Friday, May 28, 2010

An Interesting Bit of Housing Data

"...Banks own a greater share of residential housing net worth in the United States than all individual Americans put together."
This is one reason why the US economy can't truly be considered in "recovery."  Read the list of 24 other reasons at The Economic Collapse.  

Thursday, May 27, 2010

A Bearish Outlook For Housing....

....not that it has anything to do with this area.

National New Home Sales and Prices

New home sales rose on April's expiration of the homebuyer tax credit, even as median price declined to 2003 levels.

The Homebuyer Tax Credit Had Absolutely No Impact On Single Family Home Sales in Charlottesville - 1 Jan to 1 May

None.  Zero.  The Homebuyer Tax Credit had no effect on detached home sales in the City of Charlottesville.  Zilch.  Nunca.  Nada.  Nyet.  Sales for 2010 thus far are essentially neck and neck for the same months during 2009.  
This makes the "Great Recession First Quarter '09" sales and "The Governement Subsidized Housing Market '10" sales -43% lower than First Quarter 2008 (Q108 here). 

Chart shows 2009 and 2010 detached sales in the City of Charlottesville.  Click for larger image in new window:

Shockingly low sales?  Of course they are.  There was an up to $8k tax credit, historically low interest rates, and FHA loans with 3.5% downpayments, and this market couldn't do any better than during the worst financial crisis since the Depression?

And yet, it's not shocking: this market defies "logic," and is a "buyer's market" only by definition of the huge amount of available inventory.  The inventory of single family homes, including fantasy proposed, has hovered at 260 for the past few months.  There's a lack of short-term buyers, a lack of move-up buyers, and buyers expect prices to continue declining.  It's not shocking when one actually looks at the inventory, as these commenters do. 

The reality on houses priced $300k and below?  At the "First Time Buyer" price point, the houses often still need tens of thousands of dollars of "improvements" (kitchens, bathrooms, roofs, floors, siding), or are miniscule (the "charming Belmont bungalow" at 800 sq. ft. for $225k), or, in the under-$200k range, are in neighborhoods that never "finished" being "gentrified" during the Bubble ("euphemisms").

As for higher-priced single family home inventory in the City of Charlottesville?  A buyer has to really adore an 1800 square foot house on 1/4 acre for $650k that elsewhere in the Commonwealth would be a 12 minute rail commute to DC, or south, west, and east of here would be under $200K....

We're not a bedroom community for NOVA--yet.  We just have the prices.  Any moment now, cash will come raining down from the sky, saving sellers.  That run-up in prices wasn't a "bubble," it reflects the true "value" of this area.  Sales may be slow, but they have been for years, and any moment now things will be looking up....

*PM: Title updated to reflect first 1/3 of the year.  March and April contracts will close in June and July.

Related Reading:
Nest Realty Group's post on this topic, where this CAAR chart appears (copyright/courtesy of)
Here's What's Missing From CAAR's Q1 2010 Market Report
CAAR Q1 2009 Market Report - Sales overall down 33%  
Q1 2009 Single Family Home Sales in C'ville and Albemarle 
2009 Contracts, January - May 2009
Graphs of 2003-3009 Sales in Cville / Albemarle

Wednesday, May 26, 2010

High End Defaults and Foreclosures in Charlottesville and Albemarle County

Post originally appeared 5/26; updated 5/27. Update 2, 6/11 on bottom, listing still for sale.
Some notes on this post:
  • 1 in 7 mortgage holders is in default or foreclosure.
  • More high-end defaults and foreclosures are showing up in local public notices, part of a national trend.
  • "High end" owners, builders, and local personages who have recently had default notices and/or foreclosure auctions scheduled include Patricia Kluge et al; Halsey Minor; Jamie Spence and Joshua Goldschmidt of Church Hill Homes; Chris Bowen and Skyline Builders; Realtor Doug McGowan; Weather Hill Homes;  an apartment managed by Stonehaus; Barry Meade Homes;  even Forest Lodge LLC, which has among its investors Hunter Craig and Boyd Tinsley, may have been, if you read bank records, in default before being "bailed out" by the Commonwealth of Virginia...etc etc etc.
  • 3796 Stony Point Road, the property mentioned in this post, is basically a solid example of bubble valuation in this area.  Purchased for nearly $1.4 M in 2007,  in 2010 offered for sale at nearly half, and assessed at $200k less.
  • UVA is the largest presence and employer in this area.
  • UVIMCO, UVA's investment arm which manages the endowment and thus contributions from many people in this area, has had financial losses and personnel in the news recently.
  • Upshot: Locally and nationally, foreclosures happen at all price points, are recently rising in this area at the high end, and are happening to those who have/manage large amounts of money and assets, as covered by this blog and Main Stream Media, including c-ville, The Hook, the Newsplex, The Daily Progress, etc.
Original Post begins below: Will UVIMCO's Managing Director Be Part of Today's Foreclosure Tsunami?

Albemarle County has 11 foreclosure auctions scheduled for May 26, equaling $21M of loss to mortgage lenders.  A commenter in the above-linked post noticed that one of the properties, 3796 Stony Point Road is, according to public records, owned by UVIMCO's  Managing Director, Michael Aked.

So what of "risk management"?  Foreclosures happen at all price points, and for all sorts of reasons.  Still, frequent commenter "Humpty" wondered if someone who is in foreclosure is fiscally responsible enough to be  handling other peoples' money.  Another commenter, "rfs," noted that this was "sad," but wondered if the default should be disclosed to prospective buyers, since the property is also for sale.  

Similar comments along the lines of "Is he fiscally fit?" concerns were raised when Realtor Doug McGowan's troubles were chronicled in C'ville Weekly as he lost two investment properties to foreclosure.  McGowan additionally lost his own $1M + residence, too.  But McGowan seems to have bounced back.  Not only is he still agenting on behalf of other people in what is typically the largest investment purchase of their lives, but he also recently purchased a new home, according to County records.

But back to UVIMCO, its Managing Director, and this property.  According to another commenter, 'Montpelier,' the property has been listed for foreclosure auction in the past.  "Scheduled" for foreclosure doesn't preclude a default from being cured, often at the last moment.  

Still, it seems UVIMCO is getting public notice lately not for its investments--and lack of, since it bled $1B during the Great Recession--but for its personnel.   Ex-CEO Christopher Brightman recently stepped down due to an alleged affair, and has listed his house for sale. 

The foreclosure auction is currently scheduled for 4pm, but as said above, the delinquency could be "cured" before that.

Details for 3796 Stony Point Road
Purchased in 2007 for $1,375,000
Foreclosing at $1,080,000
Currently asking $774,900
Assessed at $529,700

3796 Stony Point Road, is listed for sale: $774,900k "as is".

 Assessed at:
 Detailed notice of foreclosure is here. 

Update 2 This listing is still available for sale.  Price reduced $20k or 2.9% on June 6.  See here and here.

Original Post Title: Will UVIMCO Managing Director Be Part of Today's Foreclosure Tsunami?

Tuesday, May 25, 2010

Latest National Housing Sales and Prices

With buyers getting in before the Homebuyer Tax Credit expired April 30, existing home sales rose for April.  But so did inventory,  And ultimately, the Homebuyer Tax Credit disappointed--with "First Timers" exiting the market in March, not April.

Meanwhile, the Case-Shiller numbers for March were released, and these declined.  CalculatedRISK delineates the weakening Case-Shiller numbers.

Meanwhile, David Stevens, the chief of the FHA says the housing market is on "life support":
“This is a market purely on life support, sustained by the federal government,” he said at the Mortgage Bankers Association conference. “Having FHA do this much volume is a sign of a very sick system.”

The FHA, which backs loans with down payments as low as 3.5 percent, insured $52.5 billion of home-purchase mortgages in the first quarter, compared with $46 billion of purchases of the debt by Fannie Mae and Freddie Mac, according to data compiled by Washington-based Potomac Partners.
Read here. 

Related Reading:
Mortgage Rates Near Historic Lows...As Mortgage Applications Slide to 13 yr Low and more of those who already have mortgages find themselves in trouble....

Monday, May 24, 2010

$21 Million "Worth" of Real Estate Scheduled for 11 Foreclosure Auctions on Steps of Albemarle County Courthouse - May 26

The auctions starts at 2 pm.  All details here.  The properties include "The Rocks" and "Ragged Mountain Farm" lots in Western Albemarle.  We'll see you at this record-setting line-up.   

Another Victim of the Housing Crisis - Barry Meade Homes Goes Under - includes data and comments  on Biscuit Run, Forest Lodge LLC, Weather Hill Homes, Church Hill Homes, Belvedere, Old Trail, Coal Tower, etc. etc. etc.
Million Dollar Foreclosures in Albemarle
1 in 7 Mortgageholders Late or in Default
Housing Market on "Life Support"

Friday, May 21, 2010

Mortgage Rates Near Historic Lows...As Housing Market Continues Deteriorating

The Greece / Eurozone crisis has pushed mortgage rates to 4.81, as investors flee to US Treasuries, just as mortgage applications drop to a 13 year low.

While that's an attractive rate, it's an ugly picture in the wider housing market:

One in 7 US mortgage holders is late on payment or in foreclosure - Reuters 

14% of mortgage holders late or in foreclosure - Marketwatch

Mortgage delinquencies drag on economic "recovery" - AP

Mortgage delinquencies by period and state - CalculatedRISK

Mortgage Mods Doomed By Back-End Debt - Realty Check

"Recovery" isn't the correct word - CNBC

Strategic Defaults Reach 31% - SNL

Wednesday, May 19, 2010

10 Charts Illustrate the National Housing Crisis and the Second Wave of Problems

Housing hasn't improved since the Bubble's burst, and a set of charts from Dr. Housing Bubble show the second wave of problems amping up.  1 in 4 people who haven't made a mortgage payment in a year haven't been foreclosed on.  Read.

Friday, May 14, 2010

Declining Real Estate Values = 40 Positions Cut, Class Size Increases, Programs Weakened in Albemarle County Schools

The Albemarle County Board of Supervisors refused to raise the property tax rate.  With declining real estate values, the budget school children will suffer.  Read.

Foreclosures from the sidebar April 14

US Foreclosure Filings Surge to a Record in First Quarter 2009

Option ARMs: Rising Defaults. As of Jan. 09, 28% are delinquent or in foreclosure Dec. 08. Example: Two has become three: 2385 River Ridge Road set for auction Jan 22 9:30 a.m., Albemarle County courthouse.

RealtyTrac: Foreclosures surged 81% in 2008 over 2007; 225% over 2006.
The Richmond Times Dispatch has compiled foreclosure numbers for the Commonwealth, '07-'08. Albemarle County, however, is missing.

RealCentralVA has a post on foreclosures. Be sure to check out the comments.

Do you know what a "short sale" is? Start learning here.

Tuesday, May 11, 2010

The DP: "Now's Still the Time To Buy a House." Or Is It? Chances Are That Next Month, Next Quarter, Prices Will Be Lower

This post covers inventory, housing headwinds, a local newspaper columnists' opinion, the one-month moving median price for new listings, sales in the City of Cville.
Recent low sales and perceived "low" median prices, combined with some other factors, prompted the local newspaper's weekly investment columnist to suggest several reasons that "now" is the time to buy:
"Home prices are well below 2005 averages, and time on the market is well above the healthy market average of 90 days.  Sellers have been slow to realize that their home isn't necessarily worth the appraised value or what they paid for it or even what they owe.  Houses are simply worth whatever the market will bear, which is a lot less than it was at the peak of the market three years ago.  National trends have followed a similar cycle."
The piece could stop right here and be required reading for all sellers.  Instead, it goes on to this:
" can turn quickly.  Now we are contrarians again, looking at the trends and trying to gauge if there will be a second precipitous drop before the bottom.  I don't think so.  I think that we are near the bottom and brighter days lie ahead."
There's plenty of data to back up the idea that housing is heading toward a much lower bottom.  But there's no data indicating "brighter days lie ahead." Consider:
Housing is floundering on a national basis.  However, there's a recent noticeable local trend with what looks like local sellers believing recovery has begun and therefore pricing their listings accordingly.

RealCentralVA has the 30 Day Moving Median Price for New Listings, April 10 - May 10 2010.

There's no "rhyme nor reason" to support this exuberance.  In the Charlottesville Albemarle area,  2008 real estate sales were the slowest in a decade.  And then came The Great Recession and 2009 ended with even lower sales than 2008.  It wasn't hard in  Q1 - 10 for some areas of Central Virginia to beat the same time period in 2010.  
Inventory dropped for a couple days at the beginning of May.  Below are the numbers from May 10 (top is May; bottom is April).  With the way inventory is piling up, by the end of the week, May will exceed April's inventory.  Image copyright CAAR.
Some sectors of the market are in big trouble: in Q1-10 detached single family homes in Charlottesville were down -20% over the same time last year, while 2009's sales were down -46% over 2008).  Inventory is up +20% this time over last year in this sector; ditto for Albemarle County.

Thinking of buying a house?  That asking price is somebody else's notion of value.  A buyers first duty is to lowball, and keep these things in mind.

Strategic Default Video Goes Viral...Will Actual "Walking Away" Get Contagious, too?

While one local media source was suggesting now is the time to buy a house, the widely-read RE blog RealCentralVA focussed on mortgage holders who want to bail on the debt they're renting. 

A "strategic default" occurs when a mortgage holder lets the property go into foreclosure even though the debtor can still afford the payments, typically when the value of the property has declined so much that continuing to make payments is financially stupid.  The debtor can't get a mortgage mod because they are otherwise financially sound.

On Sunday, May 9, CBS news' 60 Minutes aired a segment on Strategic Default, which has now gone viral.

Background to the problem: 

Monday, May 3, 2010

Charlottesville Albemarle Real Estate Update: Did the Homebuyer Tax Credit End With A Bang Or A Whimper?

The numbers are still rolling in for the impact of the Homebuyer Tax Credit on the Charlottesville Albemarle area; this blog will have an update shortly.

However, the Federal Government's intervention to further prevent plunging home values extends much further than a trasfer of funds to certain income-qualified "buyers": currently, 96.5% of all mortgages are owned or backed by the US.  This is accomplished primarily via giants Fannie Mae and Freddie Mac, which were placed in US "conservatorship" in 2008.  This number is up from 15% in 2006.

Read the WSJ article; CalculatedRisk has analysis from the SF Fed.

The Automatic Earth explains the consequences of US government intervention:
Let nobody try and fool nobody else anymore. Fannie and Freddie have nothing to do with the less privileged: they are the ultimate tools for Washington to keep Wall Street alive. Not only would significantly lower home values put severe strains on the major banks' balance sheets, they would also implode and destruct what Mortgage Backed Securities and various other housing related derivatives can be put on the books for.

And if Washington keeps on refusing to do so, maybe some other party can come up with some calculations on what the cost to the taxpayer would be, now that 96.5% of mortgages are provided on that taxpayer's account, of prices going down another 10%, and another set of calculations for a 20% drop, and one for 30% (or maybe 50% would be a better, more realistic view). If a government holds the view that it can spend tax revenue at will and limitless, that same government can still be put to task for doing so largely in secret. The American people have a right to know how their money is spent, on what it is spent, and above all how much.

The government needs to explain, for instance, why it has decided to prop up home prices at levels that are far higher than what they were prior to the 2002-2007 housing boom. This is vital data, because it will, or at least may, alert enough people to the fact that domestic real estate prices have zero percent chance of staying at those levels unless taxpayer money is used into perpetuity to guarantee any and all mortgages.
(Red emphasis = BB.)
Read more here.  

Frightening graphic posted at CalculatedRisk:

Meanwhile, people who already have mortgages are fleeing: 31% of all defaults are now considered strategic.