Category Archives: Greene
The headline at Zero Hedge is a stunner. A Stunning 60% Of All Home Purchases Are “Cash Only” – A 200% Jump In Five Years
Naturally, I wondered what the numbers might look like for the Charlottesville area. Being curious, I thought I’d look at the numbers for FHA transactions – frequently used by first time homebuyers as the program requires only 3.5% downpayment. The FHA numbers were more interesting than the cash numbers.
Keep in mind that these numbers are for the extended Charlottesville MSA – Charlottesville, Albemarle, Greene, Fluvanna, Nelson plus Louisa. Data comes courtesy of the Charlottesville MLS. Timelines in the chart and data are from 1 January to 1 August for each year.
- Cash transactions in the Charlottesville MSA are nowhere near the 60% in the numbers cited in the above story. 20% cash transactions seems high, too.
- FHA transactions fell and rose with the market. As the mortgage market became more restrictive and buyers had less cash, more turned to FHA loans. Now, as the market seems to maybe be recovering and FHA is less attractive. Think about it. 2006 – 2.3% of transactions in the Charlottesville MSA were FHA, increasing to a peak of 18.61% in 2009 and moving to 8.66% so far this year.
The drop of FHA in 2007 shocked me, so I looked at 2006 … similar numbers … which tracked with what I had perceived in the market. Money was free, then it was harder to get, now FHA is less of a viable option. I asked Matt Hodges with Presidential for a deeper explanation about the FHA aspect.
A history of loan program availability as well as the mortgage meltdown starting in the 2007 range, lends explanation to seemingly odd data. Locally, FHA historically has comprised a very small percentage of business – in fact many brokers chose not to do FHA loans due to the oversight, quality control costs, paperwork and most importantly, availability of lower cost options for borrowers. That change, to now considering FHA as an appropriate loan product occurred when 100% and 97% loan-to-value (LTV) loan programs, many with no mortgage insurance, started to disappear.
About the same time, banks stopped offering 95% combined LTV loans, due to the massive defaults – 2nd lien holders often lost everything in foreclosure. So, FHA became popular and competitive and they allow lower credit score minimums. Their popularity grew until… FHA started increasing the up-front mortgage insurance premiums (UFMIP) as well as the annual mortgage insurance premiums (MIP). In October, 2010, while the UFMIP was lowered, the more important MIP increased by 64%! In April, 2011, the MIP jumped 28% over the October revision and more than doubled the first nine months of 2009’s rate.
Flash forward to today. We now can offer our buyers an UFMIP 75% higher and MIP 136% higher than 2010. FHA has clearly shown us that they do not want quality loans in their portfolio. If at all possible, FHA wants you, the borrower, to get a Fannie Mae or Freddie Mac loan. But, US taxpayers, if you want to know how this affect you- well, FHA now only wants those deals that Fannie/Freddie won’t touch – you know credit dinged, minimal down payment, borrowed funds, more recently discharged from bankruptcy. This isn’t a judgment, its merely fact of how FHA has positioned themselves. FHA has their place in the mortgage world, but it’s a shrinking marketplace.
Click through to see the raw data, embedded below. Continue reading
1 – Inventory is low – (good for sellers, not so good for buyers)
2 – Interest rates remain low
3 – Prices (in many market segments) have stopped dropping, and are largely increasing.
4 – Sales volume is up across the board
5 – As always, do your own, supporting due diligence; your market will vary.
Click through to read the full Nest Report. Continue reading
- Days on Market (an inherently flawed data point) are down in Charlottesville, Albemarle and Fluvanna.
- Average Sales prices are down (not surprising)
- Total sales across the MSA are down (not surprising)
- More buyers are looking to be closer in/closer to stuff
- Good properties are selling and selling quickly
- Interest rates remain low – a good thing for buyers.
- I think we may have pulled the spring market forward a bit; the early spring may have pulled transactions into the earlier months of the year.
Dead simple Takeaways:
- Buyers: do your due diligence, don’t let emotion enter the equation and make sound, rationale decisions with the intent of holding the property for at least five to seven years
- Sellers: do your due diligence and realize that buyers most often don’t have to buy, but want to buy – it’s your job to make them want to buy your house. This means: price, presentation, perfection … and a great location and setting.
I’ve tracked the housing vacancy rate for homes actively on the market in the Charlottesville MSA irregularly over the past several years; it’s an indicator as to the health of the housing market. More occupied homes = a healthier market.
The last time I checked, the percent of homes on the market in the Charlottesville MLS that showed as being “vacant” in the showing instructions was about 22%. In 2008, that percentage was about 33%. In 2007, that percentage was 36%!
Right now, there are:
- 2271 residential properties marked as “active” in the MLS
Case Shiller doesn’t track the Charlottesville real estate market. Nor Albemarle, Greene, Fluvanna, Nelson, Waynesboro, Augusta … Case Schiller doesn’t track Charlottesville.
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 Schiller doesn’t track our market.
“Politicians are like diapers; they need to be changed often and for the same reason.” ― Mark Twain
We vote on Tuesday in what’s termed an “off-off election” meaning … fewer people vote, so your vote will matter more. Please vote.
Here are a few resources:
- Unfortunately, Charlottesville Tomorrow doesn’t cover the other important races, but luckily The HooK offers snapshots of the various races, including Albemarle County School Board (I’m endorsing Ned Gallaway for this race), Soil and Conservation District (I like Lonnie Murray)
- cvillenews gives a succinct rundown of which races are on the ballots. I’d clip a bit of Waldo’s post, but really, just read the whole thing.
What does this mean? It means simply that the Greene County real estate market – and Greene County itself – is becoming more self-sufficient and independent of Charlottesville-Albemarle (CharlAlbemarle). People are choosing to buy and live in Greene County and don’t have to commute into the City of Charlottesville or Albemarle to work. I’d *love* to see updated commuting data from the US Census.
This is just a reasonably high-level overview of the Greene County real estate market. If you’re curious about what’s happening in your location in Greene, or are currently searching for homes for sale in Greene, please feel free to contact me anytime with questions.
Sold listing volume is down just a bit in Greene County year over year:
Pending Contracts in the Charlottesville MSA are UP, year over year. But if you’re looking to buy a home in the Charlottesville area or if you’re trying to or thinking about selling, this number doesn’t matter to you one bit. What matters is – what is the market doing on my street? In my neighborhood? In my elementary school district? What happens at the top level – national, state, MSA, locality – is darn near irrelevant other than from a psychological point of view.
Here is why the top numbers don’t matter … there are extremes and outliers everywhere; today’s example:
A house just went under contract in the Bentivar neighborhood. A first look says that the house came on the market at $595k and went under contract in 6 days. If that house sells for $595k, the MLS data will show that it sold for 100% of its asking price. Which isn’t accurate.
- The house first came on the market in February 2010 for $1,100,000.
- Reduced to $835,000
- Came back on the market at $833,000
- Reduced to $735,000
- Came on the market for $595,000
- Went under contract quickly.
Look beyond the numbers presented to you. Here and everywhere. Good real estate professionals don’t try to hide the information, but it takes work to discover what’s actually happening.