Case Shiller’s Perspective on the Charlottesville Real Estate Market

Case Shiller’s Perspective on the Charlottesville real estate market summed up in one phrase: it doesn’t exist.

Today I’ll I touch on:

Case Shiller
Core Logic
– Charlottesville MLS/analysis on RealCentralVA
Fiserv/CNN
Context matters.

Median Sale Price, Single Family Homes - Greater Charlottesville

Case Shiller doesn’t track the Charlottesville real estate market. Nor Albemarle, Greene, Fluvanna, Nelson, Waynesboro, Augusta … Case Shiller doesn’t track Charlottesville. Sure, inferences and implications can be drawn from their conclusions and analysis, but if you’re a buyer or a seller in the Charlottesville real estate market, you need to look at an analysis that speaks to your specific situation.

The chart above and the one at the bottom of this post are still too broad for a real estate buyer or seller to make a solid conclusion. What matters is what’s happening in your specific market segment, whether that’s in the City of Charlottesville or the Crozet part of Albemarle County or the Ruckersville Elementary school district in Greene County … national is useful, so long as you understand the context.*
One of the challenges with analyzing real estate on a local level and communicating that analysis to people broadly (here) and individually (to my clients and prospective clients) is this:

Many consumers are looking for a simple up or down arrow the way Newsweek used to do their trending up or down snapshots (do they still do those?). But the real estate market doesn’t lend itself to “up or down” – it’s sometimes a spiral, sometimes an arrow, and more often resembles the cord of my iPod headphones that have been used by my daughter – infuriatingly tangled, and I’m just looking for sense in it. (or the end)

I wrote in early 2008 that … “The Charlottesville/Central Virginia/Shenandoah Valley markets are not covered by the Case-Shiller index. Real estate is local; while trends may be drawn from this type of research, and while the proverbial turned-corner may still be just over the horizon, it’s important to put his study in the appropriate context. …”

Crap. That “horizon” to which I referred is still a ways off. But … what I said remains true. Case Shiller doesn’t track our market.

Fiserv purports to track our market though. I would be shocked if the Charlottesville MSA (which is what they’re forecasting; like here on RealCentralVA, they actually specify what specific area they’re analyzing/projecting) saw a nearly 5% increase in home prices next year. But …think about this when you look at the below chart from CNN Money:

Home price data on 384 markets - CNNMoney.com

I want to see their data.

I mentioned this projection to another Charlottesville agent whom I trust and respect and he laughed, “what? Because we have such a massive influx of high-paying jobs?” Aside from the government defense contractors, UVA, CFA, the jobs are coming from smaller firms.

They’re projecting market-wide a 5% increase. That’s inclusive of condos in downtown Charlottesville, single family and attached homes close to the NGIC/DIA military base, newer homes in Fluvanna County and homes for sale in Wintergreen in Nelson County.

But.

While real estate is local and always will be, Case Shiller provides insight into the national psychology of the real estate market – what buyers, sellers, real estate agents, renters – are reading and feeling. And feelings matter.

Let’s have some further context, shall we?

CoreLogic … today released negative equity data showing that 10.7 million, or 22.1 percent, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011. This is down slightly from 10.9 million properties, or 22.5 percent, in the second quarter. An additional 2.4 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.1 percent of all residential properties with a mortgage nationwide in the third quarter, down from 27.5 in the previous quarter.

In the 3rd Quarter of 2011, Virginia’s negative equity percentages are 22.9% (down from 23.3% in Q2 2011) and the near-negative equity mortgages are an additional 6.1%. I have no idea (but would love to see) what the respective percentages are for the Charlottesville MSA.

(hat tip: Calculated Risk)

Nationally, the national negative equity percentage is up from 18% in April 2008.

Median Sale Price, Single Family Homes - Greater Charlottesville

The last thing for today that doesn’t seem to get factored into any of the forecasts or analyses I read is this: homeownership is at depression-level percentages, (census press release here) and I’d wager it’s likely to go lower. As I said above: how consumers feel matters. If they feel that homeownership isn’t right for them, there are going to be fewer buyers. Fewer buyers = small buying pool = decreased demand = likely lower housing prices.

 


Further, it is important to keep everything you see and read in its appropriate context. The following are my comments from a Facebook discussion with other real estate agents about Zillow*, agents who were questioning Zillow’s usefulness and perpetual misunderstanding of Zillow. Much of my comments can be attributed to Case Shiller and any other data source.

“Use Zillow in context, and explain its limitations and positives. It’s a great tool when it’s understood. … I welcome the opportunity to explain and defend my value and explain how I am better than an algorithm. As of right now, Zillow’s just not accurate in Charlottesville and the value of a good real estate agent is invaluable.

Zillow has a ton of information that can provide a good *guide* – how much a home might be worth (ballpark) and how much it might rent for. It shows the price history. It shows the tax and transfer history (in my market, those are empty … opportunity to show that Z’s not quite that awesome)

Mapping and schools and walkscore all in one place = useful.

Ballpark mortgage calculator = useful.

Nearby comps: utter and complete crap = opportunity to define value of me and of understanding contextual information.

“On Zillow” : does not equate to true days on market = opportunity to explain to my client what those mean.

Zillow is useful. To a degree. Bash it or love it, it’s not going away; better to understand how to explain it.”

** As much as anything, I wanted to capture my comments here rather than on Facebook … there, they’re neither findable nor searchable. Here, they’re mine.

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About Jim Duncan

Father, husband, Charlottesville real estate agent, bicycle rider & soccer coach. And more. Lots more.
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