Media Appearance on Thursday 17 July
I’ll be on WINA’s Charlottesville Right-Now Thursday from five to five thirty - that’s 1070AM.
Last month, we had some great phone calls and questions, and although this time will be much shorter (thirty minutes in radio time flies by) I hope we’ll have an equally or more productive time. If you have any questions or topic suggestions, other than the current market report, please let me know.
Hint: Please feel free to subscribe to this blog by clicking here for RSS updates or here for email updates.
Update 18 July 2008: A few of the topics we discussed:
- The current state of the Charlottesville area real estate market
- Foreclosure rate in Charlottesville and Virginia; some perspective gained looking at RealtyTrac - Albemarle has 1 foreclosure for every 13,356 units; Prince William has 1 foreclosure for every 111 housing units.
- Starbucks are closing; what might the impact be on the housing markets around them?
- The impact that rentals are having on the market and respective market data.
Thanks to Coy and WINA for having me on; I’ll be on again next month as well.
I’m hoping the podcast gets posted before I leave town; Coy’s introduction of me was more than I could have hoped for (and I’d argue it’s all true! 
)
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2nd Quarter Market Update for Charlottesville Region
Very little has changed since last month’s comprehensive market analysis, published just over a month ago.
First, a quick look back at my responses to the calls of “bottom” over the past eighteen months.
- The market is a bit like the axiom - “a watched pot never boils.” We won’t know how the market is doing today until we look back from a six- to nine-month removed perspective. We can gain insight by looking at the numbers - interest rates, 10 year Treasury notes, pending sales, recent solds … but to get an accurate understanding, we have to look in the rear-view mirror. December 2006
- We’ll know whether we’ve hit bottom today in 18 months when we have the benefit of hindsight. Interest rates remain low. Sellers are motivated, and it really and truly is a great time to buy a house - so long as you do the appropriate due diligence, detach your emotions and negotiate well. September 2007
- I think that the calls for the proverbial “bottom” are premature. When I was a kid I wouldn’t know the bottom of the swimming hole until my toes dug down into the muck and I was heading rapidly back to the surface. Our current market is very much the same. We won’t know when we hit bottom until we have the benefit of 18 months of hindsight - or, to continue the swimming hole metaphor, until we’ve crawled out and told our friends - holy cow! It’s really deep! April 2008
- We may not have seen the worst of what this cycle has to offer. I believe that the bulk of short-term ARMs have not yet reset, and until this happens (likely in 2009 and 2010) we may not see the proverbial “bottom.’ That being said, we won’t know the bottom until we have the benefit of nine to eighteen months of hindsight. June 2008
- The problem with saying we’ve “hit bottom” is that we don’t have anything to base that on other than speculation Yesterday on Twitter
Even Barron’s is saying that we might have hit bottom; the Big Picture respectfully disagrees.
At least I’m consistent. I’m not saying that we haven’t hit the bottom, but that calling it as such with so many unknowns and new variables in the equation would be the wrong thing to do right now, despite Lawrence Yun’s statement - “Without Forecasts, we don’t look credible.”
The Realtor update (1):
1st half 2005: 115 had more than ten sides, 296 had more than five sides, 679 had at least one, with about five hundred or so not having a single transaction
1st half 2006: 107 had more than ten sides, 285 had more than five sides, 740 had at least one, about four hundred fifty not having one.
1st half 2007: 73 had more than ten sides, 232 had more than five, 687 had at least one, about four hundred with zero
1st half 2008: 44 had more than ten sides, 169 had more than five, 619 had had least one, leaving about seven hundred with zero transactions so far this year. (out of 1201 sold residential properties)
From the DP on Saturday:
Many real estate agents may not manage to weather the moribund market before it solidly rebounds, Savage said. A full 15 percent of the Charlottesville area’s 1,110 real estate agents are expected to drop out of the business by January.
“We’re seeing a lot of good Realtors leave the business,” she said, citing the example of two agents in their mid-30s who are quitting soon.
“It’s been a tough time for sellers and it’s been a tough time for Realtors,” Savage said.
Personally, this has been one of the hardest parts of this market - seeing good people leave.
Related reading: A Market in Transition - October 2006
An interesting note: 115 agents have done Dual Agency so far this year (and at least one who has spoken openly against the practice), versus 140 last year and 190 in 2006.
Market Update (2): - Click images for larger versions
Currently there are 2,622 properties on the market.
347 have CDOM of less than 90 days
Courtesy of one of my favorite writers in the real estate space:
“It’s a buyer’s market… only if you’re actually buying,” I say, having gone through this same exchange on more than a few occasions in recent months.
Conclusions:
- This too shall pass. We’ve been in this downturn for about twenty months now. I predict that we will start to come out of it in the Spring of 2009 at the earliest. Nothing is going to happen before the election, and little is likely to change before December of 2008. Early 2009 will be the time to recover, take our collective breaths and hope for what 2009 will bring. There are too many unknowns right now to make any sort of accurate prediction.
- All real estate cycles come around, and this one will be no different. I subscribe to an outlook that is a mix of Calculated Risk and Nouriel Roubini, in that this recession may look like a “U” rather than a “V” and I sincerely hope that it will not look like an “L.”
- New construction coming onto the market has slowed dramatically, and the number of builders in the Central Virginia region is waning. Ultimately, this may be a good thing.
- Those who survive this downturn (God-willing I’ll be one of them) will come out on the other side far stronger and knowledgeable about the market.
Managing fear is an ongoing task. News about IndyMac and the bailout of Fannie and Freddie is inescapable. Why is nobody listening to this man?
First half market report 2007, with interesting comments.
1 - Realtor Update includes Charlottesville, Albemarle, Greene, Fluvanna, Louisa and Nelson, ~1200 agents total, a “side” is either the buying or selling side of a transaction
2 - Includes Charlottesville, Albemarle, Greene, Fluvanna and Nelson
Charlottesville Area Market Report for 1st Half 2008 Released
The market report for the first half of 2008 has been released today, and the full report can be downloaded here.
Two snapshots from the report are telling -
My analysis will be coming on Monday; while the CAAR market report is quite good and comprehensive, its goal is much more regional than the analysis provided here. For example:
Currently, we have 3,761 homes on the market, just a few more than we had at this time last year (see chart below) and considerably less than the 4050 on the market at the end of May 2008. The median price of these homes for sale is $309,900. The average DOM (days on market) of these homes is 151 days. It is a great time for first-time buyers, because there are 744 homes for sale under $200,000 with an average DOM of 134. There are only 256 homes currently on the market
But when one drills down to Albemarle, Charlottesville, Fluvanna, Greene, Louisa and Nelson, there are 433 active properties under $200,000 - 122 of which are condos, 54 are attached homes and 257 are single-family attached homes.
More on Monday … in the meantime I’m looking forward to Real Cville’s take.
Proof that Gas Prices are affecting buyers in Charlottesville area
Getting feedback from Buyer’s Agents is one of the most persistent challenges a listing agent faces, yet good feedback is absolutely crucial to understanding buyers’ mindsets to help best advise sellers. Note this feedback received yesterday on one of my listings:
Shows much better than all the competition. My clients liked it the best of any they saw (here - about 15 minutes/10 miles to the City). They bought in (town) however. He will be at the JAG school and easy commute and gas prices made them choose in close.
The trouble is, when showing forty plus houses a week, it’s that more challenging to elicit feedback from Buyers Agents …
As a recap, If You Don’t Think Gas Price Are Affecting Buyers … You’re not paying attention.
Charlottesville (Region) gets High Rankings (Again)
Forbes Magazine recently ranked Albemarle County as the thirteenth best place to raise a family.
Located in the heart of Virginia, Albemarle County is home to the city of Charlottesville and the University of Virginia. The county’s average SAT score of 1,098 is among the best in the nation, but its high school graduation rate of 84% leaves something to be desired. Notable natives range from founding father Thomas Jefferson to musician Dave Matthews, who was born in South Africa but grew up in Albemarle.
Most often, the rankings give the accolades to “Charlottesville” when they in fact mean Charlottesville/Albemarle/Fluvanna/Greene/Nelson. Despite our growing pains which seem to have reached a crescendo in 2004 when we were ranked the #1 Best Place to Live (thanks, Bert Sperling), this area really is a pretty great place to live, particularly if you like outdoor activities.
This year, Outside Magazine has ranked Charlottesville ahead of Crested Butte, Oxford, Michigan, Eureka, California and more as one of the best places to “enjoy outdoor living.” (Thanks, C-Ville)
It’s almost comical looking back a decade when Outside Magazine ranked Charlottesville the Best Place to Get Found:
THE PRICE OF PARADISE: Sweltering summers and increasing sprawl and traffic, especially on Highway 29, just widened (though not enough) to six lanes through town. The cloying marriage of ultrarich and Old South may prompt escapist weekends to Hackensack.
DON’T BE SEEN WITHOUT: At least two of three: a green Barbour coat, a Herb Brown Volvo station wagon, and an insulated coffee mug from Greenberry’s.
Update 10 July 2008: As requested by Larry, here are two related stories -
Should Charlottesville be Like Austin or Aspen? (2008)
Albemarle now has Curbside Recycling
I ran a poll last year asking how much people would be willing to pay for curbside recycling. Aside from those who thought government services are “free,” the predominant response was “Five bucks a week.” Private enterprise has taken the lead where government cannot - courtesy of a Channel 29 story -
For twenty bucks a month, My Recycling Club will
… come pick it up every other week…We leave the bins there for you to clean out and refill for the next time we come…And that’s it,” she said.
Battani got the idea from her concierge business. “Quite a few of those clients have asked us about picking up recycling from their home and office and bringing it in for them…It started to be a pattern,” she recalled.
All it takes to start a club is five or six neighbors who agree to sort their trash. Then for $20 a month, Battani hauls it to the recycling center.
According to Mattson, “Some people have to cartload their recycling to the McIntire Center, which actually discourages some people from recycling at all.” Now thanks to Battani, people don’t have to chose between pitching their time or concern for the planet along with the trash.
In response to an email, Sue Battani said, “The news blurb has created quite a buzz for us and we are very excited about it. Many people have signed on already and we are working diligently to get back to everyone to answer their questions and such.
And that’s a good sign.
Are Green Homes the new “Trophy” Homes?
That’s the question posed by the New York Times a little while ago.
There may be some truth to that presumption (and is that necessarily a “bad thing”?) Peer pressure works. There is truth to the trend and perception that more homebuyers are asking questions about the green bona fides of homes in today’s market. Taking the politics of the debate out of the equation, let’s focus on the diffusion of this new-fangled “green” technology -
- Will Ferrell was driving a concept BMW last year; Honda is nearing the release of a production hydrogen car. Take a look at the search volume for the Prius.
- Three years ago, I would have been hard-pressed to find a LEED or Earthcraft home in the MLS; now there are at least fifty.
- Consumer Reports now has a Green Home Improvement Guide.
I’d argue that when looking at the five classes of technology adopters - Innovators, Early Adopters, Early Majority, Late Majority and Laggards, we’re probably in or on the cusp of the Early Majority phase. Is it because celebrities have “trophy homes”? Doubtful. There is a significant benefit to “going green” that goes beyond political capital or chest-thumping.
It’s the market, stupid. Innovation is spurred by necessity.
Water is increasing by about 5%, the cost of electricity in the Charlottesville area is going to increase by at least 18%, fuel prices are at record levels (duh), and those buying houses today tend to be planning to stay for at least five to seven years (ancedotally). More buyers are asking to go green.
The Blue Ridge Eco Shop didn’t exist a couple of years ago, neither did Cville Enviro or the Better World Betty site. These places came to existence because the market demanded their services.
The market is moving beyond individual green products and into the realm of green developments - because the market is demanding LEED-certified Neighborhood Developments (although I’d argue that LEED-ND has not yet reached mainstream vernacular)
Courtesy of the National Association of Realtors’ On Common Ground magazine* -
Experts interviewed for this article were unanimous on one point: collecting green-certified houses into a conventional subdivision on a former farm fi eld at the edge of the metro area would not a green neighborhood make. Beyond that, there was little unanimity.
Some argue that the criteria for a green neighborhood are fairly well satisfi ed by building according to the principles of smart growth. That means conserving land, focusing development first in areas that are already developed, providing transportation options other than cars, and creating mixed-use development that makes neighborhoods compact and walkable. Others say that smart growth, as it is typically discussed, does not quite touch all the bases of sustainability.
Others suggest that building green neighborhoods means following the old environmental mantra: Reduce. Reuse. Recycle. Reduce the land consumed, the miles traveled by car and the consumption of energy. Reuse the buildings and infrastructure of existing neighborhoods, use waste as a source of energy, and reuse “gray” water to maintain landscaping. Recycle building materials, and even the land itself—the post-industrial brownfi elds and fallow parking-lot “grayfi elds” around defunct shopping centers.
For proof that “Smart” Growth is mainstream, check out this partnership that defies presumptions about Realtors always wanting to build, build, build at all costs -
Those are some of the results of the 2007 Growth and Transportation survey sponsored by the NATIONAL ASSOCIATION OF REALTORS® and Smart Growth America.
My prediction - in five years (or sooner) Earthcraft will be the de facto standard for building quality. That, and the Charlottesville/Central Virginia region needs to work on building transit infrastructure now.
Interesting related article - The Green Housing Boom, courtesy of Fast Company
* I requested a few extra copies of this publication because I thought it was such a great issue. If you’re in Charlottesville and would like a copy, please let me know. Otherwise you can download the entire issue here.
Search for homes in Belvedere.
Vacant Homes and Homeowners’ Insurance
As promised last week (and delayed), the following is written by David Jenkins, an insurance agent with Liberty Mutual in Charlottesville*. meant to answer the question raised when I was last on Charlottesville Right-Now with Coy Barefoot.
Vacant homes are a concern for insurance companies. Homes that are vacant are at higher risk for several things, such as vandalism and theft. A leaking pipe that otherwise would not be much trouble could turn into a big problem if left unattended. The first thing a homeowner needs to do is call their insurance company before the house becomes vacant to go over the different options they have.
If the company is not notified, the policy could be cancelled if they find out, and a claim could be denied because of this as well. Each insurance company has their own guidelines in regard to vacant houses. Their current policy may be extended, but it could cut back on some coverages, such as vandalism or theft. An insurance company may write another policy specifically for vacant houses. This policy usually does not cover as much, but will still cover the house itself as well as liability. It has the potential to have higher rates, but could cost the same as the current home policy or maybe a little less. The policy could also be cancelled. It depends on the insurance company and the situation.
Overall, the most important thing is to call your insurance company, ask questions, and try to work together. Ask what is their procedure on vacant homes. What’s covered and what is specifically excluded? Does another policy have to be written? Is there a time limit on the coverage of the vacant home?
Be prepared to answer a few questions yourself too, such as why will it be vacant? How long will it be vacant? Will anyone be watching over or checking on the house? If the home is for sale and it doesn’t sell within a certain time, do you expect to rent it out? Generally, the person’s current insurance company will want to insure the new house as well. The company usually won’t want to insure the higher risk home without the benefit of insuring the new home.
*with slight editing by me, particularly the bolding
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