Wednesday, April 27, 2011

GMAC Commits Mortgage Fraud - Federal Judge in C'ville Finds in Favor of Homeowners

RealCentralVA has the story about some Palmyra homeowners who were beleaguered by national mortgage lender GMAC for a year and a half, unable to get a HARP mortgage mod nor receive accurate documents/disclosure.  At issue was a particular kind of mortgage insurance...which the homeowners didn't know was attached to their mortgage.   US District Court (Western District of VA) Judge Norman K. Moon found in favor of the plaintiffs, who were represented by MartinWren P.C., which also posted about the case on the firm's blog.

Judge Moon issued a summary judgment before trial (documents here; fascinating).  This left the jury to award damages--except that GMAC offered a settlement to homeowners, on condition of confidentiality.  What would you have awarded these folks, knowing that they endured stress, doubt, uncertainty, and pain over their home, for a year and a half?

Bundoran Farm Update: Manor House Lost to Foreclosure, 12 Lots Sold to Investment LLC

Upper Bundoran, the manor house at the Bundoran Farm "preservation development" trying to get going amidst slow sales and Albemarle County's declining home prices in the Charlottesville Area real estate market, has gone back to the bank in a foreclosure auction. 

The April 18 auction on the steps of the Albemarle County Courthouse unloaded the 6,500 sq ft house built in 1955 sitting on 55 acres.  The house held a $3.1 Million mortgage and had been for sale for $2.6 M, and  went back to the bank for $2,033,000"Nobody bid $2,034,000," said attorney Bill Schmidheiser, the foreclosure rep.  "I was surpirsed," according to The Hook's after-auction coverage. 

In The Hook's coverage before the auction, Bundoran's intent is laid out:
"The plan for the 2,300 acre Bundoran Farm is to keep most of its acreage under conservation easement as pasture, forest, and orchards, and to plant 108 residential lots in the middle of that....Bundoran Farm sales have picked up, with 17 lots recently sold."
 [bolding/red ours]


Albemarle County tax records tell the story.  In Feb '11,  12 lots sold to a single entity called "Bramley Investments LLC", and in Oct '10, two lots went to Fred Scott, the man who lived in Upper Bundoran as a child, initially sold the acreage for millions, and now sees the manor house go back to the Bank, while 3 homeowners have bought, and one parcel has sold to another LLC.

Click for full image in new window.

Foreclosed Former Kluge Estate, Albemarle House, Relisted for $16 Million
Trump Buys Kluge Estate Winery For Pennies on the Dollar
Plunge: Albemarle County Median Sold Prices Take a Dive Q1 2011

President Obama Releases His Birth Certificate. Will This Put An End to the Birther Bubble?

 Our new neighbor Donald Trump has been inflating this issue.  What will he say now?  

See the post on the WH blog.

Update: A few weeks ago, Trump said he would release his tax return when Obama produced the birth certificate.  Waiting for this.

Donald Trump seems to be engaging in coded racism: he is now questioning Obama's ability to be accepted at Harvard Law based on grades--the subtext being that his admission was dependent upon "Affirmative Action."

Tuesday, April 26, 2011

U.S. Home Prices Fall Again, For 8th Month: Case-Shiller Index

March's C-SI, the most widely-watched monthly home price index in the nation, saw another y/y decline; only Washington, D.C. saw a slight rise in prices.  The Index is back at April 2009 prices, which were the lowest since 2003. 

New Home Sales for March, reported yesterday, declined 20% over 2010. 

And as per CNBC, Existing Home Sales, reported last week, saw 35% of transactions as all-cash (new record), w/ 22% to investors.  And 40% were "distressed"--short sales and foreclosures.

All of these data points = lower prices.

"Cheapest Homes In 40 Years? Not Even Close..." - Barry Ritholtz

Barry Ritholtz shreds The National Association of Realtors, again.  Ritholtz notes that there's only been one month, ever, when the trade association thought it was not a great time to buy.

Ritholtz points out that the most accurate metric to determine housing affordability is median income  to median price ratio. 

As the Virginia Housing Development Authority economist, Barry Merchant, has repeatedly told the CAAR, Charlottesville's median income to median price ratio has been at or near the steepest in the state for years (5-6x) and needs to fall before this market achieves "balance" or recovery (6 months supply of "homes" is a "balanced" market).  Read: years from now.

Monday, April 25, 2011

March 2011 New Home Sales Fall 20% Lower Than 2010; Worst March on Record

Worst March new home sales ever.  But new home sales rose in March 2011 over February, 2011, on warming weather.  See Graph.  This was also the weakest First Quarter on record.

The Unemployment Chart That Helps Explain Why Charlottesville Area Home Sales Are Slow and Prices Keep Falling

In February 2008, regional unemployment was at 2.5%.  Sunday's Daily Progress has an article on the long, slow, painful employment "recovery" in this area. 

The chart below, from the researchers at the St. Louis Federal Reserve, tells the unemployment story. 

Click for larger image in new window.  Gray areas are Recessions.

In the housing market, it has technically been a "buyer's market" (high inventory) in this area since 2007, but there have been slower sales and accelerating price declines  since the expiration of the Federal Homebuyer Tax Credit April 30, 2010.  

Of course, other elements besides unemployment contributed to this area's housing bubble bust: the rapid and unsustainable rise in prices, the debunked myth of the "protected market" (the idea there would always be buyers with UVA, defense, and medical as steady employers), no more easy credit, the exploded national belief that 'housing always goes up,' and this area's large and rapid rise in foreclosures at all price points.

Unemployment by City/County: 

Image copyright The Daily Progress.

Past coverage of area unemployment:
September 2010: Local Jobs Vanish
Map of Layoffs in VA
Sept. 2009 Recession Unemployment

Friday, April 22, 2011

'How to Read a NAR News Release' - and Other Friday Links

The Big Picture covers the Data-Spin-BS found in all National Association of Realtors Press Releases, using as an example March's Existing Home Sales, which declined 6.3 % from last year.

As Home Prices Keep Declining, 40% of March Sales Were Foreclosures, and 35% Were All Cash Investors

Americans are now more pessimistic about the economy than they were two years ago, deep in the Great Recession.

As shoppers cut their spending, "Going Green" is no longer a priority.

Charles Hugh Smith has the charts that show  "Our 'Let's Pretend' Economy.

Tuesday, April 19, 2011

Charlottesville Area Real Estate First Quarter 2011: Median Home Prices Slide Back 6 Years, Fall $70,000

The headline nobody read this past week was "Central Virginia Home Prices Plunge $70,000 from Peak in 2006."   

The Charlottesville Area Association of Realtors quarterly market reports typically recap the past several years.   But the new one-page format only compared 2011 to 2010, which resulted in the headline "Central Virginia Home Prices Fall $19,000."  

2011's $220k actually means that this area is back down to the median in 2005 [See charts with 2002-2010 data below.]

For individual City/County, the declines are steeper from the peak:

2011's Median Prices by Locality:

Albemarle  $250k down $94,400 or 28% from 2006 peak
Charlottesville  $225k down $56,250 or 20% from 2008 peak
Fluvanna $210k down $52,650 or 17% from 2007 peak
Greene $235k down $79,900 or 25% from 2007 peak
Louisa $199k down $50,000 or 22% from 2007 (and, tax cred, 2010) peak
Nelson $220k down $119,000 or 34% from 2006 peak
Orange $140k
down $171,525 or 57% from 2007 peak

  • This aggregated "median home price" is found by combining all sales categories (single family homes, condos, and townhouses) then identifying the number halfway between high and low.   
  • These figures indicate what buyers were willing to pay in the first part of 2011.   
  • Though the figures have limited use for buyers/sellers interested in only one category, the aggregated median is the most widely reported dollar figure each quarter. 
Prices have been falling steadily, accelerated since the expiration of the Homebuyer Tax Credit April 30 2010.  As prices fall, more mortgageholders lose equity and either can't sell, or can't refi, and are forced into short sale or foreclosure.

Here's a recap going back to 2002.  According to experts, there's still more "correction" to comeLocally and nationally.

Click image for larger version in new window.

2006-2010 Q1 Median Home Prices

2002-2007 Q1 Median Home Prices


 2011 Compared to 2010, from this year's 1-page report

All images copyright CAAR.  These images may be found in the First Quarter 2007 and 2010 Market Reports at the "Market Reports" link in the upper right of your screen at the CAAR website.


Major Price Declines Have Hit Central Virginia

Albemarle County's Price Drops

2023: The Year Bubble Values Will Return

Monday, April 18, 2011

"35 Facts That Show How Much the Average American Has Been Hurt By This Economy"

"The mainstream media is trying to convince all of us that we are in an economic recovery, but that is a lie.  The truth is that we are in the middle of a long-term economic decline and the greatest economy in the history of the world is dying right in front of our eyes."
                             --Michael Snyder, The American Dream 

See all 35 points.

What does this do to your plans for the future?

First Quarter 2011: Albemarle County Median Price Declines  
Central Virginia Home Prices Plunging
30% of Virginia Mortgageholders At or Near Negative Equity
1/4 of Virginians at Brink of Poverty, Another 1/4 Can't Meet Basic Need

Sunday, April 17, 2011

On Deflation

What happens if the price of assets, commodities, and homes continue to fall? Interesting read, with compelling graphs on debt and credit and money-printing. 

Jim Justice Talks About Paying Top Dollar For Albemarle County Acreage

The owner of the Greenbrier Resort in West Virginia paid $23.75 M for 4,500 acres, or $5,278/acre, which MeadWestvaco Corp. had finished using for timber harvesting.  At issue:  What's he going to do with it?  It has constrained development potential and it's in the "viewshed" of one of the United States' most sacred cradles of democracy: Monticello.

Jim Justice says,
Read the whole story at Charlottesville Tomorrow. 


Friday, April 15, 2011

Albemarle County Home Price Declines Q1 2011: Single Family Down $53K or 14.6% / Condos Down $36K or 29% / Townhouses Down $22K or 10%

All real estate is local, so the saying goes--unless price declines look smaller when presented as a regional figure.  Which is what happened earlier this week when the Charlottesville Area Association of Realtors presented  what looked like a page of fuel gauges in lieu of a quarterly report.  The pictures represented the entire Central Virginia area for median prices and sales.  

As we mentioned in a previous post, these numbers mean little to buyers or sellers.  But the report was picked up in the news as "Central VA home prices drop $19,000 in a year"  and the CBS19: 'Area home sales see uptick.'  These headlines underplay what's happening in this region.  

But Nest Realty Group stepped up to the plate and offered a more detailed set of numbers. When parsed into County and by property type, the reality is much different: significant price declines are driving sales.  In some cases, the sales are also declining precipitously.    The highlights (or lowlights, from the perspective of sellers) for Albemarle County are below.

For Sellers: In order to get property sold, Underpricing the competition is necessary.  Sellers at or near negative equity need to do a lot of praying.

For Buyers: The Asking Price is Not the Offer Price nor Selling Price.  And the tax assessment is a distraction, not market value.

Year-over-Year median sold price declined -$53,250 or -14.6%.  Sales have increased y/y by 17, or 15.5%, which puts it equivalent to 2008.  Q1 sales compared to Q4 2010 declined -19.6%.

Pending sales are up 7%:  200 in 2010 v 214 in 2011.  However, a number of these are contingent: the buyer must first sell the current home before they can close on the next.  So this number is going to to drop and result in fewer closed sales.

Single Family home price declines by month
*2011 January down -10% over 2010 ($225k v $248.6k) 
*2011 February down -14% over 2010 ($334.5k v $386.2k)
*2011 March down -17%  over 2010: $338,500 v. $409,000.

TOWNHOUSES ("Attached")

Year-over-Year median sold price declined -$22,500 or -10.1%.  Sales have increased y/y by 10 to 50, or 25%.  The shocker is the decline in pending sales, which are down -21.1%.

Condo sales in the region are, let's face it, tanking.  Prices have been plunging and foreclosures ramping up for the past several years.  

Year-over-Year median sold price declined -$36,450 or -28.8%.  Sales have decreased y/y by -27.3%The shocker is the decline in pending sales, which are down -45.2%.

Nest's report attributes the current decline in contracts to difficulty in obtaining financing.

Contracts Written - "Pending Sales," which will close in April/May/June:
While  less inventory came on the market this month than last year (188 v. 245), the number of single family homes (includes "proposed") is basically unchanged: 791 (2011) v 797 (2010).  Less inventory is due to folks not listing because they know they can't sell, or because the property is going into foreclosure: it's not due to higher sales (restating the obvious).

SEE Nest Realty Group's Q1 2011 Market Report.  All images copyright Nest Realty Group.
See link for 2008, 2009, 2010 Albemarle Single Family Homes pending sales and inventory.

UVA Raises Tuition 8.9%, Contributing to the Higher Education Bubble

 From The DP:
Last year, in-state students saw a 9.9% increase, out-of-state students a 6% hike.  This is the eighth consecutive year the university has opted for a tuition increase somewhere below 10%.
Read about UVA tuition hikes.  Read about the Higher Education Bubble. 

Getting children college-age students into tens of thousands of dollars in debt will result in fewer homebuyers and a declining standard of living in the years to come.

Tuesday, April 12, 2011

CAAR Q1 2011 Market Report: Cville Area Buyers and Sellers Should Expect Slow Sales and Continuing Price Declines For the Next Couple Years

Update: See Albemarle County Q1 Median Home Price Declines and sales figures.

Original Post:
The Charlottesville Area Association of Realtors Q1 2011 report has shrunk to 1 page. 

Last year, the report lacked vital info for buyers and sellers, and this blog filled in the information that was missing from the 2010 Q1 Market Report.  Those numbers remain needed to gain context on this year's numbers.

Some highlights from The CAAR Q1 2011 Market Report:

*"Results in our market are in line with the national market."  The national housing market is in a double dip.  This area is seeing, in certain sectors, declining sales and declining prices.  And there is no indication this will change during 2011.

*Median Price: Unfortunately, the CAAR didn't bother to present median sales prices individually by category: the median for Single Family House, Condo, and Townhouse are combined.   So the median price for Albemarle County is reported as -11.4 and -8.2 in Charlottesville.   This aggregated price means very little to buyers or sellers. 

Sellers need additional information in their own category to know how much lower they should be pricing than the "competition." 

Buyers need additional information so they don't "overpay."  Lower medians are good news for buyers.  But buyers are still in danger of "catching a falling knife."  There are folks who bought in 2010 who are now "underwater."

*"The numbers indicate we are continuing to work toward a sustainable and saleable market."   What does "Sustainable" mean?  We take this to mean 'everybody is used to high inventory.' 16-24 months of inventory, depending on County/category.  And  years worth at the high end.  As for "Saleable"?  We take this to mean everybody has gotten used to the fact that prices are going to keep dropping for the next several years, and that bubble valuations will be back when the kids are all grown up.

*Pending Sales: Down.  But this isn't covered in the report. 

*Market Headwinds: Gas prices, rising mortgage rates, fewer qualified buyers, difficult credit market.  Not covered in the report.

If you have 30 seconds, read the CAAR Q1 2011 Report.  Just don't expect much insight.

Sunday, April 10, 2011

Trump and Kluge Talk to National Media

"Donald plans to open it to the public and make it the most amazing experience in the world.  Hopefully it will be the most visited place in America." 
As for continuing to work with Donald Trump at the Vineyard?
"We were monumentally relevant to the world of wine," states Kluge.  "Not just nationally, but internationally.  London, Paris, you name it.  Donald has saved all that, now we are coming back, and we are coming back with a vengeance." 

Albemarle House, Now Owned By Bank of America, Re-Listed For $16 Million, an $84 Million "Discount"

A day after the Kluge Estate Winery went to Donald Trump for $6.2 M, the estate itself was relisted for sale, the priciest offering  in Albemarle County.  It has  just 100 acres besides the house.  Bank of America took back the estate in a foreclosure auction for $15.3 M on February 16

Albemarle House was once priced for the 22nd Century or a planet not yet discovered,  at $100 M, then tried to chase down the local luxury market with price reductions.  The estate sector in this area is dead dormant, and the effort was futile.

Now the question is, Who will buy this house, other than Donald Trump? In addition to Kluge Estate Winery, Trump managed to buy 200+acres that come within 100 feet of the mansion's front door.  Will it be a long-term negotiation?  His rep stated that B of A has an unrealistic expectation for the purchase price of Albemarle House.  Trump has right of first refusal.   With Trump's unknown plans for the winery, the privacy of the grand estate is in question for other buyers.  There are plenty of estates listed for sale in Albemarle County whose neighbors, and their intentions, are known.

MLS #487355

And really, saying that the estate is at an $84 M "discount" doesn't mean anything.   The original asking price of $100M reflected Kluge's and Moses' need:  to settle their Albemarle House debt,  to rescue the failing winery business, to address the steep loans from Farm Credit and SonaBank, and to leave them with some extra $ to maintain somewhat the lifestyle to which they'd become accustomed.

Listing Details

Kluge/Moses - Other Debts
Patricia Kluge and her husband Bill Moses  lost mansion project "Vineyard Estates" to Sonabank on January 31 2011, and Kluge Estate Winery was repossessed by Farm Credit on December 7, 2010.  Kluge and Moses are said to owe $86K in back taxes to Albemarle County.  And the contents of Albemarle House are under separate lien.  Unresolved: Fuel Restaurant/Gas Station/C-Store at 901 E Market Street, with "Price Reduced" signs plastered on the windows.  Once priced at the negative ROI of over $1M, it remains unsold.

Images copyright Charlottesville Area Association of Realtors.

Friday, April 8, 2011

Donald Trump Buys Kluge Estate Winery, Trump Brand Comes to Town, and Kluge/Moses Still Owe Farm Credit Millions

The business and property lost 78% of its value in 4 years.

$34.8Million: original loan from Farm Credit to Patricia Kluge / Bill Moses in 2007/09
$19 Million: Farm Credit "buys back" Kluge Estate Vineyard at foreclosure auction in December 2010
$7.3 Million: the majority of property 750+ acres is sold to Trump for $6.2M and Loudon County developer Sam Cangione buys 100+ acres w/division rights for $1.1M, April 7 2011

"What can you say?" said Farm Credit's Bill Schmidheiser.  "The market has spoken."

Bill Moses on the deficiency judgment and working with Trump at his new vineyard here.

Trump on renaming the vineyard with the Trump Brand: "Of course, it's only Trump.  Everything is Trump."

Thursday, April 7, 2011

Kluge and Moses Fail to Halt Farm Credit's Absolute Auction: Kluge Estate Winery is Up For Grabs at 1pm Today, April 7

According to auction house JP King, Kluge Estate Winery is "One of the most prestigious vineyards along the East Coast."  And it produces "an assortment of world-class wines."

Patricia Kluge and husband Bill Moses lost their last-minute attempt to stop Farm Credit's absolute auction of the bank-owned Kluge Estate Winery.

The spread is up for grabs in six parcels today, and potential 2012 GOP Presidential candidate Donald Trump has made known his interest in Kluge properties. 

However, Kluge and Moses retain the right to match the $ of the highest bidder and reclaim the land/business.

It never happened while Kluge/Moses were in control of large swaths of Albemarle County, but if Mr. Trump prevails at auction, perhaps Charlottesville really will finally become a "World Class City," as its motto proclaims, rather than the charmingly aspirational if somewhat contradiction-prone  university town that we all love, blessed with the most enthusiastic cheerleading section this side of the Blue Ridge.

Albemarle County Approves 2012 Budget, Holds Property Tax Rate Steady, After $40 Million Cuts in Past Two Years

Albemarle County BOS has approved a new budget and is holding the property tax rate steady at 74.2 cents per $100 of assessed value.  Albemarle County has made more than $40 million in spending cuts in the past two years, and has recently cut approximately $160 million in projects from the 5 year capital plan, according to The Daily Progress.  Services, schools, libraries, parks, infrastructure...or keeping the property tax rate steady?  The BOS chose the latter.

Saturday, April 2, 2011

Maine Association of Realtors Holds "Clearance Sale," Cuts Prices At Least $10k

Realty Check reports that more than 900 sellers have signed up for the event held by the Maine Association of Realtors. The median price of a single family home in Maine is $159,900, so a $10k drop is significant.  "It's a price more than a beauty contest," Mike La Plage, president of the MAR said.

Locally, many sellers are responding to the lack of buyers and doing their own price reductions.  Through mid-March, there were 17% fewer sales in this area compared to 2010.  Check out Trulia's Price Reduced section. 

The housing market is double dipping,  and many Virginia buyers are more price-sensitive than ever.

Friday, April 1, 2011

27% of Virginia Home Sales Are "Distressed"

A "distressed" home sale is a foreclosure or "short sale," where the bank agrees to take less than what is owed on the mortgage.  Typically, distressed sales have "discounted" pricing, +/-17% shortsales, +/- 28% foreclosures.

There is no reliable published monthly data on how many homes listed in the Charlottesville Area MLS are "distressed,"  and no transparent public monthly (nor quarterly) data on how many sell.  The most transparent local data appeared October 2010 , when The Daily Progress, the newspaper for Central VA, reported that foreclosures had increased 225% y/y.

A quick check of any of The Hook's weekly auction page shows the number of foreclosures remains steady, and is happening at all price points.

A "Deal"--?
You can find foreclosure listings at many places on the 'net (see below).  A reader pointed out that a scan of Fannie Mae's Homepath will show that some of the Charlottesville/Albemarle foreclosures are listed, at least initially, with comparable "traditional market" asking prices.

So if the price isn't  dramatically "discounted," what's the "advantage" to buying a Homepath property?  Several.  The lowball offer goes to a government entity, not to an "underwater" individual.  And:  a quick closing, FHA financing,  plus down payment can be as little as 3.5%.  And there's also no appraisal to get in the way of closing.  The Homepath listings do tend to go under contract more rapidly than "traditional" sales; the listing's status appears on the website.

For bank-owned properties, see Fannie Mae Homepath and  RealtyTrac (subscription required) as well as this linkfest for bank-owned properties.

Share of Distressed Sales By State - Copyright KCM Blog

The KCM Blog reported on the number of distressed sales by state.