Family Home Sales Significantly Down

The most comprehensive March numbers and Q1 2009 report will come from CAAR and from realtor/blogger Jim at RealCentralVA.

But the preliminary numbers indicate that for single family homes:

CHARLOTTESVILLE:
Q1 2009: 37 houses sold
Q1 2008: 70 houses sold
YoY Decline -47%

ALBEMARLE:
Q1 2009: 82 houses sold
Q1 2008: 126 houses sold
YoY Decline -34%

These numbers do not include pending contracts. These numbers indicate single family houses that have sold, not contracts that have been written. Sales should go up as the buying/selling season progresses, of course. But these numbers reflect pricing, buyer reluctance, a bad economy.

CURRENT INVENTORY
Charlottesville: 202 houses
Albemarle: 666 houses

Related Reading:
Gen Y Priced Out of Cville Market
Median Home Prices in Cville, Albemarle
February Sales, March Inventory

Friday, April 3, 2009

Charlottesville Albemarle Real Estate: Many Generation Y Priced Out of This Market...Ditto Gen X

According to the Virginia Housing Development Authority (VHDA), the Charlottesville Metropolitan Statistical Area remains one of the top three most expensive areas in the Commonwealth. The other two are Richmond and Hampton Roads. No surprise, right?

In a recent presentation before the Charlottesville Area Association of Realtors, as part of their "Economic Summit," the VHDA defined the problem.

The historic price-to-income ratio for buying a house has been 2.5 to 1. In this area, it has been 5.5 to 1 for most of the decade. Recently, it has fallen to around 5 to 1.

This is a College town, nicknamed "The Hook" because it gets under your skin and you want to stay. But what kind of jobs are available to Gen Y's in this area? What kind of living can they expect to make? One that will allow them to participate in the "American Dream" of owning that white picket fence?

No, according to the VHDA. Real Estate prices put ownership out of reach of many younger folks...and some older ones, too. Even with historically low interest rates, and an $8K tax credit for those whose income qualifies...which should be Gen Y ($75K single; $150K married).

Without help from the parents, how many Gen Y's nowadays have the downpayment? Even the 3.5% FHA downpayment?

And without the first-time homebuyers taking over the "starters," any market will remain frozen.

Price-to-Income ratio has gotten too high. But another useful way to look at what the sale prices of houses "should" be is "rent to sale price ratio." Before the Bubble, the historic multiplier was 15x.

A major problem with the Cville area? There's a disincentive to buy. It's cheaper to rent. A renter gets more for their money, without putting down major Benjamins, and then having to pay taxes, maintenance, etc.

If you take a quick stroll through Craigslist offerings (we're not including specific links, b/c they'll eventually be dead) you'll see that renting a house can be much cheaper than buying one:

$1595: "Newly Renovated 4 BR / 2 BA House. New Kitchen with cherry cabinets. Hardwood floors throughout. Screened-in sun porch with slate floor. Central air and heat. Separate garage and workshop."

$1650: "Greenbrier: Spacious, sunny house for rent (3,000 SF) available Aug 15 for 1 year, possibly longer. 4 BR, 3 full BA, 2 offices. Beautiful wooded location. Great school district, convenient location to UVA and downtown."

$1650: "This 4BR / 2BA brick house sits on a quiet cul-de-sac in the Fry's Spring neighborhood, less than 2 miles to UVA and the hospital, and adjacent to a Rivanna Trail access point."

$1800: "4 bedroom, 2 baths, hardwood and tiled floors, nice kitchen, w/d hookup close to UVA."

$1995: "SPACIOUS 4 or 5 bedroom home...formal living room & dining room, home office, 5thBR, Family Room w/propane FP, large eat-in Kitchen, back deck overlooking fenced pasture, laundry room and over-sized garage....upstairs has large master suite and 3 additional bedrooms and full bath....less than 1mi to Stony Point School."

(BTW: Several of these rentals have accidental landlords: the houses have been pulled from the market during the Recession. Sellers still believe that they'll get the price they need, or hope for in the future. They won't. Barring a stroke of good luck.)

Multiply the above annual rents x 15: the result is $260K to $360K. What's offered for sale in this price range are often smaller houses in less desirable neighborhoods than what's available for rent.  Plus, you have the downpayment, taxes, mortgage insurance, maintenance.

DO THE MATH ON THIS. For a $260K house at 5% interest, with just 10% down, or $26K: with property taxes and mortgage insurance, the monthly payment is more than $1,700. So if you buy a house that's the same size you could rent for $1700K, same neighborhood, same level of quality...you're looking at $100-$300K more for "purchase" in the rental examples we've cited above.  Plus agent fees, closing closts, any renovations, etc., up front.

It's not just Gen Y's who are priced out of this market, however. There are members of the Baby Boom who are priced out (Baby Boom = 1946-63, with those born from '54-63 referred to as Gen X and/or Generation Jones).

But being priced out of the market right now for Gen X or Y isn't a bad thing. Prices have nowhere to go but down. There's not enough demand in this area to gobble up the supply. There aren't local salaries or future jobs that will provide buyers who actually need to put down 20% and carry a $2-5K mortgage per month.

And, a recent study shows, a late Boomer Homeowner has a net worth less than a Boomer Renter:

The median household with a person between the ages of 45 to 54 saw its net worth fall by more than 45 percent between 2004 and 2009, from $172,400 in 2004 to just $94,200 in 2009 (all amounts are in 2009 dollars). If the median late baby boomer household took all of the wealth they had accumulated during their lifetime, they would still owe approximately 45 percent of the price of a typical house and have no other assets whatsoever.

Which makes it perfectly understandable why Baby Boomer sellers are clinging to Asking Prices that are vintage 2006: they have little (or no) net worth, and chances are their retirement account has recently lost $$$ in the market crash.

But the days of inflated asking prices turning into selling prices are largely over--except when the random seller gets lucky.

And, as we saw recently, it's houses, condos, and townhouses on the lower end of the price point that are selling.

These are CAAR's live sales numbers:

April
Active Listing Inventory: 3,553
Number of Listings Sold: 7
Median price of Listings Sold: $225,000
Average Days on Market for Listings Sold: 188

March
Active Listing Inventory: 3,553
Number of Listings Sold: 134
Median price of Listings Sold: $245,500
Average Days on Market for Listings Sold: 148

The Virginia Housing Development Authority also indicated that the Cville area is 12+ months behind NoVa in terms of price correction, and wiping out the oversupply of houses, which will drive prices down. In addition to the oversupply, foreclosures at all price points, from all different kinds of mortgages, will continue to rise.

Read through the following two info sets, then be sure to check out the market data in total. The links are at the bottom of this post.



Access the full Virginia Housing Development Authority data here: VHDA Market Data - via RealCentralVA
Access more data from CAAR Economic Summit, including podcasts and handouts.
Related Reading:
The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble - Center For Economic and Policy Research
16 Million Homeowners Owe More Than House is Worth
Sellers Trapped In Their Homes

Thursday, April 2, 2009

Charlottesville Albemarle Economic Data: Unemployment Doubles and UVA Endowment Continues Losing

Unemployment
The DP reports: The Charlottesville Metropolitan Statistical Area had a seasonally unadjusted unemployment rate of 5.6 percent in February, up from 2.8 percent in February 2008, according to a Virginia Employment Commission report released Wednesday.

YoY doubling. (Hmmm...doubling of "bad numbers" sounds familiar around here....)

Read: Area's Jobless Rate Doubles in One Year

UVA Endowment
The University of Virginia’s endowment pool continued bleeding cash in February, with $100 Million vanishing into thin air.

This is now nine consecutive months of for the university’s endowment. The DP: "In the past eight months, UVa’s fiscal year to date, the endowment pool value has declined from $5.1 billion to $3.76 billion, a 26 percent drop."

UVA has a wage and hiring freeze in place and is "controlling costs," but has continued construction. TJ's U uses 5% of its endowment for operating costs.

Hmmm...Is nixing the "housing allowance" and mortgage subsidies for faculty part of the "cost controlling" measures?

Read: UVA's Endowment Pool Loses $100 Million More

Wednesday, April 1, 2009

Median Home Prices in Charlottesville, Albemarle, and the Latest Case Shiller Index

Standard & Poor's widely-watched 20-City Case Shiller Index of Home Prices is released the last Tuesday of each month.

It tracks the median sales prices of existing single family homes, as well as (since the bubble burst) the decline in pricing. The index runs about two months behind, so March's release is for January 2009.

January 2009, in the 20 metropolitan areas, declined a record 19.0% YoY, the worst decline since the bubble burst.

As we did last month, we took this opportunity to look at Cville Albemarle median prices for the same period, January 2008 v. January 2009. Cville is a little college town with some boutiques and restaurants with aspirations, and Albemarle has some residents with cash, or who make it their second home. But the area is full of houses that have "big city prices"--prices that cannot be justified by local incomes nor job prospects--which is why there are so many unsold houses on the market.

Charlottesville:

January 2008
Median Price: $246,050

January 2009
Median Price: $199,000

A difference of $47,050
19% decline in price YoY 2008 to 2009

Albemarle County

January 2008
Median Price: $318,450

January 2009
Median Price: $242,032

A difference of $76,418
24% decline in price YoY 2008 to 2009

What the data tells us: (among other things)
  • There are buyers at the lower end of the spectrum. And those buying at the lower end are paying even less than they would have in 2008.
  • While there were buyers at the lower end of what's offered, in January--always the slowest month--this year there were half the number of buyers as the previous year. (21 sales in Albemarle; 7 in the City; a drop of 50-65% YoY).
What the data does not tell us:
  • Size of home, in terms of both square footage and number of rooms, bedrooms, baths.
  • Location of home. Not all locations are created equal, as we all know (though many Realtors might suggest this; "close to UVA" and "downtown" are two of the most overused phrases).
  • Condition of the homes. Did they need some new paint, a new toilet, or new...everything?
  • Whether the sale was a Short Sale or Foreclosure
  • The large amount of inventory at all price points that keeps coming on the market, or the months of inventory, or the Days on Market.
  • Whether buyers intend to live in the house or if it was an 'investment.'
  • Method of payment.
Does this price data mean a seller should adjust the asking price if at all possible?

Of course it does. Any data that a seller currently has available indicates that, wherever possible, prices should be adjusted downward. This is true whether it's national or local data, such as that from the Charlottesville Area Association of Realtors, available here. Of course, there are some buyers who can't adjust because they're already underwater, or because selling the house is the last hope after their stock portfolio recently lost 50%. One can only wish these sellers Best of Luck.

Charlottesville and Albemarle Pricing Compared to Major Metropolitan Areas

Last month, we looked at C'ville and Albemarle in comparison to the 20 Cities, as well as other areas of Virginia. The February data was for December 2008 (because, as we reminded you above, Case Shiller is two months behind).

Below are the current median prices; the percentage decline from December 08 to January 09 and the YoY decline are provided in parentheses.

Note: 1) we do not have new numbers for the areas in green, which are in VA; these numbers are from December 08. 2) The median price for Cville and Albemarle is for 2008, not just the month of December.

Atlanta - $125,066 (-3.20 / -14.30%)
Tampa - $144,834 (-4.40% / -23.30%)
Phoenix - $147,326 (-5.50 / -35.00%)
Las Vegas - $173000 ( -4.40 / -32.50%)
Minneapolis - $179,738 (-4.70 / -20.40%)
Charlotte - $184064 (-1.20 / -8.20%)

Prince William County - $172.4

Chicago - $207,782 (-4.60 / -16.40%)
Miami - $225,769 (-3.60% / -29.40%)

Fredericksburg - $235,700
Richmond Metro - $250,100 (Avg. sale price)

Portland - $256,565 (-3.00 / -14.00%

Charlottesville - 2008: $290,000
/ January 2009: $199,000

Washington DC - $295,100
Dulles Area - $211,600

Seattle - $314,168 (-3.60 / - 15%)
San Diego - $324,147 (-2.60 / -24.90)
Boston - $330,665 (-1.50 / - 7.30)
Los Angeles - $344,380 (-2.80 / -25.80)


NoVa - $345,4000

Albemarle County - 2008: $390,000 / January 2009: $242,032

New York - $453,096 (-1.20 / -9.60)
San Francisco - $465,668 (-4.40
/ -32.40)

Below is the Case Shiller Index. Note that the second column is not the price; it is the City's "value" on the index. See note on chart immediately below this text.




Related Reading:
Standard & Poor's Press Release
A Look At Case Shiller Numbers By Metro Area - WSJ
Drop in Home Prices Picks Up Speed in January - WSJ
Calculated Risk Reports on the Data
Localized Market Data, or Why This Market Is Stalled & Prices Are Going Down - RealCentralVA
Median Prices Cville, Alb, 20 Cities - Real C'ville