Buying and Selling Real Estate in Central Virginia

Posted on September 24, 2007 by Jim Duncan

That’s the title of Sunday’s “The Wake-up Call with Rick Moore” on WNRN.

One of the beauties of writing a real estate blog (or any blog, for that matter) is the ability to react, expand on conversations and provide context – in this case, yesterday’s show on WNRN, Buying and Selling Real Estate in Central Virginia. This time we had better calls and questions from the audience, and a pretty good conversation. Time certainly flies in radio, and the host did a great job of managing the conversation.

From CvillePodcast:

This week on the Sunday Morning Wake-Up Call with Rick Moore, two guests from the real estate industry talk about tips and myths of the business, and deal with the recent accusations by the NAACP that Charlottesville has a racial bias in lending rates. Do the quick turnover “Fix This House” schemes really work? And why has Charlottesville been accused of racial bias? Is the Central Virginia market collapsing? Find out the answers to all these questions by listening to the podcast!

A few thoughts – Jim Duncan on WNRN 23 September 2007

1) The last caller, Rich, nailed me. No two ways about it … But … my reluctance to call our market a “declining market” in light of the great rise in inventory and longer days on market is simple, yet complex. First, the simple part of the answer – I am mindful of the self-fulfilling prophesy that can come about by not reading beyond headlines. Second, there are many different factors contributing to our shifting market – not least the huge amount of new construction and condo-conversion inventory that do skew the data. About 18% of all residential properties on the market in our MSA are flagged as new construction. In Charlottesville/Albemarle – that number rises to 20%. In Charlottesville/Albemarle, 12% of the active residential inventory are non-new construction condos. The answer to whether we are in a declining market is longer than “yes” or “no.” It may be a case of semantics to some, but I think that the shifting perspectives is an important factor. We need to look outside of the past five year window to gain perspective.

2) I firmly believe that we track the real estate market too closely. Real estate should be a long-term investment – at least three to five years. Tracking mortgage applications on a weekly basis, housing numbers on a monthly basis, is a bit too much analysis. If you think that today’s interest rates are high – get some perspective.

30-Year-Interest-Rates

3) Much more careful analysis is required in today’s market – smart purchases can absolutely be found, but finding those takes more analysis, negotiation and experience.

4) On the subprime market and the NAACP’s suit, note this one disclaimer from the NCRC’s study (PDF):

The disparities discussed in this report reflect a number of factors including income, wealth, credit rating, and many others. Discrimination, of course, remains a significant factor. Several studies discussed below have found that even controlling on credit-related factors, disparities persist. The disparities in this report do not necessarily reveal levels of discrimination in the marketplace; but they do reveal the presence of ongoing barriers associated with socioeconomic factors.

There are problems (as noted when the story first broke), but to attribute them entirely to race is irresponsible.

Doing radio is fun, having the opportunity to followup is crucial.

Matt Hodges with Compass Home Loans
Some of the issues we touched on:

Excellent story on the NCRC’s/NAACP’s lawsuit
Piedmont Housing Alliance
Compass Home Loans/Matt Hodges
How to protect your home equity in a falling market
Market Statistics section of this blog
Limits on Fannie/Freddie could be lifted next year
I’m actually a Realtor with Century 21 Manley Associates, not “Jim Duncan realty” :)

This article is directed primarily at the anonymous caller:

One source of difficulty arises from a basic fact of real estate economics: about half of home purchases are by people moving within a metropolitan area. If sellers can’t sell their houses because they want too much for them, they also can’t become buyers of new homes.

“The buyers and the sellers are the same people in this market,” Professor Mayer said. “So if the sellers price so high that they, effectively, put themselves out of the market, it shows up on the buying side, too.”

Thanks to Rick and WNRN for the opportunity and CvillePodcast for posting the podcast.

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About Jim Duncan

A Charlottesville Realtor who tries to stay on the bleeding/cutting/functional edge of technology and real estate trends. I have been selling real estate for the past 10 years, lived in C'Ville for twenty+ and am married to one of few Charlottesville natives left.
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  • http://www.compasshomeloans.net Matt Hodges

    The declining market issue is hard to define, even for Fannie Mae, from their guidelines:

    Desktop Underwriter®(DU®) Q9. What is the new DU message for properties located in declining markets? The text of the DU message is as follows: “The subject property has been identified as being located in either an area of declining home prices or in an area where it may be difficult to assess home values.”

    To be fair to the caller, to the marketplace and its consumers, it may appear to be declining, but further analysis is always required. Condo conversions and a glut of new construction (among other factors) affect the median price reported.

    Regarding the last place finish in the Charlottesville MSA in disparity of percentage of high cost loans between African American and white mortgage borrowers, the issue is complicated. One statistic that did not receive attention is that four areas in Virginia fell in the top 30. As I indicated on the program, the Commonwealth could and should enact laws that provide protection for the home buyer/owner, including loan officer licensure, bricks and mortar requirement and tougher enforcement of violations. This will limit abuses by out of state predatory lenders. No doubt, there is some racism in these numbers that our community will have to address also.

  • http://www.alsmarkets.com Andrea

    Jim, I am pleased that you have tackled a subject which bothers me nearly every time I hear/see/read news regarding the housing market, especially comments from the national groups’ pundits/experts (REALTORS, Mortgage Brokers, Builders, etc.).

    In the interest of full disclosure, I will state that I am a marketing professional with several clients involved in the real estate industry here in Central Virginia. However, these are my individual comments, not theirs.

    Yes, the market is different than a couple of years ago. Yes, our market is complicated and difficult to analyze. Yes, some people are not seeing the hefty profit margins on “flips” that they might have in 2004-2005. Yes, there is a decline in our market. However, it is one that I believe to be healthy, and given the right education of the consumer and real estate professional, Central Virginia will weather this small storm and continue with our ever-increasing property values and attractive living.

    My conversations with real estate professionals on all sides of real estate transactions indicate that the market here is not experiencing a “bust” nor is everyone going out of the business. In fact, several agents I know are really busy and are closing business at nearly the same rate as they were last year.

    I believe it to be somewhat irresponsible and unhelpful of the national groups to release reports of doom and gloom that do not apply to every market and are detrimental to their members’ business.

    Concerning real estate here in Central VA, I urge people to talk with qualified experts in OUR area – don’t just rely upon national press to assess our market.

  • Dan

    Greenspan said it:…. it’s gonna get a lot Worse before it gets better.. For Example : People asking 850k 8/07( it was listed over a Mil.. several months earlier 2/07) for a home, that 3 years ago (2004) cost them 440k to buy,… are in for a, very rude awakening…it will take some time for home prices to come down.. BUT DOWN, in a BIG way they will come… Either way … Homeowners will still Make out FINE,..( the 850k homeowner might have to come down as far as 650k-600k) and the Homebuyers,.. will get a more “reality-based- priced” home…it’s crazy — but greed “done” a lot of people in. It will work it self out…