Wednesday, April 21, 2010

Another Victim of the Housing Crisis: Barry Meade Homes Goes Under

Continuing low sales in Central Virginia, and the "Great Recession," claims a builder with a long history; some of the company's 11 unsold homes are in various stages of foreclosure.  Read.

Many of the areas' builders/developers have faced mass foreclosures or changes in business plans over the past two years:  Church Hill Homes, Weather Hill Homes, K Hovnanian's Four Seasons, Crozet's Old Trail, the Belvedere development, Hauser Homes/Stonehaus Development,  the downtown Waterhouse project.  And mind-bogglingly large Biscuit Run turned into a plan for a state park (with a controversial payment).

Nowadays in Albemarle, million dollar foreclosures aren't a surprise; and they are going to increase in the future.

24 comments:

Neg60K Lady said...

Anybody know who g94b is talking about (Church Hill, Skyline, Medallian)?

Posted by g94b on April 21, 2010 at 8:01 am
Before you shed a big tear for the three compamies mentioned in this story let’s remember that one of these companies is the SECOND company that was run into the ground by it’s owners and that the other two were operated by by the same person who had three home bulding companies and ran them all in the ground at the same time. These people used the “Rob Peter To Pay Paul” method.

Anonymous said...

Neg60k Lady, google these names individually to see stories about betting that Charlottesville needed 1000's of new homes even though projected employment, growth, wages, income were stagnant or declining.

Barry Meade

Robert Hauser
Frank Stoner
Stonehaus Development
Hauser Homes

Jamie Spence
Josua Goldschmidt
Church Hill Homes
Church Hill Development
Eagle Realty

Chris Bowen
Skyline Builders

Biscuit Run
Forest Lodge LLC
Hunter Craig

Google the names with "foreclosure" and "subcontractors" and "lien."

Hauser Spence Goldschmidt Meade = generational family businesses.

Anonymous said...

Is there a way to perform a Case-Shiller-like analysis of just a local market like Cville? In viewing the listings on the MLS and comparing to their recent sale prices in the property records, Cville doesn't seem to believe that the housing market has come down from its peak. Many homes are still listed at prices similar to what they sold for in 2006-2007. Would be interesting to see the curve generated by a local-only analysis of sale and resale values.

Humpty said...

A Case-Shiller analysis would be interesting. I think with few exceptions RE salespeople in CVille are to blame. They have bought into this thinking that CVille is somehow immune to the housing bust. The actual total sales of homes, less foreclosures and short sales, as highlighted by the C'Ville Bubble Blog, is proof that not many buyers are prepared or able to pay for the asking prices. The brokers are coddling their listings and sellers are living in hope. Eventually we will see the capitulation. I guess C'Ville is one of the few generals standing. When they come for the last men standing the fall is usually harder. The Canadian central bank just increased rates, the Europeans will follow suit and we will have to ditto. When rates go up 1% in the next 12 months and an additional 1% in 24 months I want to see these sellers hold out their fictitious prices. I've been through two cycles and we still haven't seen the bottom of this one!

Star Chamber said...

Last month in comments I suggested the real estate agents/Realtors are controlling the market here and I got jumped on.

http://realcville.blogspot.com/2010/03/mortgage-rates-suddenly-jump-up.html

And in that comment stream a Realtor came on and said pricing is "proprietary." No, it's not. It's 1-2% appreciation per year, and 1-2% inflation per year--historically. This was a BUBBLE.

Inventory is rising and sales are not. There's something going on that buyers aren't privy to.
What is it?
Waiting until 2011 for NGIC?
Waiting until the bottom is called for the rest of the US and therefore then justifying the area prices?

Or insisting that these prices reflect actual "value"? Because if they don't, these sales people have helped a lot of people into financial straits over the past seven+ years.

And along those lines: notice that these sales people are now "double dipping", profitting on the way down too. The CAAR has classes for its members, teaching them about short sales and foreclosures, so they can market themselves as foreclosure specialists or short sale facilitators.

Anybody facing short sale or foreclosure needs a RE lawyer, not a salesperson.

A Case-Shiller type analysis would be great but there's little transparency here, especially in City records. At least County has a history of assessments.

And forget about pricing and sales data. It's "private property," belonging to the CAAR MLS.

Anonymous said...

Well said Star Chamber. My personal experience with Realtors in the Albermarle/C'ville area has been poor. At best they are undereducated and uniformed, and at worst they are robbers. Houses sell themselves based upon price and emotions (buyer's). The Realtor is a middleman. He takes no fiduciary responsibility. Paying this 'professional' a percentage of the sale price is ludicrous given the minimal value he/she adds. Going to him/her for financial advice is ill advised.

Anonymous said...

Sellers believed RE people when they were buyers so why wouldn't they believe now?

Several points jump out when looking at this market:

1. It's the "four corners" rule to the extreme. The RE people are looking only at the property NOT at the local or national economy and the ongoing housing crash.

2. The only other thing agents seem to look at are "Comps." It's the "Comparative Market Analysis" that makes Belmont shoeboxes $200k and so many of the McMansions on acreage in the County $1.5 million, even tho most in both categories will not sell.

3. There are lots of sellers who can carry these properties. Watch this market long enough and you see the same houses relist with tiny price changes even tho empty.

Despite #3 there will be more foreclosures and short sales b/c people can't unload these houses.

Humpty said...

Folks, why do you have any expectations from brokers.

Some facts:

1. In theory brokers work for the Seller, because that is who pays their commission.

2. In reality most brokers work for themselves and provide a service to the seller.

3. Almost all buyers (residential RE) are motivated by emotion (falling in love with the house) and hence make it a slam dunk for the broker to use this against them. Remember the broker's mandate is to achieve a meeting of the minds (price) between buyer and seller. To do this the broker is supposed to push buttons on both sides. It seems to me it's a fine line of "the end justifies the means".

4. "Caveat Emptor", buyer beware. The Buyers have to become savvy and unemotional. The first rule is don't fall in love. Do you due diligence. How many buyers actually check what a prospective seller pay for a property? the entire sales history of a property? Then compare these to every house on that block.

rfs said...

Yes, in theory brokers work for the seller, however it is really the buyer that pays the commission in a higher sales price. Commissions are baked into the ultimate take/sales price and that is the price being paid by the buyer. So in essence prices are 3-6% than if there were no Realtor at all...Having said that, there are some realtors that do earn that commission, I stress some.

Anonymous said...

A few. The real estate agent needs to go the way of the dinosaur. With widespread use of the internet as the marketing tool, it is only a matter of time until there is a FSBO service that competes favorably with fragmented local MLS services. The present real estate commission structure adds cost and very little value.

Anonymous said...

Folks you just don't seem to get it. You are ascribing to realtors in Charlottesville some kinds of magical powers that realtors across the country do not have - in places where prices have declined quickly, is it the case that they have stupider realtors who cannot seem to wave their magic wands and support higher prices? No of course not.

Realtors might help sellers set asking prices but in the end it is where supply and demand meet that determines selling price. Period. Cville real estate prices have not fallen further because of two things: (1) despite all the shouting, there remains enough demand to keep prices declining relatively gently, and (2) sellers are not yet desperate enough to engage in huge price drops. Nothing to do with realtors at all.

So, this is support for the "realtors don't add much value" argument but is also a challenge to the "realtors are to blame for high prices" argument. No realtor magic wands could make someone who is facing financial problems continue to list his house at optimistically high prices. just does not happen.

I think we will continue to see a slow decline in our area (1-2% a year) which will not be dramatic enough to spook buyers who are ready to commit and who are tired of high cost rentals in Charlottesville.

but let's stop giving realtors some kind of market-making powers and acknowledge that they are there to help people who are incapable of negotiating their own deal, to help sellers who are incapable of marketing their own properties, and to help buyers who are incapable of doing their own due diligence.

Anonymous said...

Sorry, 12.08, you're wrong. Call up three agents and express interest in three different houses. Tell them what your reasons and comps are for your offer and then listen to the BS you get in response. Then report back here.

You're not on the ground out there trying to buy or you'd have a different story. There's tiny demand here and a desperate struggle to keep prices inflated. At the moment the market is not healthy even with tax break and low interest rates.

Prices will change after Friday.

Anonymous said...

Well, then, 1:22, why don't you just make your offers and see what responses you get back from the sellers? Why do you need to seek the blessing of a realtor in order to make an offer that you feel is reasonable? And if you don't get anywhere with your offers, perhaps your idea of reasonable pricing hasn't hit the mainstream yet. But just because a realtor says, "I don't agree with your logic," etc., doesn't mean he or she is setting the going prices. I think 12:08 is the most rational poster on this board. If you know what the going price should be, get out there and make those deals!

And, btw, I have been "on the ground" for eighteen months as a buyer in the local market, working with a quite prominent local realtor as my agent, and she has been fantastic and has never shied away from using words like "lowball." The amount of $$$ she has stood to make on us is negligible given the amount of time she has invested in showing us properties and taking two offers through to contract (both of which fell apart due to inspections and contingencies). She is an honorable and savvy businessperson who is, I hope, making an investment in us that we will be able to repay by referring future buyers and sellers to her, which we will do with full confidence.

Humpty said...

Who says we are not making offers? Traditionally, what is a "lowball" offer? If a real estate agent lists a property at $500,000 how can he seriously ask his client to consider a "lowball" offer of $300k? Let's say for the purpose of the argument the property is really worth $325K based on 3 prospective buyers willing and able to pay this amount. Who is advising the client that it is worth $500k? The realtor has already set the client up by listing it unrealistically.

You realtors can try and justify asking prices based on comparable listings and the few sales data you have. Neither are realistic because they are statisically insignificant.

If a property is on the market for 6 months and there have been no offers what does that tell you?

Let's face it brokers need listings since everyone is going to the listing brokers through CAAR online. To get those listings they have to please the client. Hence the unrealistic prices!!!!!!

Who is fooling who here? If the home you are listing were priced to sell the "sale numbers" would be much higher and inventory would be no more than 3 months and not 2 years worth.

Here you go again realtors, there's nothing more nauseating than a broker giving all the talking points as if the the buyer is blind and stupid.

Anonymous said...

Hey, 1:22, this is 12:08.

I have no idea why you would tell me to call 3 agents. Who cares what they say?

Actually, you're 100% wrong about not being "on the ground". I actually bought a house and closed 2 weeks ago. Did not use a realtor - canvassed a neighborhood with flyers and found a great house for 6% less than county assessed value (around 2004 sale price). Who the heck needs a realtor when you can easily find motivated sellers and save the 6%?

There surely are hundreds if not thousands of overpriced homes out there in the greater area. Who cares? find the ones that aren't. Easy.

Anonymous said...

sorry, typo in the above (2:29). We bought for 2006 value, not 2004 value.

Anonymous said...

"And, btw, I have been "on the ground" for eighteen months as a buyer in the local market, working with a quite prominent local realtor as my agent, and she has been fantastic and has never shied away from using words like "lowball." The amount of $$$ she has stood to make on us is negligible given the amount of time she has invested in showing us properties and taking two offers through to contract (both of which fell apart due to inspections and contingencies). She is an honorable and savvy businessperson who is, I hope, making an investment in us that we will be able to repay by referring future buyers and sellers to her, which we will do with full confidence."

You must have found the only broker in C'Ville! The broker I call and have made "lowball" offers with barely follow up.

That's why I suspect this post was well written by a broker!

More broker propaganda!

Humpty said...

Folks!

A dose of reality:

http://seekingalpha.com/article/201095-february-s-p-case-shiller-housing-numbers-show-first-yoy-increase-in-38-months?source=hp_wc

Anonymous said...

"40 months to the bottom." Or more in Cville? Thanks for link Humpty.

Anonymous said...

Hey, y'all--

"18 months on the ground," happy with my realtor here. I am not a realtor pretending to be a buyer. I am a buyer who follows this site looking for insight into the local market.

I hear "Humpty" and others on unrealistic prices. For instance: we looked at a house that met our basic criteria (location, size etc.). Seller was asking "$499"K. Had condition issues, had siting issues. Our realtor immediately advised us that she thought even $400K was a stretch for a justifiable price. We felt that more like $350K or less would be reasonable, pending an inspection. At the end of the day, we all agreed there didn't seem much of a point putting in an offer of $350K when the asking was $500K. Within the year, the house (which was rented out) had gone into foreclosure and the bank had unloaded it for $340K. We weren't bummed by this, as we didn't particularly like it anyway, but my point is that in this situation, there was a ridiculously overpriced property, the overpricing kept it from selling in a traditional manner, and eventually it did sell right around where we guessed, as educated buyers working with a knowledgeable realtor, might be a reasonable price. My guess about why the situation played out this way would be that the buyers were deeply underwater--not for the purchase price, which was considerably less than asking, nor for improvements, which they hadn't made, but likely because they'd borrowed against the property and leveraged themselves ridiculously, because they were doing something asinine like calculating in a for-sure value increase of 10% a year. So selling for $340-$350K and letting the property go into foreclosure were equally bad scenarios for them--in fact, if they didn't mind the credit hit, foreclosure was probably far preferable since they didn't have to pay back the real estate ATM.

And my point at the end of all this would be. . . . the realtor had absolutely nothing to do with it. Not ours, and more than likely not the seller's agent either. The paranoid conspiracy-theory ranting doesn't help those of us actually trying to buy a home in the area.

In fact I would like to pose a question that is perhaps more constructive to some of you experts: do you actually expect prices to fall to below-ca. 2004 levels? My understanding is that the area experienced an enormous population boom in the late 90s and early 2000s, and that a lot of the influx came from wealthier parts of the U.S. (ie the northeast). If there is not a corresponding population exodus, why would we expect to see the market return to the place that it was before the population shift? As a friend of mine who grew up here put it: you can gauge what's happened in Charlottesville over the past decade by the ice cream shop at Barracks Rd: first a Carvel, then a Baskin-Robbins, now a Ben & Jerry's. It's not just housing prices that have moved up the consumer food chain here.

What do you all think?

Your friend,
Not a "Broker"

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

Just to clarify identities, "Not a broker" and 12.08* are not RE professionals.

How do we know? Email correspondence for 12.08*. "Not a broker" tells a familiar story.

12.08* had a clear strategy for buying a house and after watching the market for years, did so w/the method described. This blog is hoping that at some point, perhaps after moving, there may be an interview with this buyer. It should be said, however, that not everybody possesses the skills or perseverance to take 12.08*'s buying tack.

"Not a broker" brings up a valid point about pricing: mortgage holders who are overleveraged. These sellers are desperate to try to make what they owe due to buying during the bubble, taking a HELOC, or having an Option ARM.

Will prices go down to 2004 levels? Is the better question Why wouldn't they?

The nationwide housing crisis is nowhere near its end. Why will what happens in the rest of the nation not continue to impact this area?

And how about a Virginia government entity, the Virginia Housing Development Authority, which predicts the bottom is still in the future?

Locally, wages haven't increased since 2004, but asking prices soared. The area is once again approaching record high levels of inventory. There are many folks who are underemployed. The local and state unemployment rates are still rising. UVA, the largest employer, has wage and hiring freezes.

As for population? The people who are selling their houses are for the most part not "move up" buyers. They're trying to get out.

The money from the northeast seems to be on its way out, too. The number of $1 Million ++ listings in April alone lets you know this area is having a population bleed.

As for ice cream shops? That's an indicator, but so are restaurant and store closings. Check out The Hook and C-VILLE news blog archives for these.

And meal and sales tax revenues are down in City and County.

And how about that Downtown Mall? The vacancies, the hotel skeleton, the soon-to-be-vacant ice park. Does that look thriving?

This area is a long way from having a healthy economy.

There's not much to indicate this area is stabilizing, and much to indicate prices will decline:

http://realcville.blogspot.com/2010/03/9-reasons-home-prices-will-continue.html

Nest Realty Group's Double Digit depreciation forecast:

http://realcville.blogspot.com/2010/04/nest-realty-group-has-double-digit.html

Caveat Emptor.

It's never going to be 2007 again. Except maybe in 2023.

*in original version of this comment, we confused 12.08 and 1.22. We have attempted to correct this. 12.08 also appears (as far as we can discern) at 2.29.

Humpty said...

Quote Not a broker: "As a friend of mine who grew up here put it: you can gauge what's happened in Charlottesville over the past decade by the ice cream shop at Barracks Rd: first a Carvel, then a Baskin-Robbins, now a Ben & Jerry's. It's not just housing prices that have moved up the consumer food chain here."

So the closing of Cassis, the "food chain" restaurant must bode well for your theory!!!!!!!!!

I guess all these upmarket connoisseur and discerning consumers will be going back to dine in their local diners.

Another dose of reality!

Name/URL said...

1-2% price decline per year? There's nothing to support this except wishful thinking.

And Not a broker,
Americans think they deserve luxury all the time, even in their ice cream choices. Overconsumption has become a mainstay. Nobody makes coffee at home anymore. Everybody needs a big car. You can buy Ben and Jerry's at 7-11.

You're going to overpay for a house just like 12:08 and justify it as the Charlottesville way.

To each her own.

Humpty said...

"You're going to overpay for a house just like 12:08 and justify it as the Charlottesville way."

Anyone looking to make a purchase in the near future should seriously "lowball" any asking price. Personally I think we are heading back to prices we saw in the late 1990s. I would also state that one would be foolish to buy now unless their time horizon is 10+ years. It might take you that long to see your purchase price.

If you think I am exaggerating then take a look at the examples below which is typical for the period from 1987 to 1997. The years 1986/87 was the peak of the last real estate bubble, a bubble that was smaller than the one that just burst.

EXAMPLE 1
142 HARVEST DR
UNIT 142 PH-III
Sale Date 08/12/1999
Sale Price $144,000
Deed Book/Page 1847/568
Sale Date 06/04/1990
Sale Price $133,000
Deed Book/Page 1103/026
AFTER 9 YEARS BREAK EVEN

EXAMPLE 2
508 WORTHINGTON DR, UNIT A
09/10/1999 $239,000
05/20/1988 $265,000
After 11 YEARS LOST MONEY

EXAMPLE 3
600 SHAMROCK ROAD
$117,250 1/29/1999 $116,500 9/29/1995

EXAMPLE 4
1215 WERTLAND STREET A-13
$54,000 9/27/2000 $44,330 6/4/1999 $52,500 12/11/1985

EXAMPLE 5
602 CABELL AVENUE #10
$97,000 8/31/1998 $88,000 8/4/1995 $91,000 10/28/1986

EXAMPLE 6
3355 MORGANTOWN RD
07/19/2002 $183,000
11/16/2001 $130,000
11/02/1993 118,000

I had to find properties that sold at the peak of the last bubble and sold again prior to the commencement of the recent bubble.