I was on Coy Barefoot’s Charlottesville-Right Now! last week and we briefly discussed the Charlottesville real estate market. I anticipated 20 minutes on air, prepped as if I would be on air for three hours, and got 7 minutes. It was fast.
Some of the topics we discussed:
- FHA’s increasing limits/guidelines (story coming later this week) and their impact on the real estate market, specifically first-time homebuyers.
- The homebuyer tax credit’s impending expiration – If you’re buying a home, you must have it under contract by 30 April 2010.
- How much time do buyers and sellers have before FHA and homebuyer tax credit hit the market? (not much)
Transcription is after the “fold”. I’ve bolded what I think are the most important parts.
Sean: This is an audio archive edition of WINA Charlottesville right now with Coy Barefoot, made available online by the Charlottesville podcasting network, www.cvillepodcast.com Jim Duncan is live in studio, local realtor and blogger. He is with the Nest Realty Company and joins us on occasion for a real estate update. We’ll just change gears here. I wanted you to hear that Gemini. I appreciate you waiting while I could do that because I wanted to share that press conference with people because folks haven’t have a chance yet to hear WINA has been playing extended clips but they haven’t had a chance to hear the entire thing from beginning to end and if we have time again today I’m going to play that again and it will be podcast www.wina.com and www.cvillepodcast.com.
Coy: Just horrible horrible news here isn’t it?
Duncan: Pretty much indescribable.
Coy: Yeah. It’s just tragic and gosh. Well let’s see if we can change gears and talk about the real estate market it we can, the very latest and when it’s going to get better. Are there any signs that all the people who are under water with their mortgages are going to – you’re making a face as if it’s not going to be any time soon.
Duncan: I don’t think so. I think that we are looking at – I think I’ve been saying for three years that we are in a market in transition. I think the transition is just continuing to transition in and of itself. We have the volume of sales in the Charlottesville area are up in some categories dramatically from a percentage wise year over year or actually quarter over quarter, but what we’re seeing is I think that that may be a false indication of what’s going to happen in the next three to five years. In my opinion there’s no way to really track that accurately in our region. I think a lot of that has been driven by the tax credit, the $8,000 tax credit that has been extended two to three times.
Coy: Is that still in place now, that tax credit?
Duncan: It is and the two things that I really wanted to push to people today is that if they do make that considered thoughtful decision to purchase right now. Which it’s never a good time to buy for anybody, but if they do purchase there are two time lines that are really pretty hard that they need to pay attention to. The first is the tax credit expires and you have to be under contract by the end of April of this year to take advantage of that $8,000 tax credit for first time home buyers and it’s $6,500 for repeat buyers. The second time line is the FHA is getting ready to increase their costs and the FHA is something that a lot of buyers are using right now in the lower price points.
Coy: Are they like closing costs?
Duncan: They’re increasing essentially the closing costs.
Coy: They’re not increasing the rate?
Duncan: No, just the with the FHA funding fee up front. So some people are going to see increases of $300 to $600 minimum for purchases that they make with FHA loans.
Coy: Now we’re talk with Jim Duncan of Nest Realty. Where is the volume that we’ve seen quarter after quarter? Is it in the lower end of new home buyers?
Duncan: It’s under $300,000 is the bulk of what we’re seeing.
Coy: So apartments, townhouses, condo’s kind of thing?
Duncan: More town homes and single family. I mean I think that the condo market is going through a significant transition. A lot of the condo conversions that we saw in the boom years are really suffering right now where some were purchased for $200,000 or $225,000 a couple of years ago are now selling for $80,000 and $90,000.
Coy: Oh my God!
Duncan: That’s a segment of the market that is really really hard right now.
Coy: Now all of these new people that are getting into the market as home owners for the first time with this tax credit wouldn’t that bode well that they are going to want to move up?
Duncan: I think so.
Coy: Wouldn’t that sort of push the market up with all these new people in at the bottom?
Duncan: I think so, but again, it’s something we, as Americans have a hard time doing, just looking at the big picture. That’s something that’s not going to take effect as far as the next cycle for five to seven years. So the people who are buying today in that sub $300,000 in my client base are buying for a minimum of five to seven year time frames.
Coy: So if they do move up, they won’t have enough equity to move up for at least a few years.
Duncan: Right and I’ll be 40! It’s a good thing that we’re starting to see people who have some confidence in buying right now, but there are all sorts of negative indicators that we’re looking at and trying to make sense of.
Duncan: Well the foreclosures. I think that when you look at the number of foreclosures in our area, it looks like they’re going up. I always make the parallel between Northern Virgina and Charlottesville Metropolitan statistical area. NOVA is down year over year about 23% from foreclosures and we are actually up from the beginning of the year to fourth quarter of 2009 to about 57%.
Coy: So foreclosures in Central Virginia are way up?
Duncan: Right. Right and I think we’re just starting to see that wave.
Coy: What’s the price value of the homes? Where are we seeing those foreclosures, across the board?
Duncan: All over the board from top to bottom.
Duncan: So I’ve seen some that are in the $600,000, $700,000, $800,000 price range and some are in the $30,000 to $100,000 price range.
Coy: In Northern Virginia with the volume that they have though, they’re usually a little ahead of us, right?
Duncan: Right. They usually track.
Coy: So it’s encouraging that their foreclosure numbers are coming down.
Duncan: Right. I think they’re at the point that we want to be next year now. So there’s a lot of stuff happening right now. The interest rates are thought to be moving up after the second quarter of this year which will increase the purchasing price for buyers and increase the amount of reduction that sellers are going to have to make to meet those buyers.
Coy: Jim Duncan is my guest. You said something last year or the year before on this program that I took to heart and I think it’s the best advice you ever gave for this market. People, if you own your home and you’re in your home the best thing you could do right now is fall in love with your home again. (*note: I’ve used this line quite a lot and want to be clear that it wasn’t my idea; I just think it’s a brilliant and relevant and useful concept)
Coy: And look at it with fresh eyes and say: you know what? This is the time. I’ve always wanted to punch a hole through that wall and make this one big room. I’m going to do that. And that in fact is something I just recently did because I am seeing my home in a totally new way now and I’ve totally fallen in love with it all over again.
Duncan: One of the things that I think we’re seeing now is that the people who are buying now are doing it now with the intent to be in the community and that’s something that we haven’t seen over the last five to seven years. We’re transient in Charlottesville by nature.
Coy: People are just treating the homes they bought like bank accounts and flipping them and taking money out of them and not really thinking long term. Most people this is where I want to raise my kids and this is where I’m going to be 15 to 20 years from now.
Duncan: I’ve had people who have bought recently who are looking at that ten, 15, 20 year time frame which I think is wonderful from the community aspect.
Coy: Yeah. That’s good for us. Jim what’s the website again?
Coy: Jim Duncan www.realcentralva.com and www.nestrealty.com are the websites. Thank you for being here. I appreciate it.
Duncan: Thank you Coy.
Coy: You’ve been listening to Charlottesville right now with Coy Barefoot. Charlottesville right now is broadcast live Monday through Friday on news radio 1070 WINA from 4:00 pm to 6:00 pm. Best selling author and historian Coy Barefoot is the host and producer. To interact with Coy and his guests, you can call (434) 977-1070. Coy can be reached at: firstname.lastname@example.org. This audio download has been made possible by the Charlottesville Podcasting Network. Visit www.cvillepodcast.com for more.