Transcript of Radio show – 27 December 2009

This is a (pretty darn accurate) transcript of the WNRN radio show on 27 December 2009. Download or listen to the podcast at Charlottesville Podcasting Network.

I broke down the following discussion into a series of blog posts:

Part 1- Quick Update on the Charlottesville Real Estate Market
Part 2 – Short sales and Foreclosures in Charlottesville
Part 3 – Homebuyer tax credit in 2010 – Who’s Eligible?
Part 4 – Strategic Defaults in Charlottesville – What will 2010 look like?
Part 5 – Green building trends in Charlottesville
Podcast of the full hour show and transcript.
Read the transcript here; listen to the podcast at Charlottesville Podcasting Network.

Moore: Oh that’s me, welcome, welcome, welcome everybody. It’s the last Sunday of 2009. I was reminded that it’s not really the last Sunday of the decade, that’s the last Sunday of 2010, but anyway, it’s the last Sunday of the year. Let’s party hearty boys and girls. We are here with my man, friend of the program, Jim Duncan. Jim, how are you?

Duncan: I’m doing great, how are you?

Moore: I’m doing well. Thanks for being here.

Duncan: Thank you.

Moore: We are going to talk about the economy, probably the big story of the year and how that affects the Charlottesville, Central Virginia area because it starts from there I believe. I believe it starts from there. This is a region with a lot to do about real estate, whether it’s homes or properties and we can expand it from there to include almost everything. Jim Duncan, a member of Nest Realty joining us today for the hour. Write down the phone number: 1 (877) 979-0919 WNRN Rocks. All right. Let’s get right into it. Jim Duncan from Nest Realty as we talk about a little bit of the past and a little bit of the future. Jim, let’s just jump into it right away.

Duncan: Sure.

Moore: Everyone talks about how bad the real estate section of our economy has been, but I heard just in the last week or two that home sales are up at least for pre-owned homes. I’d like to know whether that’s accurate for our area because I believe that was a national comment and why a pre-owned home would sell faster than a new home.

Duncan: It’s a big question.

Moore: We’ve got an hour.

Duncan: I think that existing homes are selling more. Let me back up, first, looking at the national trends is a good starting point, but when you’re looking at the Charlottesville real estate market, sometimes it’s irrelevant and sometimes they are misguided. So I think that you have to have that in context. So what I try to do is look at the Charlottesville and Central Virginia regional market and look at how our trends are affected by the national trends. So in short, resale homes, existing home sales are up and new home sales are down, but I think what you need to look at also is that coming up in 2010 we’re going to have, in my prediction, significantly higher inventories of homes when you look at the number of foreclosures and shortcomings that are coming. So I think that looking back at the last couple of quarters of 2009, a lot of the new sales were being pushed by the $8,000 tax credit that was supposed to have expired and then was extended in November. So there was a lot of push by first time home buyers and I saw the statistic last week talking about the vast majority of home sales in the third quarter and fourth quarter of this year were pushed for by the $8,000 tax credit.

Moore: All right. I don’t expect everyone listening to the program to have been someone on the market for a home. So two or three sentences sort of defining the $8,000 tax credit.

Duncan: The $8,00 tax credit as it was prior to being extended in late November was basically anybody who had not owned a home in the previous three years was eligible for and if they bought a new home or existing home, they were eligible for an $8,000 tax credit, basically an $8,000 check from the government for buying a home, as an incentive to purchase a home. So what happened is that was allegedly going to expire November 30th and so there was a lot of push by first time home buyers to get in before that $8,000 tax credit expired. So there was a lot of traffic moving forward on that, but then as the government wants to do, they extended it yet again so that there is a third tax credit for home buyers that is going to be in effect until April of next year. So looking back at the end of 2009, there were just a lot of people moving very quickly to purchase homes so that they could get $8,000 from the government.

Moore: All right, but was the tax credit – did I miss you saying this? Was the tax credit only available for a pre-owned home?

Duncan: It was only available for first time home buyers.

Moore: OK. So why would the pre-owned home sell more frequently than the new home?

Duncan: Price. It comes to price. A lot of the pre-owned homes that you were seeing out there, both from a national trend perspective and a local perspective, people were more able to be flexible on price. A lot of them were for existing homes than were the builders. So what you’re seeing is another trend that we’re going to be seeing in 2010, is looking at the numbers from this year, I think that there is going to be more flexibility in price for those who are looking to sell their homes, in the first and second quarter of 2010.

Moore: All right. You talk about selling a home. We are talking with Jim Duncan from Nest Realty about one of the bigger topics from 2009 and one of the bigger ones moving ahead in 2010; the home sales and I see the phone is already ringing. Boys and girls I’m by myself today so don’t be impatient, I’ll get to it. One of the things that I read as a trend was people just giving up on their mortgage rather than trying to sell the home. Why would they do this?

Duncan: Well, there is a story from NPR nicely on Christmas day about a woman who purchased a home a number of years ago for $465,000 in Northern Virginia and now it’s worth about $225,000. So she is making and she is choosing to do what’s called a “strategic default.” She is choosing to default strategically because she sees that there is no hope to ever recover that $200,000 and some odd dollars of lost equity. So she is making a financial decision to walk away from her mortgage. I think that that’s something that we saw picking up anecdotally at the end of this year and I think we’re going to see more and more of that moving forward in 2010 where, aside from the moral and ethical arguments about why one should honor their obligations. A lot of people are making strategic financial decisions to just walk away. And again, it’s a big question about why, should, and how. I’ve had a lot of people asking me: how do I do this?

Moore: Caller are you there?

Caller: Hello.

Moore: Hi, how are you? You’ve got a question or a comment for Jim?

Caller: Kind of a question and a comment. You were talking a little bit about the NPR’s story about the Northern Virginian who walked away from her loan. The reality is you don’t really walk away from the loan. You still have this horrendous outstanding debt that you are going to have to pay off in some fashion or another.

Duncan: Frequently you are obligated to pay that back in some States and in some States you are not obligated to pay that back. Again, if you choose to go the bankruptcy route which I’m reading more and more people are choosing to do that, yes, you absolutely are going to have an obligation to pay that debt back, but in some cases you’re not. I think that one of the things that we’re seeing now in this fluid and evolving economy is that there are no hard and fast rules about what recourse should be and whether there are and should be consequences for decisions. But thank you.

Moore: Jim, I understand the strategic part of the default. The money that you owe is worth more than the home you’re paying for.

Duncan: Correct.

Moore: But that happens to cars all the time. Maybe not of the same grand dollar figure, but if you bought the property for its value, are those the only people who are pulling this strategic default? What about those who bought this because it’s where they choose to live, because it’s where they want their kids to go to school because it’s near their workplace; the people who have made it a home rather than a house.

Duncan: Right, and I think that that is something that we’re seeing more and more of. I was in a conversation last week about this is that people – taking the strategic default out of it, but just people who are buying houses today are buying homes. They’re buying places to put down roots. They’re buying places to live and be happy. So I think that you’re seeing more people are paying less attention to what their home is worth and more to how they’re going to live on a day to day basis. So I think that we’re seeing a shift in a whole lot of ways. We’re seeing a shift financially and economically. We’re also seeing a sociological shift whereby people are paying more attention to where they want to live and how they want to live and if I’ve lost $50,000 of my equity, that’s OK because I’m not planning to sell for many years.

Moore: It’s equity. It’s not money out of my pocket, at least not at the time when your total mortgage due is $400,000 and your home is only worth $50,000 based on the recent tax assessment. That has nothing to do with your mortgage payment due next month.

Duncan: No. You’re seeing a shift because in this previous bubble or whatever you want to call this five to seven year stretch, people were using their homes as investments and as ATM’s and they were doing cash out refinances and they were using their homes as leverage and not necessarily as a place to wake up and have coffee. So I think that we’re seeing a pull back from that into a more realistic buying a house as a home mind set. I think that’s a really good thing.

Moore: And as our initial caller seemed to be asking is: there seems to be or you would expect a much greater – the term punishment comes to mind although that’s not really what I’m trying to say – but a strategic default makes it sound like it’s all about how much money you have left in your pocket at the time rather than – where’s the punishment that goes with it for not paying it off. How is it that some States don’t punish you through your credit record? They don’t force you to pay the rest of the loan. I can’t come do that with my car, can I?

Duncan: I have no idea. I would say probably not. They would come and take the car back, but I think that’s what you’re seeing now is that people are choosing – and again, I’m looking at it anecdotally because there’s not any sufficiently sound evidence and numbers that we can look at. So I’m speaking purely from anecdotal evidence that is out there, but in some cases I’m reading about people who are choosing to not pay their mortgage anymore and they’re living in that house for 18 to 24 months just because the banks are so back logged with taking house back into their own inventory. So everything is a risk and a gamble and I think the people are looking for whether they’re going to move forward in five years and whether they’re going to have the money to recoup that lost equity. But again, I think people need to look at their home less as an investment and more as a home where they’re going to live.

Moore: Jim Duncan here as we talk about the real estate in the Central Virginia area and nationally as well. Some of the issues from 2009 and before and some of the expectations for 2010 and beyond. 979-0919. Call up with your comment, your question. 1 (877) WNRN ROCKS. That’s a toll free number. Jim, you mentioned this strategic default as being a shift in the way people are considering their homes, the financial aspects of their homes. Do you expect that to continue in the future? Do you expect the government or the banking industry to alter the rules and regulations to try and prevent this?

Duncan: I have no idea. I think that anybody who is going to speculate about what the government is going to do next is playing a fools game.

Moore: Has it affected the way that you speak with your potential clients when trying to sell a house or show a home.

Duncan: When I’m showing buyers in the Charlottesville area property and I did this consistently throughout this past year, I would tell them a couple of things. When you make your money when you sell is when you buy, so you need to make sure you buy smart from day one and I do that by giving them as much data and analysis as possible so that they can come to these conclusions on their own and the second part of that is that I’ve prepped them that if they buy a house for $100,000 today that I expect it’s going to be worth a little bit less next year. So my goal is to counsel people, unless they’re an investor. Investors have different goals than homeowners from a family standpoint. I want people to understand that it’s not purely an investment that they’re making financially. They’re making an investment in their home and their community as well.

Moore: Do you have standards? If somebody came to you who you considered might have strategic default as an option, would you sell the home to them?

Duncan: Well what you’re seeing now – I’ll take that as a lead in to short sales. We’re seeing more and more short sales. A short sale is if you bought it for $100,000 three years ago and now it’s worth $80,000 and in order to sell it you need to put it on the market for $70,000. So the short sale is basically where you owe more than what your house is worth. You’re seeing more and more of those coming onto the market in the Charlottesville area and Mollusk association have now instituted rules by which realtors thankfully have to strive to abide by. So when I take a listing and I’m counseling a client, we need to find out whether they’re going to be in a short sale position because that impacts everything from day one. It affects the pricing, it affects how we speak with the bank negotiator, it affects whether buyers will look at it, because short sales traditionally take a longer period of time because it’s an undefined time line. But again, now that the government is trying to institute new rules, they are going to try to institutionalize these times. So again, it’s a complex situation that we have in the market because you have different types of sales. You have regular resale homes, you have new homes, you have short sales, you have foreclosures and trying to educate buyers and sellers on the different components of the market is a challenging thing. So strategic defaults are one thing and short sales are another. I think that short sales are an option for a lot of people, but what you need to be able to do with that is to be able to prove to the mortgage company that you cannot make that mortgage payment and one of the differences between strategic defaults and short sales is that strategic defaults, a lot of them can still make their mortgage payments but they’re choosing not to. Short sales they can’t.

Moore: 11:19 am on the Wake Up call with Jim Duncan, Nest Realty here. We talked about the real estate in 2009 and looking ahead to 2010 in Central Virginia and nationally. I realize it’s awful hard to sell something when there’s two feet of snow out there, but is that part of the conversation especially maybe moving forward in the next several weeks because of what has happened this past weekend when you say: hey, you might want to consider this when you purchase this house in this suburb neighborhood versus this windy road over here?

Duncan: I think that most people come in with their own individual thresholds of risk and what they’re looking to tolerate in that kind of environmental trend. I’ll say this: I did not show a couple of houses yesterday simply because the houses and the sidewalks leading up to them were inaccessible. So I think that one good advice for sellers is that even the day after Christmas, realtors are out there showing houses trying to sell homes. But I’ve had people come into the area from other markets and ask about earthquakes and fires and tornado’s and hurricanes and people are always curious about what the environmental risks are in the Charlottesville area and it’s always nice to say that we get two feet of snow every ten years and the earthquakes we have are in the 2.0 range and they’re usually 50 miles away and we’re a pretty safe place to live. So people do their research before they get here.

Moore: Dial us up: 979-0919, 1(877) WNRN ROCKS or you can send us an instant message: Jim, you talk about people moving to town. Is it expected that some of these new, large groups of people like NGIC up on 29 North, what is that, National Ground Intelligence Center.

Duncan: National Ground Intelligence Center and the DIA, the Defense Intelligence Agency are both moving here.

Moore: Do you know the expected number of people?

Duncan: I’ve heard varying numbers, anywhere from 800 to 1,200 and I’ve heard 1,200 to 1,700.

Moore: Is that expected to mostly help the previously owned home section or the new home section?

Duncan: That’s a good question. When people come in, generally they target price and people are shifting their mentalities to looking more at price than they are new versus resale. So I think that it’s not going to help a particular segment, but it is going to help the surrounding regions around this facility. But again, it’s the backup to that is that you’re not going to have 800 new jobs and 800 new homes sold. The initial numbers were a bit misleading in that we expected more people to by buying homes and you’re seeing a fewer percentage of those people actually moving forward with purchases for a variety of reasons.

Moore: What are they doing?

Duncan: A lot of people are choosing to stay. I’ve heard from NGIC folks who are choosing to keep their home in Northern Virginia and commute.

Moore: Are you serious?

Duncan: Yeah. A lot of people up there will commute two or three hours each way as a matter of course.

Moore: Do they not have social lives or families?

Duncan: You know, it’s a different world. People have different perspectives when they move to Charlottesville. When I show homes and I say: well this is 25 or 30 minutes away from NGIC, they’ll say OK, well I drive 75 minutes each way now. So that’s sweet. People are choosing to keep their homes there for a variety of reasons. I’ve heard that people are upside down on their mortgages like we were talking about a few minutes ago. They bought for $500,000 and it’s worth $350,000. They can’t sell so they’re choosing to stay. A lot of people are choosing to stay because they have kids in high school and they want their kids to finish up their two years in high school and they’ll just suffer through that two years. You’re also seeing a lot of people buying in the Northern section; Green, Louisa area who are looking to move to NGIC and DIA.

Moore: Do you think that let’s say half of the people end up purchasing here?

Duncan: I would say if I had to guess now I would say 25% to 33%.

Moore: Really?

Duncan: Yeah.

Moore: That’s a lot of people on 29 coming South. Green County can make a lot of funds ticketing people.

Duncan: This is very true. And they have a new Walmart and Lowe’s up there, so again, Green is becoming much more self sufficient for these people. You have Dunkin Donuts and anytime you have Dunkin Donuts on 29 North you’ve got your hub of activity.

Moore: Oh goodness.

Duncan: So again, that part of the region and the county is becoming more self sufficient so people have less reason to come into the city and county of Charlottesville.

Moore: We talked about short sales again and some of the definitions I need to be continuously reminded of. A short sale is when you’re selling if for less than you paid for it?

Duncan: Correct.

Moore: But you can typically – that’s not someone who is choosing to not make their mortgage. That’s someone who truly cannot afford to keep making their mortgage payment.

Duncan: A short sales is somebody who has hardship. They can prove that there is a reason that they’re selling it for less.

Moore: And so how does that qualify as a foreclosure? Not qualify, but how does that become a foreclosure or does it not?

Duncan: It frequently does. There are so many different variables that factor into it and one of them is the bank. If the bank is unable to work with the seller and the seller has a short sale and they’re trying to sell it and then the bank just comes in and forecloses. Frequently that will kill all the work that the seller and the prospective purchaser have done leading up to it. Sometimes if you’re in a short sale you can demonstrate to the lender that you have a contract and they’ll hold off on the foreclosure process, but again, it’s very difficult to find hard and fast and numbers and data in our market as to what percentage short sales and foreclosures are making up.

Moore: So tell me a little bit about 2009 and foreclosures and 2010. Is 2010 expected to increase? I think the phrase that I hear possible from you is a flood or a trickle.

Duncan: I think it’s going to be somewhere between the two.

Moore: That’s not fair now.

Duncan: Trending more towards flood. I think that there’s going to be more distressed properties coming on the market now in the Charlottesville and Albemarle area and I’m seeing that as far as the daily updates that I get as far as the number of notice of trustee sales in our market and I’m seeing more of the MLS’s coming on as foreclosures and I’m seeing more anecdotally, again there are two properties, one in Louisa and one in Albemarle last week that each had $100,000 price reductions.

Moore: $100,000 price reductions?

Duncan: Yes.

Moore: That’s a big chunk of change.

Duncan: And that’s the bank saying: I’m done, get rid of this property, get it off our books and that impacts sellers and buyers. If a seller is looking to sell and they have one home that is priced as a foreclosure and it’s down here then the seller may not need to factor that into their numbers, but if you have four out of ten comparable home sales or foreclosures. It’s when the foreclosures become the market that’s when sellers have to factor those in and buyers again are choosing to wait. A lot of people out there are saying: I’m going to wait and see what happens. That’s a risky game is because what happens maybe is that the market gets a whole lot worse and they’re able to take advantage of it or what happens maybe is that interest rates go up which are predicted to and things magically recover to a point that if they were planning to take advantage of the market, they may not be in a position to do so.

Moore: Well, for many people, the news reports are becoming a bit more positive on the economy. Retailers had a slight increase in sales for the holiday season, unemployment numbers are still negative, but better.

Duncan: They seem to be getting better in the Charlottesville area.

Moore: What I heard from you is that the number of foreclosures is expected to be growing in the negative sense in 2010 than what we had. To me that sounds like: OK boys and girls, the worst part in the Central Virginia real estate market is not over.

Duncan: I would love to be wrong, but my speculation is that we have not hit the worst part of the market as of yet. If I had to guess, I think I wrote this a few months ago, I think that we’re going to see the bottom in the third or fourth quarter of 2010, but really and truly I’m not going to know when that bottom is until we have the benefit of 18 to 24 months of hindsight looking back and saying, well, OK, that’s when it was. There is a lot of contradictory evidence out there as to what the market is going to do and there is also a lack of good data as to the number of distressed properties and the number of homes that are still held by banks in their inventory. Looking forward to 2010, I think that if you’re going to be buying a house, you need to be doing your investigation and due diligence now so you can be an informed buyer and or seller.

Moore: This is the Wake Up call with Jim Duncan and Nest Realty as we talk about the economy from the real estate point of view 2009 – 2010. Here is an online question, it’s WNRN Studio at the AOL Instant Message site phone line is 979-0919. 1 (877) WNRNROCKS if the phone is answered and I don’t say: “hi” right away that’s because I’m multi-tasking. You talked about the snow affecting purchases. What about the new train?

Duncan: I think it’s wonderful. I think that the story a couple of weeks ago was saying that train ridership was I think double of what they had expected it to be. There were 8,500 people in the first month that were using it from Charlottesville to D.C. It still is a very small number, but I think it’s a very good trend towards public transit. I talked to somebody the other day who said he has the luxury of going up, I think it leaves here in Charlottesville about 9:00 am or 9:30 and he is able to go up, have meetings in the afternoon, get work done, stay over night and come home the next night. It’s not a commuter train by any stretch but it is something that is a positive thing. People come in from other markets that are accustomed to having good, functional mass transit are very disappointed when they get to the Charlottesville/Albemarle but now have a train as an option is something that’s a good thing. It’s a very good start. I think it’s a three year plan for more information on the new line. But it’s a good thing. I think more and more people are going to be using that to get to D.C.

Moore: But it’s not a commuter train so I would think that it has limited positive effect on the real estate sales market.

Duncan: It does and that’s one of the fears that I’ve heard over the years is that some folks don’t want it to be a commuter train because they expect that we will become a suburb of D.C. I think that has some merit, but for now, for the people who have the luxury of going up and spending three or four hours in the office and spending the night and coming home the next day or for tourism. It’s a very good tourism train.

Moore: We look back at 2009 and then turn ahead to 2010. You are a vendor in the real estate sales. You’re selling homes and helping people purchase homes. What about renting? What has the economy done for the rental market? My brand of knowledge in this area would tell me that the rental numbers have blown up and increased dramatically because if you can’t afford to buy the house, let me find a place I can afford to pay my rent.

Duncan: You’re seeing a mix. You’re seeing a lot of properties that were for sale and then they couldn’t sell it so now it’s on the rental market. That’s an unknown component of the home sales market, but rentals are not my forte’. I’m seeing more and more homes are coming on the market and from my view, I’m seeing that rental prices are going down. So it’s certainly an option. I think that one thing that’s lacking in our market is the short term rental option for people who are coming in for three to six months either to do a short term contract or to look to purchase a home.

Moore: What do you mean, because it’s only this town that’s pretty much all a one year?

Duncan: Most of the things that my clients are looking at are usually nine to 18 month rentals and that’s not a viable option for some people. Anecdotally I’m seeing more and more rentals come on the market and a lot of those are homes that have been for sale for many months and I’m seeing things in the MLS that are saying the home is for sale or for rent or lease or lease to own or what have you, just to help the seller get it off their books.

Moore: Jim Duncan here. 11:36 on the Wake Up Call. I always get your website incorrect. I want to say Central Virginia


Moore: An interesting website and blog full of information and anecdotal commentaries. It’s always good to get something that’s not always just written for the particular person to read and try and get a sales done.

Duncan: I try to provide unbiased information. It all has my own bias’ but I try to be transparent about that. That’ a good point. I will have show notes up hopefully tomorrow with links and more content about everything we talk about today.

Moore: It may take a little longer for the podcast due to my inabilities to do it myself and not having other people here.

Duncan: Quite all right.

Moore: I can record it, but that’s about where it stops. Let’s talk a little bit more about upcoming 2010 things. Recently I read that the very large plan of new homes in Biscuit Run is on the verge of not happening.

Duncan: Well it’s been on the verge of not happening for years, but now they’ve officially come out and said that they have intentions to donate it and make it into a park.

Moore: Lets toss out some numbers for the original plan. Again, for those folks who have moved in recently and who aren’t always reading the headlines in our papers …

Duncan: Biscuit Run was going to be 3,100 homes the South East of town between the Millcreek, Avon Street Development and Redfield. So it was going to be about 3,000 homes dropped in there that was going to have sort of a positive effect to some degree and also some will say a very negative effect environmentally.

Moore: So a lot of infrastructure as well.

Duncan: That was a lot of infrastructure and typically we tend to build first and then worry about the infrastructure later in our area, but now they’ve said that Craig intends to make it into a park. He wants to donate it and there has been some speculations about the merits of that. Personally I think having more green space is a good thing, but I think that there has also been some speculation that it’s a ploy to get attention from somebody who might try and buy it from him before he donates it to make it into a park. I think it’s one of those things that in six to nine months we’ll know exactly what’s happening with it. Not have an additional 3,100 homes on the horizon I think can only do good things for our real estate market at least in the short term because not having that anticipated inventory coming on the market is going to be a good thing for the existing homes who were competing against Biscuit Run to a certain degree. From talking to neighbors there, it’s good for the neighborhoods because they don’t have 3,000 homes and years of construction going on around them so their quality of life is going to be improved. There are two sides to everything, but I think that you can make an argument that this turning into a park is going to be a good thing.

Moore: As someone who sells homes, you need homes to lead your life. So whether that’s a new home, which Biscuit run would provide 3,000 and the other homes that are currently on the market and will turn over, how does it make you feel to know that there are 3,000 fewer homes out there for you to get a handful (to be very gross about it) in your hands to sell.

Duncan: I think that from my perspective which I represent my buyers and I represent my sellers and I sell representation and advice and I don’t sell homes per se. I sell representation and professionalism, but I think that it’s a good thing at least in the short term. I’ve seen some studies saying that there is a projected housing shortage in our region over the next decade which again is a whole other conversation. I think that for now, those homes that were competing to a certain degree with the prospect of 3,000 new homes. Those existing homes that don’t have to compete with Biscuit Run I think is a very good thing. So I think that the demand is not there yet for those 3,000 homes and the supply as it stands right now is still much too great for what our market can bear. So again, you look at the basic supply and demand and we’ve got an over supply and decreased demand. So you bring them more to equilibrium. I think that qualifies as a very good thing.

Moore: And you sell the property or you donate the property to become a park because that person can’t afford to hold onto it anymore and wait for that projected shortage of homes?

Duncan: I guess that’s what they’re thinking. They have decided to strategically move forward with another plan.

Moore: Did their six year old daughter convince them to become more environmentally green? Daddy, don’t build all those homes. We need more parks.

Duncan: It’s a hard thing to do. They spend $46 million on that property so it’s a hard thing to just walk away from that. I think that’s one of the reasons there may be some ulterior motives going on that not very many people actually know.

Moore: This is the Wake Up Call with Jim Duncan from Nest Realty. Jim, we’ve been talking about trends frequently. That word has come up in our conversation. What is “new urbanism”?

Duncan: It is a return to sort of a walk ability in my mind. The definitions are varied, but in my mind it’s really a mind set of living and working close to your home. You’re seeing a couple of those developments are popping up around town driven by peoples desire to have walk ability and bike ability and be close to stuff. That’s sort of my unrefined definition. By “stuff” I mean grocery stores and schools and coffee shops and things that you need for a day to day basis. What I’m hoping to see in the next couple of years is in addition to having homes and coffee shops, etc. is homes and places to work so that people won’t have to get into their cars to drive to work and I think that’s the very good thing from the perceptive of going back to the sociological change being close to your neighbors and being close to business as keeping everything local is another trend that we’re seeing develop over the past couple of years to 2010 and beyond.

Moore: We seem to have two different sets of that and again, for me it’s conversation. It’s not statistics when I talk about this. On the North side of town, near where I work, everything there has been an increase in the number of commercial retail spacing and almost nothing in the home building area.

Duncan: Right.

Moore: In other areas (this may not even be accurate) like the Crozet side of town, it seems to be more home, more residents and just now is the commercial aspect, the retail aspect starting to come in so that we can have the walk ability that you mentioned. Is there a way to do that? Must it be done in such an awkward fashion with one giant step one way and then three years later the other step gets taken forward. Is it not possible to do it in a synchronistic manner?

Duncan: Wouldn’t that be neat?

Moore: Is that just the way that the factors work or is that our, the Central Virginia methodology of doing it, the leadership we have, the way it must be done because no one is going to toss out their investment dollars until the other thing that they want is already there.

Duncan: I think it’s a combination of everything you just mentioned. If you look at 29 North area, you had the residential before and then that drove the people putting in the commercial space to the center of town and everything around there. Then the commercial said: there is a lot of homes there and a lot of people we can sell stuff to so we’ll put in the town center. Crozet has been sort of backwards in that respect. You had a big residential boom in Crozet and you’re starting to see now in Crozet the town shops where you have a gym and Domino’s and downtown Crozet which has a coffee shop and a pub and a hardware store and you also have old trail and it’s other set of restaurants and coffee shops. So you’re seeing the move to having the walk ability to stuff and it’s driven by demand. I think you see different demands in those different parts of the market, but I think it is also part of the urban planning mentality in Albemarle either because it takes so long to get projects approved that people will just put in what they can by right. So it’s a complex question to answer.

Moore: That’s why I asked the complex man who is typically full of the answers, Jim Duncan from Nest Realty, here on Wake Up. Here is another trend that we talked about which is green ability; green as in saving money and green as in feeling good about yourself.

Duncan: I think that’s a wonderful trend that we’re seeing more and more of in our market in Charlottesville and Albemarle and beyond for people who are building green, who are choosing to buy green, earth craft homes and very few lead homes which are different certifications. Earth craft homes are gaining prominence. It is, in some respects, a marketing thing in how the homes are marketed because people are drawn to earth craft, but I think that people are drawn to green building. A small percentage. I think a very small percentage of people want to do green because it’s the so called right thing to do right now, but I think more people are drawn to the green building trend because frankly it saves them money. When you build a green house you save money on utilities, you save money on disposal of materials during the construction process and it makes a more comfortable life style.

Moore: Is that true? And I don’t mean to say that in the you’re not telling me the truth question, but I know that when you buy a Prius, a car they say feel good about yourself, but it takes you ten years to actually recover the initial cost back and my understanding from green building is that it’s similar in many ways. Now parts of it may be less expensive to buy that green wood and filler for heating and cooling savings, but it costs dramatically more. So when does it go past the “oh, I feel good about myself,” to the “I have a little more cash in my pocket”?

Duncan: There is a confluence of events that have come about in the last two or three years and the first and foremost is that people are staying in their homes for longer period of times. Five years ago I would tell my clients or I would advise them that they might want to consider doing this, this or this to increase the energy efficiency and the cost would be X and I would say we would recapture that in five years. And they would say: OK, that’s wonderful. I’m moving in two. So you’re seeing a shift away from that and people are choosing and planning to stay in their homes for five, seven or ten years now. You’re seeing people pay more attention to what the cost of monthly utilities is going to be and it’s due to the economy. People are actually budgeting for utilities now. Five years ago people were not asking how much is the electric bill per month and how much is the gas bill and how much is water. Now they’re actually asking those questions, so they’re paying much more attention to whether you have low flow toilets already in place and what the cost would be to replace them and what the R value is of the insulation. So I think in my mind it’s driven much more from an economic perspective of people wanting to save money and spend money more wisely than it is from people who are saying I feel really good about the environment that I’m not cutting down trees to build this house or what have you. So I think you’re seeing a shift now towards energy efficiency and saving money that happens to be green. People aren’t going green for the sole reason of going green.

Moore: How many realtors have left the market in the past couple of years with the dramatic change in loss of home sales to much harder to make the home sales.

Duncan: I think we’ve seen a reduction from the peek of about 300 total. I think that at the peek we had 1,200 or 1,300 now we’ve got about 900 or 9Duncan:50 give or take. Talking to the old timers in the business I’ve only been doing this for eight years so I still consider myself a newby. If you talk to the old timers they’ll say we only need a couple of hundred at best to work the volume of homes that we have here. I think that the reduction is something that, in any market going through the up’s and down’s, is something that had to happen and what you’re seeing now from my perspective is the realtors who are choosing to stay really are better at what they do because they have to be. You see people who are focused more on the clients than the next transaction with a very very important job. I look at what I do as helping to manage my clients’ lives, helping them to make a decision.

Moore: How many homes were sold in 2009? Do you know?

Duncan: In 2009, there were, so far in the MSA, just in Charlottesville and Albemarle, so far this year there have 2,444 homes sold. Contrast that with 2008 and there 2,459 sold throughout the year.

Moore: That’s not that big of a change. That’s 200 per month, right?

Duncan: I’m looking at the numbers here and the peek months of May, June and July were 260, 296, and 295 in 2008 and for this year they were: 197, 260, and 300. The volume is about the same. We’re just looking here at the number of homes on the market actually trended up in November of this year in contrast with last year.

Moore: Do you think that’s because people have decided things are getting better, now I’ll put my home up.

Duncan: I think you’re seeing more of that, but I think you’re also seeing – it’s hard to track this, but I think you’re seeing some of the new construction is actually getting put into the MLS now. That’s been a struggle that we’ve had locally for years is that some new construction homes do not get put in so you can’t track them. I think you’re also seeing some foreclosures are finally making their way to the market. Again, it’s looking at the number of homes sold year after year and November of 2009, there were 189 sold and November of 2008 there were 96. So that’s a tremendous increase year over year.

Moore: Jim Duncan from Nest Realty here and the last several minutes of The Wake Up Call. The last Sunday of 2009. You can find Jim Duncan on his blog Jim, we talk about how the number homes being put on the market is increasing here in the last quarter, how about building permits?

Duncan: They are down dramatically. I haven’t seen the Albemarle report for the fourth quarter yet. That will come out in the first quarter of 2010, but you’re seeing far fewer building permits in Charlottesville, Albemarle and it’s a function of the market. There is just less demand for new homes right now. At least for some new homes and it’s an interesting time to look at the number of permits in new homes so the short answer is a lot less.

Moore: So do you think – and I ask this prediction – when it’s hard for people to always be accurate in their predictions.

Duncan: Right.

Moore: It will be a new year. For many people the new year represents the new decade although I think mathematically that’s not accurate, but we’ll have a new decade, we’ll have a new quarter. Many of the comments are that things are looking better in our economy. Do you expect those numbers to drive up?

Duncan: Building permits? I think that they will probably go up, not exponentially, but they will trend upwards.

Moore: Does that happen seasonally as well? You just don’t see it as much in the fourth quarter as you do in the first quarter?

Duncan: I think of it as more of a less quarterly and more of an annually because I think we have a tendency to look at things on a quarterly basis or a month by month basis too much and it’s like the forest for the trees conversation. So I think that we’ll see more next year than we did this year, but I think that you’re also gong to see fewer builders out there. In order to keep the machine moving forward from a building perspective, you need to be building spec houses and building new construction.

Moore: You are listening to WNRN Charlottesville and WNRS FM Amherst and Lynchburg. Jim, let’s just finish the last few minutes with maybe the most basic question. If you’re going to buy a home in Charlottesville in 2010, when do you start looking. You made comments earlier that you thought the bottom of the dip would happen in the third quarter.

Duncan: It’s hard to say. To back track a little bit of my previous statement, I think the bottom market wide is going to be may be (I’ll know in three years) in the third or fourth quarters making a statement like that is a bit silly because our market is neighborhood by neighborhood and zip code by zip code and still too broad for the Charlottesville area. So I think it’s neighborhood by neighborhood by development street by street. So I think that there are two answers to that question: if you’re looking to buy a house anytime in 2010, I think that right now is the time when you need to be looking and need to be familiarizing yourself with the different websites to find a home and you should be driving through neighborhoods and eliminating areas that you don’t want to live in, looking at crime statistics and looking at where you want to be. I think that people are rightfully putting more consideration to their home buy decision and so it’s a longer process in the lead up to actually looking at homes. So I think that right now, spend the next couple of two, three, four, six, nine months looking at real estate stuff about the Charlottesville market. Look at the national trends and focus more on the Charlottesville/Albemarle area or wherever you intend to live so that when that time comes to actually put a contract on a house and choose a buyers agent, when that time comes, you will be a lot more educated. So the process is taking longer. I think that’s a very good thing. It used to be when you looked at homes you had 30 minutes to look at a house and instead of 30 minutes you might have three months. So I think that the short answer is start asking questions now and educate yourself as much as possible.

Moore: All right. Jim Duncan from Nest Realty and his website: Jim, thank you so much.

Duncan: Thanks Rick.

Moore: We’ll have Jim Duncan back on in the new year at some point. You can send questions. I believe the website allows for questions.

Duncan: It does.

Moore: So follow up once we get Jim’s notes on his website and we’ll get the podcast stuff on See you next week.

This has been your Sunday morning Wake Up Call on WNRN.   

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