Friday, December 30, 2011

Real Estate Recap - The Top Stories of 2011 In Charlottesville, Virginia

The following is a list of highlights/lowlights of real estate in the Charlottesville Area during 2011; many of the stories will continue on through 2012 or 2013.  This list is not ranked in order of importance; rather, it has a certain logic to it, and unfolds accordingly.  The Kluge and Trump stories appear near the end of the list because they've been extensively covered in local media.

1. The Virginia Housing Development Authority Market Forecast - Charlottesville Area home sales are at a 13-year low, and the agency expects further price declines. 

2. "Distressed Sales" Are a Growing Segment of the Market - How significant are Foreclosure resales and Short Sales?   The Multiple Listing Service of the CAAR indicates 17%, or nearly 1 in 5 sales.  Others, including a Realtor known for providing local consumers with transparent data, Jim Duncan, suggests the number is between 25-30%, or nearly 1/3 of sales.  This is more in line with the national average.  As of October (most recent data) foreclosures were 25% higher than in 2010.  Data for November shows Virginia is #19 in ranking of 50 states. 

3. 2011's Home Sales in Central Virginia - have exceeded 2010's.  This is what foreclosure resales, short sales,  lower prices, and a mortgage rate hovering at the historically low 4%, can do for a market. For all sorts of reasons, we're not out of the woods, however, which leads us to...

4. The Market is Still Looking For a "Bottom" - Defined as an end to price declines and a stabilization in number of transactions.   Local Realtors, and this blog, offer opinions, and weigh in again, then add even more to the topic.  Finding a bottom is made more difficult by certain factors such as... 

5. One in Seven Virginians owes more than the house is worth  - Negative Equity is a plague on local and national housing.  But the story is even worse: in the US 50% of homeowners have effective negative equity, which means they can't move or "move up."  For instance: 

6. Charlottesville City Manager Maurice Jones - has been unable to fulfill a contractual obligation and move into the City because his house is now worth less than what he paid.   No buyer thus far.  He's a publicly-known example of many struggling homeowners in this area. 

7.  New Construction - As of the end of Q3, new homes accounted for 15% of all salesIn many neighborhoods, it is cheaper to buy a new house than a bubble-era "used" home for which (sadly) the seller still owes $$$. 

8. Habitat For Humanity - Has been responding to the need for affordable low-income housing for years now, in a City where about 20% of residents live at or below the poverty level.  C'ville Habitat becomes the first Chapter in the Country to begin transforming a trailer park into single family homes and attached units, while keeping the residents in place.

9. The C'ville Area is Having an Apartment and Townhouse Building Boom - Local developers, following a national trend (folks unable to get a mortgage, or actively shunning purchase), see the need for 100's of new apartments and townhomes.  This leads to unbelievable congestion on 

10. Rio Road - While many complexes have been planned adjacent to the road, little or no consideration has been given to the infrastructure impact on traffic, sewers, schools, etc., in the area.  It is an unfolding debacle  When is Park Street going to be widened? [right!] Add in....

11. The Meadowcreek Parkway - the County's portion is set to open in January.  The City still has no firm dateEgregious.

12. The Western Bypass - It's been in the works for two decades, its price has suddenly doubled, and buyers and sellers are already taking its potential existence into consideration.

13. Bundoran Farm Foreclosures - BF was a planned agrarian utopia that was a great idea, if only it could have started 10 years earlier.  In separate foreclosure auctions, the original Manor House went back to the bank for $2M and  2,000 prime Albemarle County acres purchased for $33M went back to the bank for $7.3M.  While the developer remained optimistic, no plans have been solidified to continue the project. 

14. Earthquake! August 23, magnitude 5.8Louisa County was home to the epicenter, Mineral, and suffered millions of dollars in damage to schools and 1400 homes.  Additionally, The North Anna Nuclear Power Plant is the only US reactor to ever shut down from earthquake vibrations.  Giant concrete waste casks, weighing tons, moved several inches.  It is unknown what impact was felt in the many miles of piping beneath the plant.  The nukes were  restarted on November 11. 

15. Louisa County - the housing market, already suffering, took a big hit from the earthquake. After a lot of wrangling, FEMA finally grants aid to Louisa and to the damaged schools.

16. The Shops at Stonefield - formerly known as Albemarle Place, the mixed-use shopping center project broke ground on May 10 at Hydraulic Rd. and Rt. 29.  As of this posting, many acres of land have been graded and lots of giant sewer pipes have been installed, but no building has begun.

17. The Reserve at Belvedere - Belvedere, once touted as a "Green" housing project comprised of single family homes, townhouses, and a retail component, off Rio Road, suffered a crisis in 2009 and then sold land for an apartment complex component, a late addition to the Development, in 2010; it broke ground in March, 2011.  The apartment buildings are rising quickly and will be ready for rental in 2012.

18. The New Martha Jefferson Hospital - Opened on Pantops Mountain in August, taking away a reliable tax base for the City of Charlottesville. 

19. The Old Martha Jefferson Hospital Building was bought by Octagon Partners for $6.5M. The CFA Institute will pay Octagon $24.5M to refurbish the building for a 2013 opening. CFA's HQ are currently in UVA's Fontaine Research Park; when the CFA moves into MJH, they will add 45 new jobs and infuse some cash into the City's tax base. 

20. The Waterhouse Project - After years of changes in the planning stage and downsizing, the Downtown success story met its tax deadline for completion, and the company it lured from Albemarle County, World Strides, is able to move in and benefit from tax breaks given by the City.

21. The Landmark Hotel Remains Unbuilt - a blight on the Downtown Mall since 2008, the problem of the hotel and its debts made appearances in various court rooms and court documents this year.  This blog believes it will never be finished.

22. Most Illuminating Local Real Estate Reporting - Biscuit Run - the scandal over appraised value and tax credits combined with what seems to be political favoritism.   The story has been growing since December 2009, when the land was sold to the Commonwealth in a surprise late December deal for a State Park that may not open until 2020.  The Hook has scrupulously researched the story, the latest of which includes the developers suing the Commonwealth of Virginia for $20 Million more in tax credits.

23. Most Misguided Local Real Estate Reporting - "Health" of the C'ville Market - With new construction at a 50 year low, The Daily Progress touted the opinion of a trade publication with a banner headline and puff piece.  This blog pointed out the problem with the reporting. 

24. Patricia Kluge's Multiple Foreclosures - Albemarle House and Kluge Estate Vineyards and Glen Love and Fuel C-Store Bistro.  Finally, Kluge and husband Bill Moses Filed For Bankruptcy.

25. Donald Trump becomes a property owner in Albemarle County - buys Kluge Estate Vineyard and installs son Eric as Vintner, with help from Kluge and husband Bill Moses.  Trump tells Bank of America that Albemarle House is Worth $3M.

How bad has the housing bust been?  On December 21, The National Association of Realtors Admitted it Misled Consumers, Congress, and Wall Street - The trade association inflated home sales by 6.5 Million units from 2006-2010, meaning the bust was 14% worse than reported.  Here's the impact on C'ville.

What has the Too Big to Fail Banking Oligarchy done for homeowners?  We're in the middle of a systematic dismantling of property rights and, as a consequence, the destruction of the middle class.

Lastly, DIA/NGIC new hires,  hoped for in '09 and '10 as market-revivers, weren't in 2011, either, and still can't get there from here.

The Hook's RE Wrap Up
Free Enterprise Forum's Top 10 Stories to Watch

1 comment:

craigger said...

Great recap bubblers, I hope you are off to a great new year. i don't think the Cville housing market will enjoy one however. I would say there is massive pain ahead for the marginally located housing here. Quality is selling well in the county and location is selling well in the city, but a seller is in a sad state of affairs if their home isn't in one of those categories. For those prospective buyers out there, bid low and bid often, as I think some sellers are getting the message and letting things go well below asking price.