Category Archives: Nelson
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.
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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.
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Cool, crisp air, nights coming sooner, leaves changing … and Festivals in Charlottesville.
There are so very many to choose from.
- 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.
Real estate assessments matter to market value insofar as they impact the psychological perception of value.
From a visitor:
… tidbit of info. – Nelson Co. assesses real estate every 5 years. I just received the assessment of our second home in Wintergreen. In 2006 it assessed at $599K, now $385K — down 36%
2012 is going to prove very interesting in the Charlottesville region.
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.
Blue Mountain Barrel House and Organic Brewery is a 10,000 square foot production-only facility for the 10 lines of Blue Mountain beer that will be kegged or bottled in 750ml corked bottles and undergo 100% natural refermentation. … The advantages of the Colleen Business Park, water quality, as well as the opportunity to expand in the same locality are the reasons that Blue Mountain chose Nelson County for the site of its production facilities. … Although the two breweries will be production-oriented and not include a restaurant area such as the Blue Mountain Brewery pub in Afton, there will be a tasting area at both facilities, as well as a beer garden patio shared by both breweries for public tours and tastings. … “The CVEC Board of Directors was enthusiastic in authorizing the sale of land to Blue Mountain Brewery because these two production and bottling operations fulfill the purpose of developing the Colleen Business Park in partnership with Nelson County and the Service Authority.” Continue reading