Friday, July 30, 2010

Thursday, July 29, 2010

20 Year High as Charlottesville Goes to 8%, While Albemarle Is at 5.8%: Unemployment Rises Month-Over-Month and Year-Over-Year

What recovery?  The previous post reported that area home sales have slowed to a crawl.  Unemployment has leapt in the past 2 years: the Charlottesville Metro area was at 3% in 2008.

 And did you know: local private sector job growth has ended, and those with 4 yr degrees and PhDs have the highest rate of un/underemployment.  Home sales are impacted by unemployment, obviously, but prices in the area also remain detached from reality wage-earners' incomes.

 The current unemployment figures are nsa for June, 2010.  Compared with June 2009, Albemarle had the same rate of 5.8% but Charlottesville was lower, at 7.4%.  See the and Va Employment Commission and The DP for all numbers.

 Sure, Virginia's doing better than some other states.  But we don't live in those other states; we live in an area that has rising unemployment.

Monday, July 26, 2010

Charlottesville Albemarle Home Sales Slow to A Crawl in July: It's A "Buyer's Market" With Soaring Inventory But Few Willing or Able Purchasers

 This market is  years away from balance, and "recovery" remains elusive, as inventory soars and sales plunge during the "Spring / Summer" selling season, typically the busiest time of year.

The handwriting's on the wall, not the contracts: June saw 122 properties go under contract in Charlottesville and Albemarle.  Through July 22, just 67 properties have gone under contract.  Even if sales keep the same pace, July will end 25% lower than June.

The slow down began after the April 30 expiration of the Homebuyer Tax Credit, when contracts plummeted 30-50%, depending on area:  May here, June here

2010 is proving to be worse for home sales than the middle of the Great Recession 2009. 

Contract Numbers:

July: 67
June: 122
Cville = 16 single family homes
Albemarle = 71 single family homes
Cville/Alb = 17 condos
Cville/Alb = 18 townhouses

There's no good news for sellers.  Buyers are waiting for sellers to realize the last sale price of the home doesn't matter.

The above chart is via/copyright RealCentralVA.

Friday, July 16, 2010

1 in 4 Virginia Mortgage Holders is "Underwater" - Owes More Than the Home is Worth - Virginia is #7 In the Nation

The 15 States With The Most Underwater Mortgages:

Nevada -- 69.9% of mortgages underwater
Arizona -- 51.3% of mortgages underwater
Florida -- 47.8% of mortgages underwater
Michigan -- 38.5% of mortgages underwater
California -- 35.1% of mortgages underwater
Georgia -- 27.8% of mortgages underwater
Virginia -- 24.3% of mortgages underwater
West Virginia -- 23.8% of mortgages underwater
Wyoming -- 23.8% of mortgages underwater
Maine -- 23.8% of mortgages underwater
Louisiana -- 23.8% of mortgages underwater
Mississippi -- 23.8% of mortgages underwater
South Dakota -- 23.8% of mortgages underwater
Maryland -- 22.9% of mortgages underwater
Idaho -- 22.7% of mortgages underwater

Thanks to Humpty for compiling the list from Business Insider's slide show.

The following posts give an idea why so many local mortgage holders owe more than their houses are worth, and why the mortgageholders with negative equity will increase in number.

2010 CAAR  Mid-Year Market Report Showing Slow Sales, High Inventory
The VHDA Review of Current Market Conditions
Lowball Offers and Buying v. Renting
Short Term and Move Up Buyers Exit Market, Prices Remain High, Sales Will Remain Low
An Example of Years Worth Of Mortgage Payments Wiped Out When Prices Drop
2010 Foreclosures Up Dramatically Over 2009

Charlottesville's Downtown Ice Park To ReOpen

The Hook reports:
The sale comes two weeks after skating stopped and at a price of $3 Million, a million dollars less than the asking price and about a million below the 1996 development price.
 The article also reports on the City tax assessment, currently at $6.5 Million:
That's so far out of line as to be obscene, says [Realtor Roger] Voisnet, who believes the assessment should be slashed to the one- to two-million dollar range, since the $3 million sales price included not only the building but also the business.

US Justice Department Wants to Seize 2291 Ferndown Lane in Glenmore

Glenmore, the gated  golf community in Keswick that has been rocked by the Michael Comer embezzlement, has a property linked to the Taiwanese presidential scandal.  The search engine at RealCentralVA shows at least 46 mappable properties currently for sale in Glenmore, including
  • Longest DOM: 533, 1507 Bremerton Lane - $449k 3 bd / 2.5 ba
  • Priciest: 1000 Glenmore Lane - $2,700,000  - 4 bds / 4 ba/ 3 half ba
  • Cheapest: 1425 Bremerton Lane - $439k - 3bd / 2 ba

Thursday, July 15, 2010

Virginia Has a State Budget Surplus?

It does?  Many $ issues spring to mind contraindicating a "surplus," including that Virginia borrowed  $1.26B from the US Treasury to pay unemployment compensation in 2009,  VDOT is squeezed,  and there are significant State Retirement System issues.

1,500 Applied for 73 Jobs At New Chick-Fil-A in Waynesboro

Waynesboro is about 20 miles from downtown Charlottesville, and the new(est) shopping center is closer to Crozet and parts of Western Albemarle than the in-town CF.  Waynesboro has 9% unemployment while Augusta County is near 7% (May 2010).   The CAAR included the Valley's info in its most recent release of RE salesdata. The most important detail about Chick-Fil-A's grand opening today is in the second-to-last paragraph of this story. 

Tuesday, July 13, 2010

CAAR's 2010 Mid-Year Market Report: Sales Below 2002 Level, Even With Homebuyer Tax Credit and Historically Low Mortgage Rates

The CAAR 2010 Mid-Year Market Report shows that  2010 sales beat sales of 2009's "Great Recession."  Contracts had to close by June 30.*  

But these sales were fueled by the Federal Government's subsidies:  the Homebuyer Tax Credit and carefully-controlled historically low mortgage rates.  2010 sales beat the Recession, but certainly not the bubble.  And the story's longer than one year:  Sales in 2010 are lower than 2002.** 

Now, as can be seen by the Pending Contracts links beneath the sales charts, further demand has fallen off a cliff.  And inventory keeps rising.***

Click for larger image in new window.

2006 - 2010 Sales,  January 1 -  June 30 

 2002 - 2005 Sales,  January 1 -  June 30 

Pending Contracts Plunge As Homebuyer Tax Credit Expires

May Contracts Plunge Nationally and Locally, 35-50%

June's Cville Albemarle contracts are at an 11 year low

Read the report:
CAAR's Mid-Year Market Report via RealCentralVA.   

Here's What's Missing From CAAR's 1st Q Market Report
Graphs: Declining RE Sales in Central VA
What Constitutes a Lowball Offer in C'ville Albemarle?
The VA Housing Development Authority Market Conditions and Challenges Report

Daily Progress reporting on local sales:
Mid-Year 2010: Subsidies Boost Sales, Future Looks Bleak
Mid-Year 2009 "Area's Mid-Year Home Sales Reflect Continued Struggle."   
Mid-Year 2008: "Is This the Bottom?"


Median Prices

New Home Sales

*On June 30 the closing deadline was extended, but this will impact mainly to short sale and foreclosure purchases, which often take longer due to paperwork/multiple parties.
**Except for Louisa County, down to 2004 level.
***Inventory will start declining now as unsold units are rented, or pulled off the market, waiting for next year's "turn."

Images copyright CAAR.  Graph for SFH contracts via RealVCentralVA

Monday, July 12, 2010

"Price Reduced" - What Happens to Mortgage Payments When June's $300k Home Is...August's $285k Home...And October's $270k Home?

Years worth of mortgage payments are lost if the "comparable" home sells at "price reduced" a few months from now--or a house that is already mortgaged loses value.  See charts below, which use as an example a house priced at the "First Time Homebuyer" level of $300k.

Check out Trulia for daily price reductions.  Contracts: April saw a bump up, while May saw a plunge and June's Cville Albemarle contracts are at an 11 year low. 

Area sales got a boost in the first half of 2010 due to the Federal Homebuyer Tax Credit that expired April 30, with closing by June 30, 2010.  Going forward, it's another story.

The below mortgage calculations are based on a 5% interest rate, and a 3.5% downpayment, which is what is required, with "good" credit, for an FHA 30 yr fixed.   The numbers don't  include the loss of agent fees, closing costs, upkeep, upgrades, HOA, etc., when prices decline.

Click for larger images in new windows.

House priced $300K:

Buying for $15k or 5% less, $285k w/ 3.5%down, means 4 years of payments have been wiped out:

House priced $30k or 10% less, $270k, puts June's buyer at even more of a disadvantage:

Input your own numbers in the mortgage calculator, which appears in the sidebar at The Mortgage Buzz.

Nationally, housing will see more price declines due to high inventory, lack of demand, unemployment, foreclosures.   Foreclosures have soared and are moving to the high-end.  Meanwhile, inventory is at record levels.  So what constitutes a Lowball Offer in this area?

Jumbo Mortgage Holders Default on Mortgages "At A Rate Greater Than Rest of the Population"

The NYTimes reports RE analytics firm CoreLogic's findings:
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
But jumbos are a smaller share of the market, NYTimes, says Realty Check's Diana Olick:
A little less than 14 percent of the loans outstanding in the U.S. are "jumbo," meaning over $417,000, according to government statistics (FHFA). The number of loans that are over $1m are even less than that.
NY Times article here.  Diana Olick here.

Locally, there's been a noticeable bump up in foreclosure auctions scheduled (though not always completed) for houses or properties in excess of $1M.  In this area, a "jumbo" is a mortgage above the FHA's conforming loan limit of $437k.  See here:

June's $1M Foreclosure Auctions
May's record day of $21M in Scheduled auctions
April's Million Dollar Foreclosures 
High-End Defaults and Foreclosures in C'ville/Albemarle
2010 Foreclosures Surge Over 2009 

Saturday, July 10, 2010

Moving to Charlottesville: Better to Buy or Rent? - A Reader's Question

A relocating reader seeks input.  The question appears in the comments section of the "Lowball Offer" post, which itself has links to info about the current and projected future status of the Cville Albemarle RE market.  The reader's query may be found here.

Wednesday, July 7, 2010

What Constitutes A Lowball Offer in Charlottesville Albemarle Area Real Estate? - A Reader's Question

In a post devoted to local listings, a reader poses a great question:
I'm curious what people here think is a lowball offer. Even pretend you're optimistic about the market when answering this.
Is an offer of 90% + closing costs + a small allowance for some maintenance that should have been done a lowball, when the asking price is the same price that was paid in 2005-2007??
According to a local real estate agent, that I should probably no longer work with, it's a low ball offer and I'm making him look bad.
The comment appears here.

A couple responses have already rolled in, and they're reproduced in the comments after this post.

So what about it?  What constitutes a "lowball" offer in an area that faces these issues:
With all this in mind, Is there really anybody out there who is paying asking price?  (That's a rhetorical question but the answer, shocker, is that yes, there is....)

Friday, July 2, 2010

Pending Home Sales Plunge 30% Nationally - The Decline Is Deeper in Charlottesville and Surrounding Counties

*With the expiration of the Homebuyer Tax Cred, The National Association of Realtors report  Pending Home Sales plummeted 30% from April to May, a record low.

* Every City / County in this area saw a decline in pending contracts from April to May.  See charts below; here's a recap of the numbers:
  • Charlottesville Albemarle Single Family Homes   -50% 
  • Charlottesville Attached Homes  -55%
  • Charlottesville Condos  -36%
  • Greene County  -44%
  • Fluvanna County  -52% 
  • Louisa County Decline -11% 
*Noted earlier in the month: Charlottesville and Albemarle Single Family Home sales contracts plummeted nearly 50% from April to May.

*The NAR's monthly "Pending Home Sales" index tracks contracts that will close in 1-2 months for detached, condos, and attached homes.  Locally and nationally, May and June will see stronger closed numbers than July, August, September.

*This area has skyrocketing inventory.  RealCentralVA recently suggested buyers  IGNORE National Data?  Sure, why not?   This market has its own troubles.   Sellers need to understand local data that buyers already know

The reality is that if a home hasn't sold by now  --  July 4th essentially being the end of "Spring Selling Season" -- chances are low that it will sell soon.  Properties are being pulled off the market to become rentals, "waiting out the market." There will be action in June as buyers try to close before the school year begins...and then...barring interest rates going down to 2% or a new homebuyer tax credit (both possible)....sales will be challenging.

*Closed Sales Jan - 1 Jun rose over 2009, but remained at a decade low.

Charts:  the top two via/copyright RealCentralVA.  Colored charts via/copyright Pam Dent.

Single Family Homes in Charlottesville and Albemarle  -50% from April to May.

April 2010
May 2010:

In the charts below:
"New" = inventory that came on the market that month.  
"Pending" = Signed Contracts.  
"Sold" = closed sales for properties that went under contract 1-3 months earlier.
  Charlottesville Single Family Homes Pending Contracts Decline -50% 

 Charlottesville Attached Homes Pending Contracts Decline -55%

Charlottesville Condos Pending Contracts Decline -36%

Greene County County Pending Contracts Decline -44%

Fluvanna County Pending Home Sales Decline -52%

Louisa County Pending Home Sales Decline -11%.  Louisa is rural and doesn't have "jobs", but it's close enough and "affordable" enough for C'ville's priced-out homebuyers.

Related Reading: 
CalculatedRISK on the record low contract numbers

Charlottesville Albemarle Area Unemployment Rises

 "...dampening hopes of local business and development leaders."  It was reported in September '09 that private sector growth had ended in this area.  Currently: Virginia: 6.9 %. Charlottesville: 6.6%. Albemarle: 5.5%.  Read.

Nationally, the number is at 9.5%, but when those who have stopped looking or are underemployed are counted, the number is 16.6%.

Thursday, July 1, 2010

Halsey Minor Is No Longer A Villain In Charlottesville...But He'll Still Never Finish The Landmark Hotel

Minor is favored in arbitration over Danielson, but the hotel is no longer in his control; the FDIC is the decisionmaker.   Read.  By the way, now that the Ice Park didn't find a buyer and has closed, all it's going to take is another mircroburst aimed at The Pavillion, and the Downtown Mall will be toast.