Wednesday, November 30, 2011

Virginia Is Now 7th Worst State For Owners Owing More Than House Is Worth

Buyers can get overwhelmed by constant local and national data.  But what remains is this: the only consistency in the Charlottesville Area housing market for the past four+ years has been that prices keep declining.   Caveat Emptor.

The dwindling pool of willing, qualified buyers and trapped sellers won't be helped by today's data:

Approximately 30% of Virginia mortgage holders are at or a hairsbreadth from being underwater.  The Commonwealth's ranking rose has gotten worse since the 2nd Quarter of 2011, when it was #8.  

Core Logic reports that, nationally, underwater homeowners declined from Q2 to Q3--because 260,000+  homes were lost to foreclosure.  That's not progress.

Many Charlottesville Area homeowners are handicapped by effective negative equity, which is why the market may stagnate for years.  The major price declines just haven't abated during prime selling season. An earlier post details the problems that come with negative equity.  The data helps explain why foreclosures--and foreclosures at the high end--keep rising in this area. 

Related: RealCentralVA has a long post on looking at national data in context to the local market.  Most pertinent, IOHO, part for Sellers: the Realtor wondering where the influx of high paying jobs is....

Click on image for larger version in new window.  Source: Core Logic via Calculated Risk.

The Dwindling Pool of Willing, Qualified Homebuyers

At the moment, the Charlottesville Area market tracks the wider housing market at a lagtime of 12-18 months.  Economists predict the rest of the US will see 10-20% further price declines in the near term.   Anybody who is thinking of buying right now may want to consider: What would halt the Charlottesville area market from aping the continuing price slide?  The lack of definitive answers may indicate the need to make an offer in line with the future price declines.

And this doesn't even take into account the growing disaster in the EuroZone.

From the embed below: 'the pressure to reduce the selling price of existing homes to compete with new homes on the market continues unabated.  The current level of price "reversion" still has quite a bit more to go before reaching the long term median home price levels.   With personal incomes on the decline, credit conditions very tight and inflationary prices continuing to rise the "affordability" of housing may continue to remain under pressure for some time to come.'

Case- Shiller Index: Home Prices Now At 2003 Levels

...And they aren't finished declining.  Read. And those who are still interested in purchasing a home are reluctant to try to catch the falling knife.  After all, folks who bought during the Homebuyer Tax Credit, which ended in 2010, are now underwater.

Home prices have dropped back 8 years and mortgage rates have never been this low.  Yet housing is going to continue to slide.  Consumer attitudes toward long-term commitment have gotten worse.   David Blitzer, S&P, paraphrased:  If people were convinced that prices were at the bottom, they'd be buying.

Tuesday, November 22, 2011

UPDATED: #OccupyCville Occupies Charlottesville City Council - Decision About Continuing Encampment at Lee Park is Deferred to Unspecified Date

UPDATE: The group has until Tuesday, Nov. 29 to make a decision on a new location and to vacate Lee Park.

Original Post: The local Occupy Wall Street encampment has a permit to remain overnight in Lee Park near the City Courthouse in the middle of Downtown.  The permit expires on November 26.  On Nov. 21, about 100 supporters crowded Council chambers, and nearly 50 people spoke, all but four in support of continuing the encampment, which is part of the most widespread US political movement of the 21st Century.  At the moment, Council has, as per Graham Moomaw of The DP,  deferred the decision, and is calling for more dialogue. 

It seems Council understands that the most liberal city in Virginia can't say no to the movement: but they haven't found the ways and means, yet, by which to say yes. As NBC29's Dannika Lewis reports, Mayor Dave Norris commented "...Is the movement stronger than the park? ....I think it's clear that it is."  And Councilor Kristin Szakos said, "I think that free speech doesn't expire at 11 o'clock.  It doesn't expire at Thanksgiving."

This blog aggregated the live tweeting. Read tweets from Nov. 21, which include Re-Tweets from Occupiers: Aimee Fausser and Shannon Harrington and Bob BrighamSupporter: UVA professor John Edwin Mason.  Journalists: The Hook's Hawes Spencer; The DP's Graham Moomaw; NBC29's Dannika Lewis; Charlottesville Tomorrow's Sean Tubbs; and a journo from C-Ville Weekly.

Monday, November 21, 2011

Monday Links: Home Sales and Declining Prices, #OWS, Stupor Committee Fail, Euro Zone Crisis


Occupy Wall Street - #OWS

Super Committe Failure and Euro Zone Crisis Peaking Just As the US is About to Give Thanks....

The US stock market is currently dropping.  The Super Committee has failed to do their job.  And the sovereign insolvency of Portugal, Italy, Ireland, Greece, Spain can no longer be backstopped by Germany and the European Central Bank.  It's the last few moments.   It's a charade that's coming to an end and will drag the US down with it, as we dragged the rest of the world down in 2008.

A Four Page Memo About #OWS

Sunday, November 20, 2011

First-Time Homebuyers Decline 19% in 2011

The NAR lacks credibility and has bombarded consumers with questionable info, but they sure do like to release data.  The latest trouble: firstime homebuyers are declining.  They're the grease of the housing market wheel because they provide current owners the ability to move up.  Not too surprising their numbers are declining with the end of the Homebuyer Tax Cred, and since many Gen Y have no option to move home after college.

Thursday, November 17, 2011

Paradigm Shift: We're Not Going to See "Recovery" - It Will Be Something Else

If not recovery, then what? We need another term to define the new US paradigm.  

We're seeing a shift in the economy, and a shift in work.  What's done is done, and apparently can't be undone.  And it's the #OWS folks who are telling us this now in the streets, in cities all over the country--and the world. 

What about the Charlottesville Area?  We're all connected; but our market is a little behind others' "corrections."   Charlottesville Area is seeing more severe home price declines than other markets on a national basis.  

"Recovery" - this blog has been engaged in a discussion w/Realtors about "recovery."
Then the conversation moved to Twitter: see here and here and here.

Now Jim Duncan has a post up about "Recovery."  And this blog has embedded his video, below.

What should we talk about instead of "Recovery?" Stability would be good.  The knowledge that a home is not an investment.  The realization that it's a place to feel comfortable and express your habits, tastes, and predilections.  And to raise the kids and (possibly) retire.  Stopping the bleeding of foreclosures and negative equity.  Coming to the knowledge of now.

With Workforce Participation Declining, and Owning a Home Based on Two Incomes, What Next?

In the article embedded below,  Charles Hugh Smith shows why the Great Recession isn't ending. What's important here for the US and Charlottesville Area Housing Market are charts 5, 6, and 7: participation rate, which started rising in the '70's, when more women entered the workforce.  At that point, owning a single family home became based on two incomes.  Current wages are at the same level as the last decade, but homeprices have skyrocketed.   

The US  triage of printing money and going further into debt doesn't address the problems of lack of jobs and the change in kind of jobs available.  The burst of the debt-fueled housing bubble, combined with the work issues, are a paradigm shift for our economy and homeowning.

When Will the Charlottesville Area Housing Market Enter Recovery?
Effective Negative Equity: Why the C'ville Area Housing Market Could Stagnate for Years

Tuesday, November 15, 2011

Podcast: When Will the Charlottesville Area Housing Market Enter Recovery?

The Realtors got together to appear on WINA's Real Estate Matters for Saturday, Nov. 12.  With interest rates at the historic low of +/-4%, lower prices, and high inventory, why is this area still in a malaise? Why is there no rebound?  And when will recovery begin?

Keep these thoughts and questions in mind while listenting to the podcast:
  • The recovery after a bubble usually starts 7+ years after.  Since area prices peaked in 2007 or 2008 (v. nat'l peak of 2006) that would put "recovery" beginning in 2014 or 2015.
  • In this instance, what does "recovery" mean?  That prices begin to appreciate again, say at the usual rate of inflation of 1-2% per year?
  • A balanced market--favoring neither buyers nor sellers--is about 2500 units available for Central VAWhat if this market never returns to "balance"? 30+% of the population is transient.  There's no short-term buyers here.
  • With new construction now costing the same as many "existing" homes, and buyers having the HGTV effect (wanting shiny new homes, appliances, color, furniture), how many will choose the "used" houses, whose sellers "need" to sell to pay off the mortgage, without serious price chops?
  • Confidence in the economy, jobs, and the value of a house is discussed as necessary to re-ignite home sales.  
  • What if "confidence" doesn't return?  What if it has just been replaced by an indifference, if not a refusal, to own property, knowing a home is not an investment?
  • The College Bubble will prevent Gen Y from buying a home for years.
Listen to the discussion.

3 Realtors and a Bubble Blog:
Part I - Who, What, Why
Part II - Should A Seller Try to Wait Out the Market?

Monday, November 14, 2011

City of Charlottesville and Albemarle County Real Estate Updates: January - October 2011

Jim at RealCentralVA has two posts aggregating the data for year to date.  The pending, solds, and listing data is for all property types (single family, condo, townhouse) aggregatedIndividual types and micro-markets show varied data and strengths and weaknesses, but this is a good overview.

One thing that Jim is no longer doing: comparing current data to bubble-era data--and with very good reasons: it was interesting, curious, anomalous but ultimately irrelevant.  If you need a house right now, you need a house.

However, this blog will continue to do so because that's what bubble blogs do, and for these reasons:
  • Many of those bubble-era buyers made the purchase with the expectation that they'd be selling now.
  • A number of bubble-era buyers are going to face foreclosure or short sales in 2012.
  • It is many of the bubble-era buyers, now sellers, who still have inflated asking prices because they need to get back the bubble-era value of the house during a sale. Or they actually believe the house has appreciated since they bought it (the "exception to the rule" idea of homeownership).
  • There are fewer buyers now but more homes.  More coming on the market due to Boomer Retirement.  And more new homes are being built--because that's what many current buyers want, since they know they will be staying 6-10 years.
  • The volume of transactions during the peak of bubble era (roughly 1999-2008) was higher than it will ever be for the next decade.   
  • Prices during the peak of bubble era were higher than they will be for the next decade (except in the occasional micro-market). 

(Yes, the last two bullets points are fairly serious predictions.)

See Albemarle County Data.  See City of Charlottesville Data.

The North Anna Nuclear Power Plant Has Been Restarted

No fanfare as the process was initiated on Friday, November 11. The plant is slated to begin generating electricity today and--if all goes as hoped--will be at full power in 10 days.

The Louisa County Housing Market After the #VaQuake
Dominion Moves Forward With Permit Process for 3rd Reactor

What Recovery? After 3 Years of Money Printing and 0% Interest Rates, the US Economy Remains Weak

Calling a spade a spade. Be sure to click over to BI to watch the video w/Rosenberg and Consuelo Mack.

Thursday, November 10, 2011

3 Realtors and A Bubble Blog - Part 2 - Should A Seller Try To Wait Out the Market?

This is Part II of a Series.  See Part I - Three Realtors and A Bubble Blog - Who, What, Why 

Jim Duncan put up a post recapping a WSJ / Smart Money article, which wondered if sellers should be "patient" and stick to their prices.

The take away: Sellers shouldn't wait.  What a home "may be worth" is irrelevant when buyers can be patient and the market is still declining.

But read on, because the data is here to back up that assertion, and the Brokers weigh in with their experiences.

The Duncan post contained a video (embedded below) which points out that a new listing gets the most attention during its first 30 days and asserts if it doesn't sell within 30-60 days, it's priced too high.

As an enticement for sellers not to wait, the post includes details about a home Jim Duncan got sold in 21 days.   

And it gives data for houses that recently went to contract: (click for larger image/new window)

Michael Guthrie, CEO, Roy Wheeler Realty:

I totally agree with Jim 's post and Mr. Knutsen’s tweet is proof of that.  Anyone who has paid attention to what I have been saying since becoming President of CAAR in 2009, and now on my weekly radio show, has heard this consistent message, “Homes need to be in good condition, staged well, and priced competitively until our listing inventory shrinks causing a more balance market”  When they are, statistics show there are buyers ready to buy them.

Greg Slater, Associate Broker, BHG - REIII

I absolutely agree with both Jim and the piece by WSJ.  In the market under $500k or so, homes priced right AND well maintained can sell in 30-60 days. There is demand. The condition of the home is vital. I would say a home in poor condition with deferred maintenance is going to cost the owner more than it would to do the work itself. There are fewer buyers willing to consider these homes.
This does not necessarily apply the higher you go in price. The higher is end is more saturated and less price sensitive.  A home can be priced fairly and take much longer to sell.
The seller Jim described was motivated and prepared. I was able to sell  a property in the $700k range in Glenmore earlier this year. The seller and I collaborated on price and preparation of home. It went under contract in 29 days. The key advice I give sellers is that you have to start at a price that is supportable by data. Once you have that supportable range determined, you have to position yourself against the other homes for sale in a context of absorption rate.
This market can be very unforgiving to those who try and test it.

Just in the couple weeks since Jim put up his post, more data has rolled in showing local and national RE declines and problems.  The global economy is in chaos via Greece and Italy et al, leading some to fear another global financial crisis is in the offing.  So why anybody who really wants to sell would be trying to "wait" is truly mystifying.  Somebody who needs to make X amount on a sale--and thus isn't cutting price after 60 DOM--should probably be looking into other options, such as a short sale.   


That's enough data for somebody who really wants to sell to be motivated to sell.  And for somebody who really wants to buy to make an appropriate offer. 

Wednesday, November 9, 2011

"Effective Negative Equity" - The Charlottesville Area Housing Market Could Stagnate For Years Because Buyers and Sellers Can't "Move Up"

On Monday, the bad news came from Core Logic: the y/y price decline of 5.8%in the C'ville Area is worse than the national average.

Price declines lead to "negative equity."  Almost 30% of Virginia mortgages are at or near negative equity; in fact,  Virginia, is #8 of 50 states for owners owing more than the house is worth.

But the latest data defines a serious nationwide problem: Effective Negative Equity, which now stands at 50%.  

The graphic, at left, shows the "old" model of homebuying: start modest, and move up to a progressively larger house every few years.

This model is a relic of the past. 

Housing analyst Mark Hanson defines the problem of Effective Negative Equity:

"On US totals, if you figure average house prices use conforming loan balances, then a repeat buyer has to have roughly 10 percent down to buy in addition to the 6 percent Realtor fee to sell. Thus, the effective negative equity target would be 85%. You also have to factor in secondary financing, which most measures leave out.

Based on that, over 50 percent of all mortgaged households in the US are effectively underwater — unable to sell for enough to pay a Realtor and put a down payment on a new purchase without coming out of pocket. Because repeat buyers have always carried the market as the foundation, this is why demand has not come back. It's as if half the potential buyers in America died over a two-year period of time."

Bolding is this blog's.  Read Mark Hanson's comments, and the rest of the article, below:

Graphic is from

Monday, November 7, 2011

Biscuit (Re)Run: Forest Lodge LLC Takes Commonwealth of VA to Court to Get Higher Tax Credits For Failed Housing Development

At the heart of the matter--what the court will have to look at--is whose version of "What if the housing bubble never burst?" is most accurate. DMB Manager Coran Capshaw and local banker Hunter Craig are among the plaintiffs.  Brendan Fitzgerald has the story.  RealCentralVA has the pertinent linkfest.

Charlottesville Area Home Price Decline of 5.8% is "More Severe" Than Other Parts of the Country

The Newsplex is making the comparison of "more severe here than other parts of the country" after posting data from housing analyst Core Logic.  While the national rate of decline was -4.1%, the Charlottesville Area saw a -5.8% decline from September '10 year-over-year to September '11. 

The Charlottesville Area is still a declining market--meaning prices will continue to drop.  Much of the area hit its price peaks later than the rest of the country, so larger price drops aren't unexpected.  As an example, here's a month-by-month recap of peak prices, and recent lows, for the City of Charlottesville.

Price declines like this lead to the value of all homes dropping, meaning more owners are dragged "under water," a slang term for negative equity.  Just a small drop in a home's value can wipe out years of mortgage payments. 

And price declines can lead to the continued rise of foreclosures in this area.

A recent graph shows the City of Charlottesville sales crash.

And Charlottesville Area home sales  are at a 13 year low: click for larger image

 Read The Newsplex story here; below is a screenshot of the report. click for larger image.

At Least $4.5 Billion Moved From Banks to Credit Unions During October

Customers have had enough of "Too Big To Fail banks."  They caused the financial crisis but are acting like victims, and have gobbled up taxpayer money, doing even better than before the Recession began.

Louisa County Finally Approved For FEMA Assistance For Home Owners

That's a relief.  There are at least 1,400 homes that were damaged in the August 23, record-setting earthquake, and few, if any, homes had earthquake insurance.  Read the details.

Related: The Louisa County Housing Market, Post-Quake

Thursday, November 3, 2011

Three Realtors and A Bubble Blog, Part 1: Who, What, Why

The burst of the national Housing Bubble in 2006 started a national economic downturn that went global with the collapse of Lehman Brothers in September, 2008.  This blog has been tracking the Charlottesville Albemarle Area decline in prices and sales, and concomitant rise in RE inventory since May, 2008.  

Currently, locally, we've seen millions of dollars in lost equity, and thousands of homes and acres available for sale.  Area prices are still dropping and sales are at a 13-year low; many mortgageholders owe more than the house is worth, and foreclosures are rising.  Due to lower prices, sales seemed to be keeping pace with 2010, but in August, a significant slowdown began--partly due to seasonality, but also due to lack of interest or qualified buyers, despite historically low interest rates for the 30 yr fixed hovering around 4%.

And with the publication of the 2011 3rd Quarter Market Report from the CAAR and the much more detailed 3rd Quarter Report from Nest Realty Group, combined with the faltering national economy, the Euro crisis, the August debt ceiling/credit rating crisis, plus high structural unemployment,  the C'ville Bubble Blog questions and concerns  grew more specific.  

The C'ville Bubble Blog drew up a list of 10+ questions.  The answers have a direct impact on home sales, for both buyers and sellers, today.

But instead of just presenting Bubble Blog opinions, we widened the field to three Realtors.  How were they chosen?  Fairly simply: they're the ones who have interacted with this blog consistently since its inception in May, 2008.  They've offered data, corrections, interpretations, perspective.  And that's both on this blog in posts or in comments, as well as in conversations on Twitter.  

Importantly, these three Realtors offer differing areas of expertise, diverse perspective and experience, and are local leaders in the profession in terms of sales and reputations.

The 10+ questions will be answered in a series of posts over the next few days.  For now, check out the Bios of the participating Realtors.  The Bubble Blog bio/perspective is on the sidebar.  The list of questions to be answered is beneath the Bios.


Michael Guthrie, CEO of Roy Wheeler Realty Company

Blog: Market Insights
Twitter: @mrg7175
Company Website: Roy Wheeler Realty Company

Michael Guthrie began his realty career in Charlottesville in 1982, but moved to Northern Virginia where he spent 22 years in RE, mostly in management or senior management positions.  He moved back to Charlottesville in 2005 to become the Principal Broker and CEO of Roy Wheeler Realty Company.  In 2009 he was President of the CAAR; he was Realtor of the Year in 2010; and Charlottesville Chamber of Commerce Small Business Person of the Year in 2011.  He is a new member of the Board of Directors of the Virginia Association of Realtors.  Guthrie is a 50-something who lives in northern Albemarle County.  His proudest achievement may be as World Famous Radio Personality on Saturdays on WINA.  He recently posted about the health of the C'ville area housing market.

Greg Slater, Associate Broker, Better Homes and Gardens / Real Estate III 

Blog: Greg Slater - Charlotttesville Real Estate Broker
Twitter: @gregslateragent 
Company site: BHG Real Estate III 
Bio from his blog
Bio from Piedmont Construction 

Greg Slater has been licensed to sell RE in Virginia since 1997.  He joined local firm Real Estate III in 2003; it aligned with Better Homes and Gardens in 2009, and became BHG - REIII.  In 2010, Slater was President of the CAAR.  His focus is about 75% on new construction, and he takes clients through the entire building process.  He's a 40-something who lives with his wife young son in Old Trail, a popular, growing development in Crozet.  Slater describes himself as a "Hokie who loves C'ville" - a Virginia Tech graduate who is now surrounded by University of Virginia Wahoos.

Jim Duncan,  Associate Broker / Partner, Nest Realty Group

Blog: RealCentralVA
Crozet blog: RealCrozetVA
Twitter:  @JimDuncan
Company: Nest Realty Group 
Real Estate Data:  The Nest Report
Bio from blog 

Jim Duncan is a 30-something Realtor now in his 10th year of the profession.  He is a founding partner of Nest Realty Group, a boutique RE firm  awarded the 2009 Inman Innovator of the Year Award.  What distinguishes him as a Realtor locally--and nationally--is his use of Social Media.  The widely-read blog RealCentralVA was one of the First Fifty RE blogs in the nation, founded in January, 2005, and is currently at 3,660 posts; the blog covers RE as well as City and County development, zoning, and politics, local ephemera, and national housing market issues.  Duncan is also a veteran on the Twitter, having begun in April, 2007; he has nearly 5,000 followers and is currently at 19,000+ updates.  He lives with his wife, a C'ville native, and their children, in Crozet.


Starter: What's your comment on the RealCentralVA  post about sellers  trying to "wait out the market" V.  cutting prices as per WSJ article/video?

1.  In reviewing the Virginia Housing Development Authority Presentation to the CAAR,  what jumps out at you? 

2.  Do you have an understanding of the jobs situation in the C'ville Area? Any hopes for housing getting a lift from jobs?  

3.  What are your hopes or fears for what's being rumored in the mortgage pipeline... 3% interest rates?  Do you think more buyers will wait for this?  (word is 6-9 months from now)

4.  In your experience, OTHER than economic need (i.e., liens, other debts) why don't/won't sellers who CAN, lower their prices?  Is there anything you can say/do to convince them of market realities?

5.  Care to speculate on where the PRICE bottom is in this market?  What quarter?  Year?

5a.  Care to speculate on when Inventory may be balanced again, neither in favor of buyer or seller?

6.  Are there any national economics websites or news sources that you direct buyers or sellers to, in order to assist with an asking or offer?

7.  Got any PIIGS/ Euro fears?

8.  Any comment on new HARP program, or the rumor of principal reduction that could come with the Attorneys General settlement over MERS / robo-signing?  Will this help or hurt the market? 

9.  In many parts of the US, well-priced NEW construction is pushing the prices down of "used," existing  homes.  But not in the City of Charlottesville, and not in much of Albemarle (even when seller has equity).  Comment?

10.  Care to speculate on the proposed Western Bypass and impact on market?  


Wednesday, November 2, 2011

Is the North Anna Nuclear Power Plant Going to Re-Start Next Week?

RealCentralVA has details, including a link to the history and current issues involving re-start, written by local writer Tammy Purcell.

The Louisa County Housing Market After the #VaQuake 
The Hook on the Louisa Housing Market

With 8,000 Approved, But Unbuilt, Housing Units, Does Albemarle County Need to Expand the "Growth Area" - ?

Albemarle County has made an effort to remain 95% rural.  When you look at the numbers, below, of "approved" v. "actually built" houses and retail outlets, it doesn't seem like more land needs to be devoted to development.  16 years worth of residential approvals, 20+ years worth of retail space, by the calculation of one County Supervisor.  And this is all minus the 3,000 units of the failed, bailed-out Biscuit Run.

Read more here.

Click on image for larger version in new window.  Image from The DP.


This looks like a movement that could get a foothold in some of the hardest-hit foreclosure areas--Michigan, Ohio, Florida, Arizona--in addition to California.  Don't miss readers' comments in the embedded article.