Thursday, March 25, 2010

Mortgage Rates Suddenly Jump Up - Inventory is Up - Local and National Sales Are Down

"Recovery" in 2010?  Apparently not.... Mortgage rates jumped from their lowest in 2010 to their highest on Wednesday, March 24, from about 4.8 to 5.125, impacting fixed as well as adjustable rate mortgages.  The last time there was such a jump, May 2009, it took about six months for the rates to get back to the lows that are now history.

Bad news for those under contract without a rate lock: the monthly payments will be higher than originally calculated.  This will cause some contracts to fall through.   This jump does not seem to be related to the Fed's expected exit from the mortgage market by March 31.

Read more about the rate jump at Mortgage News Daily. 

Additionally, locally and nationally:

*This blog recently chronicled 9 Reasons Home Prices Will Continue Dropping in the Charlottesville Albemarle Area. 

*Home sales were down in Charlottesville and Albemarle for February, as detailed in this post at RealCentralVA.

*Nationally, existing home sales declined in February, and new home sales were at a record low in February.

*Here's how one correspondent, a local mortgage professional, characterized the market:
What is telling to me is the CAAR site has about 250 more listings right now than last month, average DOM is up, median price is down.  Tax credit expiring in 5 weeks, USDA is out of funds, FHA will boost up front mortgage insurance from 1.75 to 2.25% on 4/5/10.  This year will be much harsher than last year in terms of actual sales and falling values.  We are in an L shaped recovery assuming we have hit the horizontal line....
(emphasis is BBs)


In addition to lower sales and confluence of reasons pushing prices down, with the arrival of Spring, local inventory has jumped over the past month.

In Charlottesville and Albemarle, there are 1367 offerings, including

Albemarle: 714 single family homes- 32 single family homes sold in Albemarle in Feb. 2010
Charlottesville: 240 single family homes - 5 single family homes sold in Charlottesville in Feb. 2010

Some data and visuals from RealCentralVA:

Charlottesville and Albemarle closed sales February, includes detached, condo, townhouses:

64   - 2010
79   - 2009
72   - 2008
105 - 2007
141 - 2006
124 - 2005
108 - 2004

Properties that went under contract in February.  How many will fall out of contract, due to higher mortgage rates (or contingencies)?

March 2010 (thus far) has generated a few more contracts than February.  How many will fall out of contract, due to higher mortgage rates (or contingencies)?
Related Reading:
CNBC: Loan Volume Was Already Falling Fast, Before Rate Jump
CNBC: Video - Housing Double Dip Bloomberg: Obama Mortgage Mods May Extend Foreclosure Crisis
CNBC: Bank of America Doing Principal Write Downs.  Treasury Next?
NYT Economix Blog: The Housing Crisis and the Resentment Zone 


c said...

ACK! How about MLS# 475189?

2185 finished sq. ft. Built 1932. .68 acre. Locust Avenue.

Last sale was June 2000 for 309K.

Today it can be yours for...

990K! Let's just say a million--what's 10K between Cville bubblers?

$453 per finished sq. foot.

Wow. Just wow.

downtownenvy said...

It says they just remodeled, so I am going to assume they are still suffering from fresh paint fumes? It's a lovely home and a great location, but not worth that anymore.

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

MLS 475195 Short sale (or foreclosure that hasn't recorded yet)

3796 Stony Point Road Albemarle County - 15 acres

2007 August $1,350,000 Purchase
2010 March $775k For Sale

Assessed $529,700

Great example of how this market is going.

Anonymous said...

Actually, to be fair the $1.35 M purchase price in 2007 was a multiple transaction that included seven lots rather than just the one. The $529 K assessment is for one 6-acre lot with a 2750 sq.-ft. house and run-in shed on it. The asking price on the MLS is for more land than included in the $529 K assessment, if it's for 15 acres--dunno if it is for all seven lots or not. The seven lots purchased in 2007 for $1.35 M sold in 2001, pre-bubble, for $755 K. I'm not going to spend the time to search for records of what additional buildings or renovations might have come into being on all seven lots between 2001 and 2007, but I did want to check out this claim of radical bubble bursting, since it seems pretty out of line with what is actually happening in the local market (contrary to your claim that an assessment for 40% of the purchase price in 2007 is "a great example of how this market is going"). Please be more careful with your gloating.

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

This property is being sold "As is," by one of the top short sale specialists in the area.

BTW, the going rate for land in Albemarle County is under $10k per acre, thanks to Biscuit Run's deal with the Commonwealth.

But nobody's "gloating." The number of people who have lost money on housing--if not the house itself--in this area will have a trickle effect on the already weak local economy for a long time.

--John Doe

rfs said...

Is there any way to confirm whether it is a short sale or not? If it is a short sale shouldn't that be indicated in the MLS listing (if the listing agent is aware...)

John Doe said...

The CAAR has classes to train agents in short sales and foreclosures.

Check it out:

Anonymous said...

So, look, fine, I just put in the owner's name on the GIS. There's the house on 6 acres, assessed at $529K or whatever, being offered with at least one other land parcel. Then among the seven parcels transacted in 2007 for $1.35M, there are another four assessed as vacant land, for a total of $415K (added to the $529K is $944K). Then there's another house on 2 acres assessed at $147K (running assessment total now $1.09M). Then there is the "big house" on an additional 5 + acres, built last year, assessed by the county at about $850K (total now over $1.9M). Doubtless there was a significant investment in building the main house here, but I don't see a big loss between what was paid for all this property in 2007 and what the county currently says it's worth. And it looks like not a short sale, but rather a buyer who amassed a little domain, lived in one house while building the "dream home," and is now trying to unload one of three houses owned, with some portion of the total acreage. The asking might not even be insanely inflated--who knows! I'd just love it if everyone could chill out for five minutes instead of thinking they smell blood in the water on the MLS and going into a bubbler-frenzy.

Anonymous said...

MLS# 475189?

2185 finished sq. ft. Built 1932. .68 acre. Locust Avenue.

Last sale was June 2000 for 309K.

Today it can be yours for...

990K! Let's just say a million--what's 10K between Cville bubblers?


did they paint the walls with gold when they remodeled?

the information i have says population in Charlottesville has DECREASED since 2000, while the supply of homes has INCREASED, and median incomes is up about 25%.

can anyone tell me how that justifies the 200-300% price increases in this area since 2000, even since prices have "come down" (barely)?

John Doe said...

So look fine 9:37pm, thanks for clarifying.

Still, if you believe @jimduncan, half of all transactions here are currently short sales. They're not always listed as such. Ditto foreclosures. Sometimes the info only comes from looking on the gisweb or

other anonymous 9:37pm, no, nobody can tell you how prices are justified here.

--john doe (can't log in to google at the moment, fwiw)

Anonymous said...

I can tell you what justifies 200-300% price increase in 10 years: the CAAR star chamber.

Here's an observation: I drove by a bunch of open houses last Sunday, some advertised, some just posted with signs, in the City. Made the circuit twice b/c I had a sleeping infant and was hoping to go in at some point. Trip took about hour and a half, including a pause at the park.

Guess what? There was nobody out looking at these houses. Maybe I missed the flashmobs twice, maybe not. But I don't think I have much competition out there for any of these houses. Yet some of these prices haven't changed in a year.

So I'm really supposed to believe that all these homeowners are pricing their places exactly the same way? That its not the real estate agents? Really?

What are the agents there for, then?

Anonymous said...

Neg60kLady, you can get in on this. It applies to people who have NOT fallen behind on payment, but whose houses are worth less than what they paid

Jim Duncan said...

One point of clarification regarding this:

Still, if you believe @jimduncan, half of all transactions here are currently short sales. They're not always listed as such. Ditto foreclosures. Sometimes the info only comes from looking on the gisweb or


That was from a conversation with one Charlottesville attorney who is doing a lot of short sales.

Right now, I'd estimate that about 20-30% of properties currently on the market are short sales, dependent a bit on price range.

Jim Duncan said...

And because I love a conversation .... what exactly is "the CAAR star chamber."?

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

Has kind of a ring to it, doesn't it? :0)

Neg60K Lady said...

Anon 10:21 PM,

thanks but no thanks. "lucky" for me, i owe considerably less than what my place is "worth" despite the falling assessments, because i was responsible or some might say crazy enough to put 20% down back in 2007.

i have to agree with the majority of the readers' comments that Obama's proposed program would be worse than moral hazard - it would be moral bankruptcy.

even though i'm no longer a renter, i do feel that renters have suffered enough at the expense of "homeowners" or should we say "debtowners." Pete from Washington put it well:

March 25th, 2010
10:08 pm

What's not often noted is that a large proportion of those 'underwater' mortgages are the result of 'cash-out' home refinancings to enable the purchase of frivolous and expensive toys like giant SUVs, vacations to Cancun, plasma-screen TVs, motorcycles, ATVs, swimming pools, boats, jet-skis, snowmobiles, and so on. (In their infinite wisdom, our fearless leaders chose to make this 'free' money tax-deductible as well.)

Now, why on earth should our pockets be picked by people like this? Why should we have to pay for their extravagant, irresponsible lifestyles? To keep home values artificially high? Let them fall to their natural level. If they do, then more responsible people can afford to buy an extra house to rent to people like the above while they learn the abc's of financial propriety.

downtownenvy said...

I am with Neg60K lady on this one. I feel terrible that people are losing their homes, but for heaven's sake who doesn't read a contract before signing it?

Also, if you read it and don't understand it why would you let that much pride get in the way and sign it anyhow?

We have been offered a lot of mortgage products during the last five years of our home searching, and for the longest time the first one offered was a variable rate ARM of some kind. We always insisted on fixed rate, and we always did our research to keep up on changes in the industry.We finally found a local mortgage rep who was respectful of our wishes.

The frustrating thing to a lot of us is that because we were willing to wait for prices to adjust we are now still sitting around waiting for a lot of these sellers to get real.

I don't want to bleed anyone, but I am also not going to make the same buying mistakes I have seen in this local market. We have been saving our down payment, and we are determined not to overpay. I refuse to be one of those people two years from now who runs around crying despairingly because I paid too much for my house.

I also realize that home values constantly fluctuate and there is a chance that any house will lose value. The problem here in town is that many of these properties are being offered far above a value that is reflective of today's economy. It's pretty easy to predict that if we go buy something without really negotiating price we will get our backsides handed to us. JMO. Love a good conversation too;).

rfs said...

A question for Jim Duncan...regarding the possibility of a short sale, does the listing agent have any responsibility in determining if a listing could be REASONABLY be a short sale? Like asking the sellers about how much is owed on current liens, etc? If so, and it is determined that this may become a short sale, it should be noted in an MLS listing. If I were a buyer and saw potential short sale/foreclosure, I would probably move on to some other property given the amount of time I hear it takes to complete a short sale. Way too much interest rate risk the longer the process takes.

Oh regarding Nego60K lady, I do a fair amount of research on list prices versus actual sales prices (minus possible sales concessions as they are not part of what gets recorded in public records) but if someone put 20% down on a house bought in 2007, chances are you are quite close to being underwater. I have seen multiple times where actual sales occurring in 2010 where the house was bought in 2006/2007, sellers are losing close to all their downpayment especially factoring in sales costs, ie commissions. Of course if you aren't selling, it does not much matter...

Jim Duncan said...

rfs -

I'll respond to this on my site in the next day or two ...

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

Neg60klady, Downtownenvy, agreed. You may even be more disturbed when you read the materials.

Be sure to follow the links provided as well, which includes a FAQ and various scenarios.

Anonymous said...

Just $345k for this "magical" Belmont home. Can you put a price on magic?

Last sale $275k 8/30/2005 - the magic was a recent addition.

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

rfs, the Obama Admin has a program that is supposed facilitate Short Sales, and make the process "easier" for sellers, buyers, and agents. It's no longer supposed to take months to complete a short sale, under this program, and there are small financial incentives. Begins April 5.

But it's a good question...why aren't all short sales listed as such on CAAR?

And good advice...Rate Lock.

BTW, that Belmont house is across from noise controversy Bel Rio, and if you google it, you'll see it was featured in a Hook article for $359k.

rfs said...

Thanks. I am aware of the administrations efforts to shorten/ease the short sale process. But lenders rarely do what is "suggested". I suspect many times there are more than one lender involved, probably two DIFFERENT lenders. I just can't get that excited about the short sale promises. It really would be helpful to see "potential short sale" in an MLS listing so buyers can plan/offer accordingly.

Star Chamber said...

I was using "Star Chamber" metaphorically, which is a common usage nowadays, but it also assumes everybody knows their British History. The term is used for any group that holds proceedings in secret.

It's certainly a secret or a mystery to buyers about how things get priced around here. I'm not saying all the local Realtors huddle together but there are things going on concerning pricing that non-professionals aren't privy to. One way homes get priced is with market analyses by Realtors who are looking at similar homes and pricing their listings the same way--whether or not they sell.

Of course many current sellers are also over leveraged/underwater and are just trying to pay off their mortgages.

Then there's the sellers who truly believe that what they paid in the past five years is the actual value of the home plus an increase.

Then of course there's the greed factor.

Don't know what category 707 Evergreen falls into, a new listing $375k which sold for $319k after months on the market in 2008 (I drive by this house daily, North Downtown). It's been a rental for past year (220 Douglas is longterm rental too).

rutledge said...

Yeah, the $990K Locust Avenue one gave me a much-needed chuckle.

But then again, so did the one on Early Street (Belmont) that I have on good authority from a friend who lives on the street that it went under contract IN A WEEK for $299K. Of course the contract could always fall through, but as long as there are suckers willing to dig themselves into these horrible situations, I think responsible buyers are in real trouble here with respect to pricing.

Jim Duncan said...

@Star Chamber -

Please contact me offline, I'd welcome the opportunity to run through how I attempt to value properties.

jim AT RealCentralVA com

I'm always trying to get better at what I do, and welcome the feedback/discussion.

Anonymous said...

@ Star Chamber:
"I'm not saying all the local Realtors huddle together "

Um, yeah; that's exactly what you're saying.

Anonymous said...

8:58pm what are you saying? You think it's transparent? Jonathan Kaufman, one of Duncan's colleagues, called his pricing "intellectual property." Not subject to explanation. That was last year on the other bubble blog which doesn't post anymore.

Anonymous said...

Jim Duncan said: "Please contact me offline, I'd welcome the opportunity to run through how I attempt to value properties."

Why not do it here? This seems like a poor attempt to add mystique to what is not a complicated process. It also reinforces the faulty notion that real estate agents control prices. Anybody who thinks that gives them way too much credit.

Jim Duncan said...

anonymous -

Thanks for the question. I won't do it here for the following reasons

- I don't deal with anonymous people.
- My process is proprietary
- How I help my clients determine pricing is individual and specific. There is no one-size-fits-all analysis.
- I'm seeking/offering a conversation rather than a comment; "how to price a house" is much more than that; google "unzillowables" to read about some of the intangibles that affect pricing.
- I use my name wherever I comment. Right or wrong this practice holds me accountable to my words and actions; I don't work with anonymous people.

Anonymous said...

One thing jumps out from the buyers' POV: many sellers and many of their agents seem unfamiliar with the basic law of supply and demand. This element is not being taken into account when pricing properties: lack of buyers. (Not to mention lack of financing.) If it was, there wouldn't be so many 3-4 bedroom houses out in the county priced at $500, $700, $800k, or higher, and there would be no $1-2M asking prices in the City of Charlottesville.

Also, the "My house is the exception to the rule" is in play here.

star chamber said...


Anonymous said...

Serious Buyer,

Carolyn Baum tells it like it is . . .

Anonymous said...

sorry, anonymous 10:28 march 27, you haven't lived here very long have you? when you say "It also reinforces the faulty notion that real estate agents control prices. Anybody who thinks that gives them way too much credit."

that's one element of what's happening here.

if this were really a buyer's market prices would be plummeting and there would be 100s if not thousands of walkaways.

so what's your opinion on what's keeping prices up?

calling pricing proprietary or intellectual property is absurd.

Anonymous said...

Calling pricing method 'proprietary' or 'intellectual' is hype. I suspect pricing secrecy is more about sales and marketing edge than professional service.

Basically, pricing in C'ville and its surrounds is not transparent. Brokers, in general, are not offering supporting data or the logic of the pricing derivation method no matter how many R.E. industry designations follow their names. List often still is inflated well above what was paid for the property. In most cases it certainly is not even close to the expected current economic market return of 1.5-2% per annum. Does the list price solely represent the seller's wish and the agent goes along for the ride as the incentive is a % compensation? Are appraisers also succumbing to this nonmethod? Add listing talking points and retouched photography that misrepresents the condition of the home or room count. There is really no such thing as a buyer's agent unless the agent NEVER lists a home in the community because he/she is tiptoeing around prospective future customers. Caveat emptor.

Anonymous said...

Anonymous above says: "If this were really a buyer's market prices would be plummeting and there would be 100s if not thousands of walkaways.

so what's your opinion on what's keeping prices up?"

There is a continuing misperception that there is a conspiracy keeping prices up. It doesn't work that way.

First, asking prices aren't selling prices. Find places you like and bid low. It will take work, but you'll get something.

Second, prices are higher here because Charlottesville has more to offer than most other places.

Third, this isn't the only place where prices are too high for too many people. There are many such places, which is why buyers have to choose between getting "less house" for the money or living outside and commuting.

Anonymous said...

Thanks, 10:55pm. CAVEAT EMPTOR. It's like driving a new car off the lot around here even if you're buying the used junk--the place loses value the minute it's "yours."

But 11:44, You're 11:29 from the mortgage post, aren't you?


"Charlottesville" has a lot more to offer than most other places" -- true, Ruckersville and Waynesboro, and Scottsville, maybe. But not Richmond, Roanoke, Lynchburg, etc. If you assert otherwise, you've never spent any time in these actual cities.

"This isn't the only place where prices are too high...."

Hello? Keep up. This is the most overpriced market in the state. Read the material before you try to defend your upcoming taxpayer funded mortgage modification.