Wednesday, June 29, 2011

Bundoran Farm: Originally Purchased for $33 Million, 2000 Prime Albemarle County Acres Go Back to Bank for $7.5 Million

As if Charlottesville's real estate crash needed yet more confirmation, the Bundoran Farm "preservation development" that was such a great idea just a couple years ago has now gone back to the bank at a 77% discountFor a veritable song. While some lots at the property have sold (see also here) many buyers are seeing better value--and shorter commutes for those at NGIC--in the "wilds" of Northern Albemarle and Greene County.  And of course it's the economy.

Still, the current developers are hopeful Wells Fargo will continue their vision.  No Biscuit Run-style bailout here, and no Donald Trump bailout, either.

Sales are dreadfully slow at the "high end," but the low end is falling hard, too.  2011 is only half over...and already it has proven the worst post-Bubble year thus far for the Charlottesville Albemarle Area, with the latest numbers showing the market on track to do worse than the price drops and low sales of 2010.

Monday, June 27, 2011

Home Price Calculators: What's That House Worth?

As home prices and sales volume continue declining in the Charlottesville area, the pressing question for buyers and sellers: What's that house worth?  While the "actual" worth of any property is "What a buyer is willing to pay for it," other metrics exist for calculation.

1. The blog Paper Economy has a calculator that will assess "value" according to the price jump then decline of the National housing bubble.  This calculator will give a detailed set of numbers for any address based on date purchased, including highest value, as well as current "real" and "nominal" prices.  Try it out.

2. The Housing Market News provided at Patrick.net combines original content with national news aggregation on a week-day basis.  Read "Why It's a Terrible Time to Buy an Expensive House"
and then check out the "Fair Market Price Calculator" that is based upon rent.  To find local comparable rents for a property (which you'll need to input) go to Charlottesville's Craigslist.

This previous post contains data about the Charlottesville area's most recent home sales; the declining sales volume and (in majority of cases) dropping prices are recapped here:
click for larger image in new window

Wednesday, June 22, 2011

The Fed: Bernanke Doesn't Know Why Economy is Slowing, There'll Be No More Stimulus, and Interest Rates Ain't Risin' Any Time Soon

Read the transcript of the press conference and Q&A. 
Read what Bernanke did not address.

Virginia Gets $44M of $1B Obama Plan to Prevent Foreclosure For Unemployed Workers

Charlottesville foreclosures just jumped 25%, and the Spring selling season is weak, and nearly 30% of Virginians owe more than their house is worth.  Virginia housing is suffering like other areas in the US.

To help prevent more foreclosures, the federal Housing and Urban Development "Emergency Homeowners' Loan Program" will offer up to $50k, two year, interest free loans to qualified mortgageholders who are unemployed, underemployed, or facing economic challenges.  Of the $1B, Virginia has been earmarked for $44M.  Approximately 1,000 Virginians will receive the aid; after prequalifying, approved candidates will be selected by lottery.  For commentary, see Zero Hedge.   NBC29 provides some local commentary in the video; the $ is erroneously referred to as a "grant."  ELIGIBILITY here.

Tuesday, June 21, 2011

2,000 Acre Bundoran Farm "Preservation Development" in Albemarle County Scheduled For Foreclosure June 29

In January, this blog noted 2010 was the worst year thus far in the Charlottesville Area's  5 year (and counting) RE downturn.  But it's official: with just under half the year gone, 2011 has now become "the worst."  

Charlottesville area home sales are now below what they were in the Year 2000.  The most recent news is that home prices keep dropping, May's sales were lower than April's, and significantly down compared to 2010.  And a recent report shows area foreclosures rose 25% y/y.

That's at the low-end.  Anybody keeping an eye on the mid-to-high end sees the market's hurting even more: a couple years of inventory and very few buyers.  Which leads to:

Bundoran Farm

The latest casualty of the area's housing bubble is  a "high end" development.  Bundoran Farm had a great vision: to integrate farming, the "green" life, sustainability, and eco-building.  But it was conceived in another era, for another era, and for another kind of mortgage market and economy: easy, optimistic. 

Wells Fargo--which took over the failed regional Wachovia--is foreclosing on the property June 29, 1pm, on the steps of the Albemarle County Courthouse.

Even so, spokespeople from developer Celebration as well as  Wells Fargo Bank remain optimistic about the future of the project.

 In April, this blog noted that Upper Bundoran, the farm's manor house + 55 acres, had been lost to foreclosure auction, and relisted in May for $2.3M.

At the time of the Upper Bundoran Foreclosure, we noted that several of the developments lots had been sold to an LLC, not to "homeowners."

It's not over.  At this time next year, the talk will be about the wave of foreclosures and strategic defaults that hit the mid-to-high-end markets--and how much more prices have fallen.


Related:
Kluge
The Biscuit Run Bailout
Change in Plans: Belvedere Developers Sell Land to Build Apartment Complex

What Took So Long? Kluge and Moses Finally File For Bankruptcy

Over the weekend, the sign appeared at their last business holding, "Fuel," putting the gas station/cafe up for foreclosure auction on July 14.

But last Thursday, June 14, the beleaguered couple filed for Chapter 7 bankruptcy protection, according to The DP:
  • This places the couple’s assets under protection and under the control of a court-appointed trustee. 
  • The filing indicates the couple’s debts are “primarily business debts.”
  • The bankruptcy petition prevents creditors from continuing lawsuits, garnishing debtors’ assets or even calling the debtors to demand payment.
  • The filings indicate that the couple has between 50 and 100 creditors
  • They owe between $10 million and $50 million in liabilities.
  • The filing indicates the couple has between $1 million and $10 million in assets.
  • There are at least three banks involved in Kluge/Moses proceedings. They include Sonabank, which foreclosed upon the couple’s Vineyard Estate development; Bank of America, which foreclosed on Kluge’s Albemarle House manor home; and Farm Credit Bank, which foreclosed on — and sold in pieces at auction — the couple’s Kluge Estate vineyard and winery.
The DP also describes what happens with any Chapter 7: "According to court officials, debtors must provide the court with schedules of debts, assets and other financial data and attend a meeting of creditors usually held a month or more after the petition is filed. At the conclusion of the court procedure, the debts are “discharged” and the debtors no longer liable for the debt, although the laws regarding that discharge are “complex,” according to the court."

Related:
"Glen Love," the Kluge / Moses Spec House Turned Downsizer, Lost to Foreclosure
Donald Trump Buys Kluge Estate Winery For a Song 
Albemarle House was lost to foreclosure and is now listed at $16M by BofA

Sunday, June 19, 2011

Patricia Kluge's Foreclosure Woes: "Fuel" Set For Public Auction

There's a giant sign in front of the last of Patricia Kluge's holdings' business ventures, just off the Downtown Mall at 901 E. Market Street.  Fuel was once a cafe, c-store, and gas station, and it closed in July, 2007.   It was listed for sale for years, including 2009's optimistic asking of $1.6 Million

The public auction will be held on-site on Thursday, July 14, at 11 a.m.  For more information, see the website for the law firm handling the transaction, Lenhart Obenshain, and click on "Foreclosures."

Tuesday, June 14, 2011

Charlottesville Area Real Estate Update: Sales Plunge, Prices Wobble and Drop As "Spring Selling Season" Fizzles

Nest Realty Group has released data for  home sales in May 2011.  It's a lot of bad news for sellers--but not unexpected bad news for anybody who reads the local and national news.

Locally, May 2011 closed sales are lower than April 2011Albemarle County had 15% fewer sales in May than April.  Usually, sales in this area rise through the summer. national housing experts have already called the end of the "Spring Market," and the Charlottesville area is right in line with this trendMortgage rates keep falling but they're not enticing buyers.

The big drops come with year-over-year comparisons.  Last year was fueled by the Homebuyer Tax Credit.  And all this local bad news comes just as home price guru Robert Shiller opines he wouldn't be surprised if prices dropped another 10-25%. 

Details for May 2011 compared to May 2010:
  • Charlottesville (attached, condo, single family)  sales down -34.78% and median price down -15.79%
  • Albemarle (attached, condo, single family) sales down -17.48% but median up 3.4%
  • Fluvanna sales down -31.43% and median price down -8.25%
  • Greene sales down -9.52% but median price up 15.84% (new construction near NGIC)
  • Louisa sales down -46.67% and median sales price down -38.58%
  • Nelson sales down -16.67% and median sales price down -38.54%
When all the numbers are combined, they equal what's presented, below, for Central VaAggregating the info cushions the blow a bit, doesn't it?  However, these counties--and even their neighborhoods (as any Realtor will tell you)--are vastly different.
  • Median Prices for single family homes the MSA have now slid -13% since 2008 ($308k to $272k)
  • Sales of single family homes in the MSA are down -19% in 2011 over 2010
  • Sales of condos/townhouses in the MSA are down -39% but median price is up 2%
Background: the closed sales for May of 2010 reflected contracts written before April 30, 2010, the deadline for the Federal Homebuyer Tax Credit.  For a recap of 2010, including the big drop in sales 3rd and 4th Q, click here.  Because the Fed Gov't is no longer subsidizing home purchases with a direct cash infusion, this year's sales were expected to be somewhat lower.

Some of these low numbers could be good news for anybody willing to jump in and buy--somebody who can also deal with the prospect of prices continuing to fall and sales to stay at the 'new slow.'  This is the buyer who doesn't believe a house is an "investment."

Recently:
Charlottesville Foreclosures Rise 25% Y/Y 
Nearly 30% of Virginia Mortgage Holders Are At or Near Negative Equity

Nest Report Charlottesville: May 2011

Friday, June 10, 2011

Charlottesville Foreclosures Rise 25% in 2011 Compared to Same Time in 2010

In the same week that home price guru Rober Shiller said it wouldn't surprise him if home prices dropped another 10-25%, new numbers show that the Charlottesville area foreclosure rate has increased 25% over the same time last year.

NBC29 has a text version as well as a video.  The current CAAR president, Barbara McMurry, is quoted as saying she's sure the market will "survive" (has anybody ever suggested it will not?) while Chamber of Commerce head Timothy Hulbert notes that foreclosures make home prices lower for buyers.  Good for buyers, bad for sellers and owners.

Nearly 30% of all Virginia mortgage holders are at or near negative equity--they owe more than the house is currently worth.   Negative equity and inability to sell will invariably lead to more short sales, foreclosures, strategic defaults.  We're not done with our "correction," and won't be, for a while.

Additionally, new data shows how much financial difficulty many Virginia families are having in this economy.

In October 2010, the year-over-year rise was 225%.  Currently, sales in this "Spring selling season" aren't what most have hoped for...and the mid-to-high end of the market, and the "move up" market are having trouble.  Sales actually declined from April to May...that's moving in the wrong direction, since they typically rise through Summer.  (More on this the week of June 13.)

Wednesday, June 8, 2011

Virginia is #9 On This Awful List of States

Nearly 30% of Virginia mortgage holders are at or near negative equity.  This means they can't refi, would have to sell for less than what they paid, or try to arrange a short sale.   Or they have to suck it up and keep paying for an "asset" that will never recover its value.  Is it any wonder foreclosures are up 25% this year over last year?

CNN says, "Walk Away From Your Mortgage?  It's Time to Get Ruthless"

Monday, June 6, 2011

Contracts for Single Family Homes and Townhouses January - May 2011

Jim Duncan has the charts and data at REALCentralVA.  This data is an indicator of what has happened in the market most recently, and gives an idea what the level of completed sales will be in June, July, Augusts.  Jim's best guess is that 80-85% of contracts will close.

This blog will add commentary in due time.

At the moment, we're wading through the dozens of comments and following the links readers have posted following the bizarrely-titled Wall Street Journal article Why It's Time to Buy , which proceeds to give reasons why it might be time to buy a few years from now.  It also ignores the "known" 875k REOs, the debt ceiling theatre, the Greece/euro crisis, our own hellishly high unemployment, the coming elections, as well as more foreclosures just around the corner....

Sunday, June 5, 2011

Roy Wheeler Realty CEO Expects Real Estate Market to "Turn A Corner"

We do, too.  In 2013...or later.  The latest local (and here) as well as national data elicits responses from "shrug" to "awful."  As mentioned recently, we expect prices and sales to bob up a bit in June, July, August.  But that's seasonality, it's not an upswing or "recovery."  

On the occasions of the NAR's "National Open House Weekend," Roy Wheeler's Michael Guthrie  tells NBC29 that interest rates may spur people.  Rates have been in the 4's since 2009, and currently are 4.55%, the lowest of 2011.  The rates haven't done much nationally to entice buyers.  CNBC's Diana Olick: If Mortgage Rates Keep Falling, Why Are Home Sales So Bad?

Guthrie said, "I think we'll start seeing a gradual increase" in sales.  We agree.  As prices keep falling and "correcting," sales will gradually increase.  In this area, it's pricing, not mortgage rates, that will get people to market.  Before that, there will be lots of sellers, especially those in the mid-to-high end who bought during the bubble, who will endure a good deal of painSupply far exceeds demand here, and there's nothing at the moment to change this.

Friday, June 3, 2011

100's of New Townhouses and Apartments = More Competition for Charlottesville Albemarle Home Sellers in This High-Inventory Market

100's of new 'luxury,' amenity-filled, low-maintenance, well-priced townhouses and apartments are being rapidly built in the Charlottesville Albemarle area, enticing potential buyers away from the stagnating existing home market.

Forget all the dire news about 9.1% Unemployment and Housing's Double Dip.

What sellers actually need to be concerned about right now is that the people who see the future of the housing market in this area--that is, the developers, the money people--these people are saying, Consumers want new townhouses.  And they're also saying, Consumers want nice apartments.

Consider:

The big news, via RealCentralVA and Free Enterprise Forum:

 And it's going to be easier than ever to have a "nice place" without buying: 

700+ new apartments are going to be built in the next year along Rio Road, in the area between Towne Lane (near Pen Park) and Route 29; besides "green" Belvedere,  "upscale" housing development Dunlora is in this area, as is the Meadowcreek Parkway (currently closed). 
  • Nearly 300 units at "The Reserve at Belvedere." 
  • Approximately 300 units across from Fashion Square Mall, "Arden Place." 
  • 88 units at an "affordable" housing development built by Albemarle County, Treesdale Park. During the Bubble, there were downpayment assistance programs and grants to help low income families know the joys of owning.
  • The Shops at Stonefield on Rt. 29 at Hydraulic Road intends to have not only shops, restaurants, and hotel, but also luxury apartments.
Additionally, Old Trail in Crozet, the Pavillions at Pantops, Belvedere, Forest Lakes, and Hollymead all also have available, and are adding, Townhouse stock.


Here's why all this high-density building makes sense, and why current sellers should be hysterical concerned:
  • This area is highly transient, and the "short term buyer" has all but disappeared.   In order to just "break even" on a home purchase (agent fees, closing costs, upgrades, taxes, insurance etc), a buyer has to stay put for 7-10 years.  
  • National homownership has dropped down to a level not seen since the year 1998...just since 2005.  The US Census Bureau says the number is actually down to the 1990 level.
  • Many people are choosing to rent instead of buying, waiting until prices stabilize.
  • When buyers do the math on falling prices, it's hard to jump in knowing that even small drops in price mean years of mortgage payments are wiped out.   
  • Gas prices.  
  • The most reliable cluster of "well paying" jobs with transplants needing housing is north of Albemarle County,  in Greene County: NGIC.  A person employed there has to really love driving, and really love dropping wads of cash, in order to consider living in the Western Albemarle/Crozet area or the Keswick/Glenmore area.  Both have 60-90 minute daily commutes--on a good day.  Add up the hours and that's more than an additional day of worklife devoted to driving.
Bottom Line

In Fall 2011, buyers are going to have lots more nice choices--smaller, closer, low upkeep places, as well as the option to put off buying until later.

Current Inventory (June 2, 2011, includes 'proposed')

Albemarle County
850 Single family houses
184 Townhouses
107 Condos



Charlottesville
228  Single family houses
41 Townhouses
71 Condos


Yes, sellers can all but forget all the recent bad news, both local and national.  The local news is disturbing enough.

Forget all the recent news about housing's Double Dip.  Forget that some are calling it a Housing Depression.  Forget how low home sales are in the City of Charlottesville.  Forget the falling prices in Albemarle County.  In fact, forget that major price declines hit Central Virginia in Q1.  

No Recovery: Unemployment Rises to 9.1% and Housing in Double Dip

The bad housing data confirming low sales and declining prices piled on in May.  And now this. QE3 is no doubt on the horizon to try to stave off the Great D.

Wednesday, June 1, 2011

Going, Going, Down: Recapping May 2011 Home Price News

At this point, only a few NAR members think that housing is going to "recover" or "correct" in 2011.  Or 2012, for that matter.  It's not.  The data comes thick and fast.  While there may be some seasonal movement upward in sales and even, for certain sectors, prices, the trends are downward, and will continue this way--locally and nationally--for the foreseeable futureBelieving in "recovery" as a seller means the property will be priced for a past era, and won't go to contract.  Believing as a buyer means paying too much.

Anybody who says otherwise?  They're trying to sell something.  Consider:

Pending Home Sales Dive in April:  -11.6% from March, -26.5% from 2010.   This does not make a successful Spring Selling Season.

New Home Sales Down 23% Over 2010.

The Case-Shiller Home Price Index--the most widely-watched home price metric: Home prices are back to their 2002 levels.  "This month's report is marked by the confirmation of a double-dip in home prices across much of the nation."  More.

Real Home Prices and Price-to-Rent Ratio: Back to 1999 

Mortage originations are down 35% over 2010.

66.5% of Americans own a home, the lowest level since 1998.

More than 28% of US Homeowners are Underwater on Mortgages.

Effective Negative Equity will keep the "organic" homebuyer at bay for a generation.

Home Prices Have Now Fallen More Than During Great Depression. 

S&P, Home of Case-Shiller Index, has a new blog on home prices.

More and more people  believe that renting is the American Dream"--there's plenty of time, and inventory, to buy in the future.

The economy is not growing: it's slowing.

What do the nat'l numbers have to do with a local purchase or sale?   That's for the next post, which will recap recent C'ville area home sales and news.