- The Core Logic and Federal Housing Finance Administration have released more price data, showing that Charlottesville area price declines accelerated in the past month/quarter, and in 2011, outpacing other parts of the country.
- Virginia is the 7th worst state for owners owning more than house is worth.
- Va Assoctiation of Realtors: "10 not-so-fun-facts about Virginia Housing."
- The positive: the latest data for the Cville Area shows a slight decrease in unemployment.
I always look forward to the Merchant report. When I saw his first report a few years ago, I knew immediately it would help us explain the market and support what many of us knew, but did not have the graphs and data to support on a local level. Looking back, the affordability chart was always the most interesting to me. Unfortunately, he did not look at it again. His analysis of loan defaults, underwater homeowners, and the distressed inventories are very important. It's important to note we are in better shape than many areas around the state. His position has moved from not predicting a bottom to 'the worst is behind us.' I liked the way he stated the current conditions than moved his attention to the future and the obstacles we need to overcome. it's impossible to predict the future, but I think his timelines are pretty good.
- Mortgage rates are historically low, hovering about 4%, but this hasn't, locally or nationally, increased sales.
- There's a problem in the C'ville Area, and nationwide, with "Effective" Negative Equity preventing "Move Up" buyers.
- There is a dwindling pool of willing, qualified buyers.
- This is a highly transient area. According to Fannie Mae stats, about 30% of the population exits every year. The "Short Term Buyer" - 1-5 Years - has disappeared from the C'ville Area, which leaves a lot of condo, townhouse and bungalow sellers in the lurch.
- Population has increased, and number of available, newly built units skyrocketed over the past decade: but sales are now down. Oversupply of inventory will be a problem for quite some time.
As with number one, uncertainty remains the greatest concern; buyers not feeling confident in their employment situations and sellers faced with losing their jobs, having to move, wanting to move, job/life mobility has become a much greater issue.
I don’t think the employment situation is as bleak as some would like to have you think. I have heard that NGIC is done hiring but I have also heard there are more to come including another department that will come because of BRAC. Suffice it to say, the 10% defense cut will certainly curtail some of this movement at least in the short term. What some don’t realize is that a fair amount of private defense contractor jobs are coming in to support NGIC. I have heard as many as 3 private jobs for every on NGIC/DIA job although that seems quite high.
There are small private firms around the area who are quietly growing as well. Many of the folks they are employing will rent initially but I believe will become 1st time buyers once they get themselves established and know their jobs are secure. Should mortgage interest deductions go away for 2nd home owners, this could curtail another segment of folks who will at least think twice about inventing in a 2nd/resort home.
C'VILLE BUBBLE BLOG
In Charlottesville / Albemarle, private sector jobs have vanished: a net total of 11 new jobs were created in 2010. Boutique Manufacturing, which Greg Slater mentions, and some financial employment, which Jim Duncan mentions, will provide some homebuyers: but not enough. Five years ago City unemployment was at 2.1%. The lack of high-paying jobs combined with what is high unemployment for this area helps explain the glut of unsold houses in the $400-800k range, which for this area was the "move up" price. The feeling of wealth and optimism and striving for the "upper middle class" has evaporated from this area. And now buyers can get new houses (and smaller, greener) for less than what the bubble era current sellers paid. Toss in to this the fact that 1 in 5 local residents can't pay their bills...and you see how small the pool of available buyers is.
NGIC is pretty much done hiring locals (+/-75 jobs) and importing potential homebuyers. UVA has announced 200 teaching positions over the next 5-7 years, some of which is replacing retirees; this will be a trickle of buyers starting around 2014.
Stay tuned for Part 4.