207 in 1st two quarters of 2010.
155 in the first two quarters of 2009.
Doing some math … there have been 34% more building permits issued in Albemarle County in the first two quarters of this year versus the first two quarters of last year.
First, the local information (and the lede) –
Certificates of occupancy (the government granting permission to live in a house) for single family homes in Albemarle County are up 60% year over year. See for yourself. The other counties – Charlottesville, Fluvanna, Nelson, Greene do not provide building permit information in nearly as accessible formats, so I’m running with Albemarle’s data.
So … what?
What I try to do every day is understand the market – understand what I can of the macro economic environment and apply that to the context necessary to the micro economic, and specifically the Charlottesville real estate market.
It’s not easy.
These are some of the stories I have been reading over the past few days and weeks. In short, the outlook is mixed.
Simply put, confusion reigns.
For the Charlottesville MSA, the moving Median Price seems to be stabilizing. Maybe. I’ll let you know in 18 months. Anyone who says anything definitively in this market likely has an ulterior motive; my goal is to educate and inform myself, my readers and my clients.
Months of supply decreased to 8.6 in August from 8.7 in July. The all time record was 12.4 months of supply in January 2009. This is still very high (less than 6 months supply is normal).
After the weekend housing discussions, I received a few emails, asking: â€œWhy do you think the worst of housing is behind us? Why can’t we fall another 33%?â€
The short answer is, Prices certainly can fall much further; it is possible. However, I am making (what I believe is) a higher probability argument due to fair value. My basis for saying the worst is likely over are prices: We are off 33% from the peak, and as of the end of Q1, were ~5-15% over fair value by traditional metrics. So a return to fair value â€” even a 15% drop in 2011 â€” still means the worst is (was) behind us.
Jobs, Income, cost of renting, the mortgage tax deductions, desire for specific school districts, and myriad other factors have typically provided a relationship between home prices and fair value. Assuming that these traditional elements continue to have force, then prices may be less likely to careen past fair value the way equities do when they mean revert. Psychology has an impact, but the insanity seems to be more tempered with Houses than it is with stocks, likely to due the transactions costs and time lag of buying and selling real estate versus instant stock transactions.
At the very least, I would venture to say that with housing starts and homebuilders’ stocks failing to reach new lows after hitting bottom well over a year ago, one can say with some degree of confidence that we have seen the worst of the housing recession. More and more the issue becomes the timing and the strength of the recovery.
Last Thursday’s numbers from Realtytrac seemed like bad news. In August, foreclosure auctions hit their second-highest monthly total in the report’s history: 147,003, up 9 percent over the month before and up 2 percent over August last year. That’s 7 percent below the peak month, March of this year.
And the immediate precursor to foreclosure sales — bank repossessions — hit their all-time high in August: 95,364, up just 3 percent over July but 25 percent over August 2009. That makes the ninth straight month repos have increased on a year-over-year basis. But foreclosure is a pipeline — and those numbers are the outflow end of it.
On the inflow end, things are slower. August saw 96,469 default or foreclosure notices go out, a 1 percent drop from July and a 30 percent fall from August 2009. And that marks the seventh straight month new foreclosures have fallen on a year-over-year basis. This trend — increased “outflow” and slightly reduced “inflow” foreclosure activity — means that lenders and loan servicers are 1) giving up on modifying mortgages when the borrower can’t pay, and instead repossessing homes and auctioning them off, but also 2) trying to manage the foreclosure pipeline to minimize the downward pressure on home prices.
Why isn’t this bad news? For starters, a multiyear tidal wave of foreclosure sales has been inevitable ever since the housing bubble burst: Too many people had mortgages they couldn’t afford to pay, mortgages with a face value higher than the home’s new market price. There’s never been any way for prices to start heading back up until they first find their bottom — which won’t happen until those bad mortgages are cleared away.
President Obama’s $75 billion mortgage-modification program was always going to be a huge failure — you just can’t keep people in homes they can’t afford — but now the markets are admitting it.
And then I’m hearing that:
– There are 7 million foreclosures in the pipeline – what might those do to housing prices?
– Some banks are seeking to vacate the lending business altogether. (from a conversation, no link)
– Banks are delaying short sales in anticipation of
Here’s the problem with politics – while I appreciate the necessity to achieve a “balancing act” it’s time to make a decision.
The president gave a standard â€œon one hand, but on the other handâ€ answer that, if nothing else, underscores the tough balancing act facing the administration when it comes to either helping delinquent homeowners or bailing out irresponsible debtors, depending on your point of view.