Thursday, October 27, 2011

Prices Will Continue Declining: VHDA Presentation on Conditions in the Charlottesville Area Housing Market

Barry Merchant, the senior economist for the Virginia Housing Development Authority, made his annual trip and offered an update on housing and economic conditions to the CAAR.

Fascinating presentation covering headwinds to the economy, to mortgage lending, and the difficulties facing homebuyers and sellers.

The upshotPrices are still declining.  Sellers need to keep this in mind when listing, and buyers need to keep this in mind when offering.

Post and Video: If It Doesn't Sell In 60 Days, the Price is Too High
30% of VA Homeowners At/Near Negative Equity
CAAR Q3 2011: In a Word, "Down" 
Nest Realty's Q3 2011: A Detailed Look at the Area's Pricing, Sales
Barry Merchant's presentation to CAAR - 10-26-2011

Third Quarter 2011 Median Home Prices In Virginia

The Charlottesville / Albemarle MSA is included for these purposes by the Virginia Association of Realtors in "Central Valley."  Note: Micromarkets (neighborhoods, areas) vary considerably; this is an aggregated view as part of the association's marketing materials.

And the prices, which include all property types (detached house, condo, townhouse).

Images copyright VAR.

Wednesday, October 26, 2011

Congress Has A 9% Approval Rating

A new poll by NYT/CBS finds a shockingly low approval and deep distrust of the government by Americans.

Tuesday, October 25, 2011

Now You Can Buy a Home For As Little As $100 Dollars in 28 States...But Not Virginia

No kidding.  Another genius idea from the Housing and Urban Development Administration (HUD) to help banks offload the depreciating assets they don't want.  The US GOV will waive the 3.5% downpayment, and the 3% closing costs.  Virginia is excluded because it is a "recourse" state.  Read all about it.

Expected to ReFi 1 Million Mortgage Holders, What's the Impact of the Revised HARP?

A couple hundred bucks a month back in the home debtors' pockets on a $200k mortgage with rates lowered from 6-7% to 4%.   Is that going to help the housing market?  No.  Is that going to help the economy?  Not really.  And....

Monday, October 24, 2011

Details: The Revised "Home Affordable Refinance Program" Can Lower Monthly Payments For Homes Now Worth Less Than Purchase Price

Paid $750k for a house now worth $589K?  The revised HARP may help underwater homeowners, if the mortgage is owned or backed by Fannie Mae or Freddie Mac, with limited costs/fees to the home-debtor.  

Read the Federal Housing Finance Administration PDF.   And streamlined details of the plan are  in the embed, below.

Related: Previous Obama Admin Housing Programs Promised Aid to Millions of Homeowners, Fell Far Short

President Obama to Announce New Re-Fi Program For Those Who Owe More Than House Is Worth

The POTUS will be in Las Vegas from 11am - 3pm PDT, where he is expected to discuss details.  Nearly 30% of Virginia mortgage holders are in negative equity, and this kind of program could help them refinance -- if they choose to stay in their homes.

Related: The ProPublica guide to failed save-the-housing-market programs from the Obama Admin.

Thursday, October 20, 2011

Whose Responsibility Is It to Disclose the Proposed Western Bypass In Albemarle County? And How Will Today's Sellers Market Their Homes?

Updated Nov. 1, Nov. 2.

The Western Bypass has been in the works for decades, went dormant in 2002, but now looks like it will be built.  Charlottesville Tomorrow has a rendition of the 6.2 mile road. 

Though the completion date would be years from now, many homes could be impactedIt's already influencing buy / sell decisions in this area.  That is, the proposed Western Bypass is impacting decisions for those who know of it, or know what to ask.** 

The potential existence of the Western Bypass does not need to be disclosed by seller because Virginia is a caveat emptor state: buyer beware.  

So will buyers' agents disclose the prospective road?  A pertinent discussion of disclosure and caveat emptor may be found in this recent post about Historic Districts at RealCentralVA here.

And how should a home "in the neighborhood of" the proposed Western Bypass be marketed?

Like this? A description of a house at 2700 Magnolia Drive, from a new, October 17 listing:  the 4.5 acres are "Like a bird sanctuary." When the property is mapped, like hundreds of others, it is nearby the proposed bypass.

Map of Proposed Bypass, from Charlottesville Tomorrow:

Here's the Google-mapped location of the listing:

A. The listing
B. St. Anne's-Belfield School, Ivy Road
C. Mary Carr Greer Elementary, Lambs Lane
D. Agnor Hurt Elementary School

And here's an impassioned response the listing elicited.  The comment appeared after a recent post.
Here's a picture of the listing.  Note:  in the past 3 months, the listing has changed Realtors and had asking price reduced $120k.  This kind of drastic price reduction, however, is being seen all over Central Virginia in response to the slow market and lack of  move-up buyers, as sellers acclimate themselves to the "new normal."

 Magnolia Drive, Albemarle County
click on image for larger version in new window
10/17/2011 Relisting: $559k
9/2011 Price Reduced: $589k
8/2011 Original List: $685k
12/2003: Purchased for $475k
Tax assessments here.

Many listings leave out the "big picture."  Or overplay a detail ( For instance, a. What's not close to UVA?  b. Only in the 21st C. has living behind the hospital been considered 'desirable.') But this particular listing struck a chord in the reader because it's in an area that is much on the minds of residents in Albemarle County.

The issue of  the proposed Western Bypass and whether and when  to buy or sell, and of how to market impacted homes, will continue to grow over the next few years.

**In fact, most "issues" don't need to be disclosed by the seller.  The list of data a buyer must compile and the questions that one might need answered can be staggering. Examples of buyers' questions:
  • What's going to be built on that empty 100 acres next to the property?  
  • What kind of road/restaurant/sportsfacility/prison is in the works?  
  • Is there a sex offender nearby?  
  • What's the crime rate?  
  • Is there radio frequency / antenna interference?
  • Ever had a tree fall on the house?  
  • Any ghosts?  
  • What are the neighbors like?  
  • Is there a fault line beneath the home?  
  • Was the house a crackden/whorehouse/drugdrop?
  • What are the sewer pipes like?  
  • Does the neighborhood periodically have noxious odors from the water treatment plant?  
  • Pests?  Swarms?
  • Schoools?
  • Etc.
Images copyright CAAR. 

UPDATE:  The post had image and content changes on November 1.  It includes the Bypass map and the property location map in place of the listing and comment images, which are described and linked.

UPDATE Nov. 2: Albemarle County BOS vote on construction hours, MPH, etc.

The Nest Realty Group Third Quarter Report

The Q3 Nest report is more comprehensive, and presents a more realistic view of this market, than the recent regional Q3 CAAR report.  

Prices are still dropping.  Due to lower prices, however, sales numbers in the City of C'ville popped up over the disastrous 2010 Third Quarter, which saw a national plunge in purchases due to expiration of the Homebuyer Tax Credt.

Where's the Recovery In the Charlottesville Market?
National Trend Gone Local: Declining Inventory Doesn't Indicate Health In Today's RE Markets
WSJ: How To Make A Lowball Offer

Wednesday, October 19, 2011

The Home As "Trapped Asset"

Everybody needs a place to live, but some people would rather rent money from a bank than rent a house or an apartment from a landlord.  "Owning" obviously isn't for everybody.  And those who want to tie up their money in a "trapped asset" should do it with eyes wide open. 

Monday, October 17, 2011

WSJ: Decline in Housing Inventory Won't Lead to Rise In Prices; CAAR Remains Hopeful Charlottesville Albemarle Area Market Is Different

Last week when the Third Quarter CAAR report came out, the big news was that there was a -7.3% year-over-year decline in home prices in the region.*   This is a large drop, and should be motivating sellers with equity to cut prices, since buyer traffic is declining, sales have declined and we have now entered the "slow" time of year.

Instead, what the CAAR narrative focused on, and what it got local media entities to focus on, was the idea that a decline in inventory could actually "lift" prices.

This blog refuted that notion, with a post about why local declining inventory doesn't equal "health."

Now the WSJ has noticed the phenomenon on a national level:
While falling inventories are typically a sign of health, because reduced competition can boost prices, that isn't the case right now. Instead, real estate agents say, people are pulling their homes off the market rather than try to sell them at today's discounted prices.  At the same time, banks have been more slowly moving to take back properties through foreclosure ever since processing irregularities surfaced last fall, temporarily reducing the supply of foreclosed properties.  The shrinking supply isn't driving up prices because demand is soft.
(italics are this blog's)  The article also uses the words "slim pickings," which certainly describes the $350k and under market in the Cville area.   Read the whole article.

"Waiting out the market" has proven itself, for the past 6 years in this area, to be a $$$ losing strategy.  As the local housing market is nowhere near a recovery, and there are daily national headlines about how troubled housing is, why would anybody expect a "lift" in prices?

The idea that prices could "lift" is a disservice to sellers as well as to buyers.

*In some micro-markets (aka "neighborhoods"), the price decline is steeper (more about prices in an upcoming post).

Related:  How to Make a Lowball Offer

Saturday, October 15, 2011

Hanley Wood, Which Recently Profiled C'ville As "Healthy" Housing Market, Axes "Big Builder"

The WSJ reports, "With no meaningful housing recovery expected any time soon," the publisher Hanley Wood is shuttering an offshoot of Builder, "Big Builder" magazine, which "chronicled the housing frenzy and the worst downturn in decades."

Hanley Wood is the entity behind "Builder Online," which declared C'ville the '6th healthiest market in the US" based on its projections for building permits in 2012.  Charlottesville's local paper, The Daily Progress, picked up the story and banner-headlined it.  But even Realtors were shocked to hear this "news."

The WSJ gives the grim national stats about new housing construction in the US: about 300,000 new homes are being built per year now, the lowest since records started being kept in 1963, after peaking at 1.3 million in 2005Locally, the number of new homes for sale has dropped 75% since 2006.  READ at the WSj.

Thursday, October 13, 2011

1612 Grove Ave - C'ville Foreclosure Re-Listed For Sale At Market Price - $265k

Why is this foreclosure listed at market price?  Since the backyard abuts the 250 Bypass, some buyers would say it's actually listed above market price, enjoying as it does the passage of 40,000+ cars per day.

This property was Re-Po'd by the FHA in June for $133k.  Folks buy foreclosures because banks (or the government entity on which they've dumped their bad mortgages) slash prices, typically 20-30% below market (local example).

Here's another local example of a market-priced foreclosure.  These may be the last halcyon days of such a pricing  "strategy."  There's a foreclosure surge coming. 

Maybe a buyer will take the WSJ advice on lowballing for this one.

1612 Grove Road, City of Charlottesville, VA
(click on image for larger version in new window)


Images copyright CAAR and Google

#OccupyWallStreet - #OccupyCville

Below is the graph that shows shocking income inequality in the US: 1% v. 99%. Via MotherJones.  Many more charts and graphs are in the embed. 

Wednesday, October 12, 2011

#OccupyCville is Formed

The C-Ville reports that a local branch has sprung up for the national #OccupyWallStreet movement.  See the #OccupyCville site and follow them on Twitter.  Sometimes, wishes come true. 

Wall Street Journal: How to Make a 'Lowball' Offer

Area prices are dropping like proverbial stones (see this and this).   But when buyers think prices are going to drop further, as many do in the Charlottesville Area due to lack of recovery plus high inventory and low sales, buyers price for tomorrow, not today.  National and local RE sales enter a slow period during Fall/Winter, and the WSJ has tips on how to go about making a lowball.  And one of the most-read posts on this blog is from 2010, "What Constitutes a Lowball Offer in Charlottesville Albemarle?"  Don't miss the very informed reader comments after these posts.

Tuesday, October 11, 2011

CAAR 2011 3rd Quarter Report: In a Word, "Down." Prices Down, Sales Down, Inventory Down.

This post: What do "Active Inventory" and "Days on Market" mean for buyers and sellers?
Next post: How much have prices fallen in particular areas?  How much will they continue to fall?
The Charlottesville Area Association of Realtors  Third Quarter 2011 Report is for the region. Data can vary widely from the City, and County to County.  This report is an overview.

First, the 2011 basics compared to 2010:
  • Prices for region are down -7.3%  
  • Sales for region are down -2.3%   
  • Inventory for region is down -7.6% 
  • Days on Market for region remains unchanged

**What if  lower inventory is NOT a positive sign?**

The CAAR report opens with active inventory (houses for sale) numbers
"Currently, there are 3,239 homes on the market, compared to 3, year ago.  This continual float down of active inventory represents progress toward what is considered a balanced, neither buyer's nor seller's advantaged, market of 2,000 to 2,500 listings."
But the truth of the current market is harsh: the reasons there is less active inventory are not good news.  ID'ing correctly  the reasons for declining inventory will go a long way in correctly pricing a home: prices will continue to fall for quite some time here, and everywhere else.
  1. New listings are down due to the time of year.
  2. There are fewer listings because there are fewer "move up" buyers--folks are just staying put, knowing how hard it is to sell.
  3. There are fewer listings because of the area's rising foreclosure rate; folks are sliding into foreclosure before they even try to sell.
  4. There are fewer listings because many folks owe more than the house is worth; even if they can continue to pay the mortgage, they know they'd take a big loss if they tried to sell.
  5. There are fewer listings because sellers know how few buyers there are--there's a trend toward renting.
  6. The sad ever-increasing presence of the "accidental landlord" continues to be a phenom in this market.
That there was a 17+% increase in homes being purchased that were below $200k in 2011 v. 2010 it's investors and first-timers entering the market, not move-up buyers.

Further, the statement that there are "26% fewer listings in Q3 than Q2" is disingenuous: there are always more listings in Spring than the end of the summer.


Days on Market

Days on Market is a number that can be manipulated--and is.  A home can be on the market for 180 days--6 months--and relisted to start "fresh" at zero.  Redfin has shown that homes get the most interest the first 30 days they are on the market.  Buyers tend to think something is "wrong with" the listing or that the seller will be unreasonable about offers, the longer a home sits on the market.


DOM - Days On Market
And this:

Images copyright CAAR.

Wouldn't It Be Great if C'ville Has An "Occupy Wall Street" Welcome for President's Visit?

The POTUS will be bringing his campaign bus tour in support of the American Jobs Act 2011 to Charlottesville between October 17-19.

While Mr. Obama's "support" of Occupy Wall Street is admirable,  the administration's continued kow-towing to and bailing out of gigantic banks is demolishing the American citizenry (see this and this).  Sure, he inherited many of the problems: but the solutions are being bungled (for example).

A senior WH official has embraced the movement on behalf of President Obama.

We NEED CHANGE.  Does anybody still have HOPE?

Monday, October 10, 2011

This is Not a "Recovery" - US Median Income Has Plunged Since Recession "Ended"

Median income fell "only" 3.2% during the Recession--6.7% after, for a total of 9.8% in four years.   The numbers below (and see chart in embed) also help explain why 4% mortgage rates aren't motivating  home buyers.

This is Not a "Recovery" - 13.5+ Million Remain Unemployed as 58,000 New Jobs Added: September Unemployment Remains at 9.1%

You may have read the number "103,000" new jobs added to economy...but that was because the 48,000 no-longer-striking Verizon employees were re-added to the total.  They don't count as new jobs.

Chart via CalculatedRisk.
Click on image for larger image in new window.

Wednesday, October 5, 2011

After 6 Year Downturn "We Are Still Not Even In A Recovery Stage" - Local Realtors Weigh In On "Health" of Charlottesville Area Housing Market

PART 1 of 2 Posts - Assessing the "Health" of the Charlottesville Area Housing Market

The current "health" of the Charlottesville Area real estate market has been under discussion (more intense than usual) for the past few days, specifically the new construction market.  

A couple of local Realtors have posted about it: Roy Wheeler Realty CEO Michael Guthrie and RealCentralVA / Nest Realty Assoc. Broker Jim Duncan. Both are widely read, and widely influential in this area for buyers, sellers, and other Realtors.

So when Realtor Michael Guthrie talks, people listen--and repeat his perspective.  He's a past prez of the CAAR, a Realtor with decades of experience, and CEO of The Roy Wheeler Realty Company, which has been in C'ville since 1927Guthrie blogged about this market's "health" at Roy Wheeler Co's Market Insights:
I woke up to the headline... saying "Local housing market called 6th best in U.S." ....I must admit this information caught me by surprise.  My initial thought was "if we have the 6th best housing market in the US", the rest of the country is in a whole lot of trouble.  Why, because, in my opinion, we are still not even in a recovery stage of what has been now a 6 year downturn.  There are certainly signs that we may very well be bumping along the bottom but what that means is there are homes that are now selling while others sit on the market.  The reason; there are still almost 3500 homes on the market representing over 15 months of inventory The average sales price for homes sold in September was the lowest it has been since March of 2011. We live in a great part of this country....What does all this mean?  We are not even close to coming out of this challenging real estate market.  Sellers still need to be very aggressive with their pricing and have their homes in good condition.  The good news is that when a home is well priced and in good condition, there are buyers waiting to buy them.
[Links deleted for length, and bolding is this blog's]

Guthrie's blog post was in response to a newspaper article about a  trade publication.  Builder Online, which posted its list of 20 "healthiest" building markets in the US, offering growth projections for 2012.

The Charlottesville MSA was #6 on the list.  

Central Va's daily newspaper, The Charlottesville Daily Progress, ran an article about this trade pub's list;  the article included the information that sales have dropped in 2011 over 2010.  

Nevertheless, the newspaper ran the story as if some definitive authority (a government entity such as FHFA or the HUDhad made a pronouncement on Cville, the #209 of 367 MSAs.

This blog aims to educate buyers, goes for transparency, and is anti-spin (as are the goals of most non-selling RE or "bubble" blogs).  So in response were two posts:

And on Monday, Oct. 3, Jim Duncan, Assoc. Broker Nest Realty Group, one of the Realtors quoted in the newspaper article, blogged about "health", perspective, and offered additional data.  

Duncan notes that this market is 'less bad' than many other markets.  Which is true.  Context counts.

PART 2: pricing, foreclosures, short sales, kinds of buyers,  the changing market.

The Buy v. Rent Debate Continues

Monday, October 3, 2011

Charlottesville, VA's "The Daily Progress" Takes Opinion of Media Outlet For Builders, Presents It As If It Is "News"

An online media outlet for builders thinks that 2012 will be better than 2011 for the Charlottesville Area new construction market, despite declining sales, and has deemed this market "healthy."

Which is more disturbing, misleading, embarrassing, depressing?

1. That the US housing market is so troubled that the Charlottesville Area, which has seen a 16% year-over-year decline in new home sales is termed "healthy" by a media outlet devoted to builders?


2.  That The Daily Progress, the only regional, daily local newspaper, prints the opinion of the media outlet in big bold letters, above-the-fold headline on the front page of the Sunday edition, as if it is news?

Additionally, The Daily Progress headline indicates that Builder Online is referring to the entire Charlottesville Area real estate market, rather than just the new construction element.

Sales of newly constructed homes are small as percentage of total sales, and have declined:
  • In 2010, new homes made up 15.3% of market
  • In 2011, new homes made up 9.7% of market
  • That's a decline of -5.6%
And further, in the online edition of the puff piece, the newspaper calls the trade association's projection for 2012 a "Report":

So...Really?  Would the  Above-the-Fold headline have been more pertinent for a lovely Sunday in October if it was one from Page A5: "State says pumpkin crop looks good"--?

Images copyright The Daily Progress / Media General News Service

With Nat'l New Home Sales At 50 Year Low, Media Outlet for Builders Overlooks Charlottesville's 16% Annual Decline in Sales, Deems Market "Healthy"

"Builder Online" is a website for those in the construction business, run by Hanley Wood, which describes itself as "The No. 1 Media Company Covering Construction."

On Sunday, October 2, the regional daily newspaper, The Daily Progress, published a story that proclaimed the "health" of this area's market, based on Builder Online's opinion/projection that 2012 would see stronger permitting and building.

The actual data for this market contradicts the website's enthusiasm--and The Daily Progress' repeating of the opinion.

BACKGROUND: In MayBuilder Online termed the Charlottesville Area* new home construction market as "worsening." In June, the website stated that the market decrease was "slowing."

NOW: the trade organization has produced its bi-annual forecast, and opines that the Charlottesville Area is the "6th healthiest market" in the USofA.

"Healthy?"  Really?   

Not when you look at the actual numbers:

The Charlottesville Area's new home sales in 2011 are lower than in 2010:  
  • 194 2011 
  • 230 2010
  • Decline of -16%
The building of new homes has dropped off a cliff due to lack of demand:
  • In Sept 2006, there were 252 new home for sale.  
  • In Sept 2011, there were 65 new home for sale. 
  • That's 75% less.
Sales of new homes as total of all home sales has declined, for y/y June:
  • In 2010, new home sales were 15.3% of total market
  • In 2011, new home sales were 9.7% of total market
  • That's a Decline of -5.6%
    Apparently in a nation where new home sales just hit a 6 months low, and the year is on track to be the worst in 50 years, the Charlottesville Area may be termed "healthy."
    Stop laughing.

    Builder Online states, in its methodology section, that it's privileging markets that have Universities and Military.  That's true of C'ville.  Add the two hospital systems and it seems like this should be a "healthy" market.  It's years away from "balance" (equal # buyers and sellers) however.  Think 2015. 
    Image below copyright Builder Online.  Click for larger version in new window.
    Sure, there are folks buying new homes.  And this area--and most housing markets in the United States--may be called lots of things.  But most of them can't be called "healthy."

    *The Charlottesville Area for these purposes includes the City, Albemarle, Louisa, Greene, Fluvanna, Louisa, and Nelson Counties.  It is #206 smallest of 367 Metropolitan Statistical Areas in the US.

    Sunday, October 2, 2011

    "Coal Tower Project" is Following Economics-Driven Local Trends: Scaling Down, Building Apartments Instead of Townhouses or Single Family Homes

    Developers recognize where this market's heaviest future demand is: rentals. The younger generation(s), call them Gen Y or Millennials, are saddled with too much debt for most to buy a home,  and the short-term buyer has vanished from the Charlottesville Area market.  Nationally, the homeownership rate is dropping to a level not seen since the 1990's.  There are no major private sector jobs filling the gaps made here during the Recession.

    The "Good News": there are currently 100's of new apartments, and townhouses, coming to this area in response to these changes.  Now Coran Caphshaw's Coal Tower Project is adjusting itself accordingly, and now called City Walk, as reported by The C-Ville:
    The original plans...called for a residential development [of] 315 residential units, 250,000 square feet of commercial space, and mixed-use buildings around the property, including a nine-story tower. [Now there will be] a four-story central building that’s going to be an apartment complex with an attached garage.
    There will also be a walking trail from the Belmont Bridge to Carlton Ave. in Woolen Mills, where the apartments will be located.  Developers hope to break ground in 2012, and secure funding from the Federal Gov't office of Housing and Urban DevelopmentRead the details here.

    Buyers and Sellers Can Now Track Realtors' Success Rates, Online

    That is, buyers and sellers can do this in 15 Western real estate markets covered by online brokerage Redfin, which now has a "Scouting Report." This type of transparency will likely go national in coming years.  The NYT  gives an overview of the data.  There's a dogpile of responses from Realtors online, including a calm response from The Phoenix Real Estate Guy.  But this Portland, OR, agent is outraged, wondering "Who died and made Redfin...REAL ESTATE GOD?"