Tuesday, August 23, 2011

Charlottesville Area Real Estate: With Mortgage Rates Low For Next *2 Years,* Buyers Are In No Hurry...Unless the Price is Just Right

Pricing has been holding back Charlottesville Albemarle sales (understatement).   Inventory remains high, dropping now due to seasonality, because sellers couldn't or wouldn't lower prices.  Area sales are slow (recent data here and here and here)

But now savvy sellers are trying to get a contract before unemployment and the economy get even worse.

There's a shrinking pool of buyers in this area (see this and this) and sellers who aren't underwater can lower prices faster. 

Price is the key.   The CAAR has been saying this in quarterly reports for several years.  But sellers are taking note now: especially those who tried to "wait out the market" for a couple of years, those who have seen neighbors sold prices, and those who actually have to relocate or are facing foreclosure due to job loss or life circumstance.


Eric Murphy said...

I am in no hurry, as you say. I see homes in the $400k range that should be $250k. I see properties out in Western Albemarle that are asking $750k that should be under $500k.

Unfortunately for a lot of people whom bought in the mid-2000's they cannot drop their price. Yet, there should be plenty of homes out there owned for many years, and they need to drop their prices first. They have not done this yet, like you say. I don't know what they are waiting for.

If they bought a house in 1984 for $200k, and was valued in 2005 for $600k (which skewed their perspective), why don't they price it at $400k today even if it's still assessed for $550k (for example)? Makes no sense, but I would blame the realtors and the county for not valuing properties correctly.

Something has got to give, so we will wait it out. My advice to others whom may read this is, don't buy until at least 2012 unless you get a good deal on a foreclosure or short sale. Don't be tempted by a $20k price drop when a $100k price drop will happen next year!

Eric Murphy said...

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I have an idea for your blog which I think you would like, can you e-mail me murphye gmail so we can talk more?


Anonymous said...

The above commenter is spot on. I truly feel terrible for the scores of people who bought their ~1200 square foot cottage for $400k in bubble times, but that doesn't mean it's worth that much, or anywhere close to that much, now. It's a great time to wait!

money money money said...

Any seller who has an asking price that is higher than what they paid from 2002-2010 is in denial.

Agree with 4.47 in feeling terrible but just hand it back to the bank. Let the bank take the loss.

Looking like there will be more of this in 2012.

John Doe said...

@ eric murphy: email is real DOT cville AT gmail DOT com or DM on twitter @cvillebubble

Anonymous 4.47...it is *awful.*
We have upcoming post on sellers who ARE NOT listing at what they paid...sellers who are taking BIG losses.

Money money money, it seems likely that the mid-to high end in this area will have many more foreclosures and strategic defaults sooner rather than later.

John Doe for C'ville Bubble

Art Nesten said...

I agree that if possible, they should hand the property back to the bank and let them take the loss.

An alternative way to have the bank take the loss is the short sale. However, this should be done before the end of 2012, because the debt forgiveness on a short sale is taxable after 2012. In other words, if you take out a 250k mortgage to buy a house, then the house loses value to 150k, and you short sell the house at 150k, you are liable for taxes on the 100k "profit"/debt forgiveness after 2012.

Expect many short sales to happen next summer and fall before this goes into effect.