A Continuation Of Trends That Started Last Year
A report from the Virginia Pilot. “Owners of about 2,800 properties in three of the city’s more affluent neighborhoods received a rare notice in the mail last week: Their home assessments had decreased. Virginia Beach Real Estate Assessor Jerry Banagan sent letters to residents in North Beach, Lago Mar and The Reserve at Great Neck that their home values were down by an average of $10,000 to $85,000 from the notifications they received in March.”
“‘These properties still received a healthy increase in assessments,’ Banagan said. ‘We just backed off a little.’”
“In most neighborhoods, officials found only slight differences from the March assessments, Banagan said. That wasn’t the case in the three affected neighborhoods. ‘Sales prices just took a nosedive out there,’ Banagan said. ‘To go back and change an entire neighborhood is pretty rare, but the data was pretty compelling.’”
“Real estate agent Susan Pender said investors who were flipping properties were pushing up prices of homes in North Beach two years ago. But in recent months, homes have been selling for $100,000 to $150,000 below the March assessments, she said.”
The Examiner from Virginia. “Demand for housing construction has slowed considerably since the Prince William County board installed a de-facto moratorium on new subdivisions on Jan. 1, though it is unclear if the new rule or the unfriendly real estate market deserves the credit.”
“Application fees are down 80 percent this year compared with the same period in 2006, county Director of Planning Stephen Griffin said.”
“Because the change dovetailed with an overall chill in the home market, assigning responsibility is a difficult matter, Griffin said. ‘The timing is such that we can’t tell the difference,’ he said.”
“‘In my opinion, the market was making the correction on its own, and there was enough inventory with the major builders that they had plenty on their plate and were not going to build anyway,’ Cherokee Homes President Shawn Cody said.”
The Daily Progress from Virginia. “The Charlottesville region’s real estate market has cooled since the record-shattering year of 2005, but housing prices remain at a level beyond many people’s ability to pay.”
“‘Affordability is a huge, huge, huge problem,’ said real estate agent Ray Caddell. ‘It used to be that I’d try to figure out how to get a house for the checker at the grocery store or the maid at the local hotel. It’s very, very hard to do that anymore.’”
“‘The problem is that people’s income hasn’t kept up with the housing prices,’ he said.”
“The Charlottesville area real estate market is in transition, shifting from a seller’s market to a buyer’s market. Prices are beginning to drop slightly and homes are staying unsold for longer”
“In the first quarter of 2007, the median sales price for the region dropped 9.2 percent over the same period in 2006. The region’s homes-for-sale inventory is also increasing, giving buyers more choices and slightly lower prices. There are currently 3,443 active listings in the region, representing a three-fold increase over three years ago.”
The Morning Call from Pennsylvania. “The number of new listings for homes in the Lehigh Valley hit an all-time high in May, while the number of homes sold fell year-over-year for the 12th month in a row. It’s a continuation of trends that started last year as the booming housing market of 2004 and 2005 began to fade.”
“The high number of homes for sale is slowing the pace of transactions, and possibly depressing prices. New listings rose 16 percent last month to 1,864 units, compared with May of 2006, which had also been a record. The number of new listings was about three times the number of homes sold in May.”
“Prospective buyers are reaping the benefits of lots of homes on the market because they can be choosier and make offers below asking price.”
“‘As the price of housing goes up, everyone and their uncle wants to list their house, even if they really were not planning on leaving,’ said Bethlehem economist Kamran Afshar, who publishes the quarterly Lehigh Valley Economic Review. ‘You have more houses on the market than otherwise would have been because it is such an attractive market.’”
“Last month, there were about 3,400 homes listed by real estate agents for sale, or about 1,000 more than the number of real estate agents who work in the Valley.”
“Home sales fell last year for the first time in at least 10 years. New listings outpaced home sales by nearly two-to-one last year, according to the Realtors’ association.”
“Higher-end homes are taking much longer to sell, compared with past years. According to the association’s multiple listing service database, there are more than 1,000 homes for sale that are priced between $300,000 and $400,000.”
“The average price of a new four-bedroom home last month was $378,000, based on 16 sales. That’s down 16 percent from last year.”
“The Lehigh Valley Builders Association said nearly all builders doing business locally have experienced slower demand. Some of the national builders with subdivisions in the Lehigh Valley have had to offer incentives here, officials said.”
Strong contender for the Most Obvious Statement of the Year:
“‘The problem is that people’s income hasn’t kept up with the housing prices,’ he said.”
And that, my fellow HBB-ers, is why this bubble was bound to pop.
Have you seen the interest rate rises as of late? I always like a little gasoline for the fire. I don’t think the feds will be cutting rates for quite some time now.
and this info may just push the yield a bit higher for today!
3 minutes ago 10-year Treasury auction has very low 10.9% indirect bid - MarketWatch
In citizen-speak, destinsm, does that mean an indirect bid of 10.9% on a 10 year note that was only taking in under 5% just last week?
If that is a trend, it is curtains
In citizen-speak, destinsm, does that mean an indirect bid of 10.9% on a 10 year note that was only taking in under 5% just last week?
An indirect bid is the % of bidders from foreign central banks, and primary dealers. It is a measure of how much foreign interest “no pun intended” there is in the current issue. In May of this year, indirect bids were about 44%. The average for all of last year was about 33% from overseas. So that 10.9% number is a real fall off but can be mis-leading at times.
TES-TI-FY, Arizona!
Nothing more to it than that, except economists and industry shills don’t get paid for making simple, obvious statements.
Amen, Slim!
“Higher-end homes are taking much longer to sell, compared with past years.”
Like, um, Captain Obvious: no one could afford “higher end homes” when they DID sell, a couple of years ago. Prices had nothing to do with affordability. Now that things are coming back to earth at warp speed, we’ll just see what “higher-end” really means.
“Last month, there were about 3,400 homes listed by real estate agents for sale, or about 1,000 more than the number of real estate agents who work in the Valley.”
oooff. Just when you thought you’d never have to park cars again.
Just in!!!! RealtyTrac leaked its foreclosure numbers to CNBC. Up 19% month over month, April to May. HUGE!!!! CA, foreclosures up 350% YoY, May 06 to May 07.
Add to that the number of short sales taking place.
Even for us here, that is unbelievable!!
1.19 to the 12th power is 8.06, so the MOM figure is even more impressive than the YOY figure
But but but….RE doesn’t lose value in CA!!!
I posted this WA state info yesterday, but it is worth repeating… taken out of a personal email from the leading Washington real estate analyst (normally pro RE).
“Markets all over the state are slowing noticeably, with the May data apparently more pronounced. Aggregate statistics in most places are still showing increases, but it’s my bet that much of that is purchasers doing some bargain shopping and moving up-market compared to what they would have been purchasing a year ago.”
My guess is that nationally and in every region the 2nd quarter RE data are going to be terrible. 2nd quarter economic data will show that we are in a recession. By August/Sept we will be in the “fear” stage of bubble deflation.
Data release time at the end of July should be very, very interesting.
I just saw that Darrell. Unreal. And that’s just the beginning…
Yes, this is just the beginning C, when those all those ARM’s start resetting real soon (10 year note up to 5.21% today…. 0.21% increase in a week), the cascades will be in the hundreds of thousands of foreclosures by 2009-10.
The pain is just beginning.
It also looked like they skipped the segment with a debate on the housing situation, right after they reported that. Unless I missed it?
No CEO will talk to CNBC at the home builders conference. No one wants to talk about tightening lending standards or skyrocketing foreclosures.
One CEO refused because he said the news was painting a bleak view of the housing market. Gotta lov it. Fear is the word of the day. BTW OT: last night I visited a friend of the family several blocks away and she informed me that they had 9 home robberies in the past two weeks.
LOL. As if being tight-lipped will do wonders for the market. Who do they think they’re fooling?
Then again, 5% off is a “steal” for some people.
My wife and I were in Charlottesville a couple of months ago, and apart from the university, I couldn’t see what economic engine was driving all of that suburban growth. Much of the residential part of the city itself looked kinda shabby. I’m not sure what would support $400k homes, since it’s not like many university folks are exactly overpaid.
I’ve worked at two different universities, and lemme tell you, they’re not exactly renowned for paying well. In fact, during my employ, I felt like I deserved an advanced degree in economics because I’d managed to make ends meet.
Charlottesville has become “Asheville-ized.” Great history and natural beauty have bred an insipid pseudo-trendiness that has caused the quality of life (and housing stock) to go down while prices have gone way up.
Typical non-descript 3BR in cheapest middle class area (e.g., North Ave area) - 250K. Same in lower-middle (Belmont) - 210K. And 400K in University area for similar sounds about right. 100% increase in last 6 years, 200% increase in last 15.
Wow, Gainesville is still cheaper than that, depsite having some of the best hospitals in the SE all in one block, one of the best state universities next door, and being probably (not knowing these cities personally) more liberal and conducive to the ‘hippy’ lifestyle which some of these bobo’s like to rub shoulders with (though not, exactly, partake in). There’s pot, “organic” produce, and intellectuals a-plenty. And there’s less racial tension. Come here!
(But don’t buy in the sprawl area please, unless you tell the termite guys I sent you and that I should get a kickback. Buy some overpriced downtown condos that flippers are short selling and ride my bus to work. If you can find a job, of course … You may not be able to buy a condo on writer’s or artist’s income, and instead look at existing SFH … lol.)
Jacksonville, Gainesville, and Tallahassee are all cheaper than Charlottesville.
“My wife and I were in Charlottesville a couple of months ago, and apart from the university, I couldn’t see what economic engine was driving all of that suburban growth.”
The answer: real estate speculation. Just like every other bubbletown, USA.
Very true, but it was just so surreal to see it in a place like Charlottesville. Which I’m not bagging on, by the way. It’s a beautiful little city, but I can’t imagine trying to find a job there outside of the university.
The housing debate is on at 9:40 am EST on CNBC.
It wasn’t about the housing secotr, per se. Just spill over to the larger economy. Both seemed to think housing is screwed. One saying it would put us into recession, the other saying that housing is a tiny part of the economy, so won’t overcome growth in other sectors.
Sorry that’s west coast time.
So many thoughts, so little time…
I wonder if Banagan’s position is appointed by the mayor? How would the mayor feel about a bureaucrat singlehandedly reducing tax receipts like that? Maybe he won’t have a job next year…. ok, that’s my inner cynic talking.
“Because the change dovetailed with an overall chill in the home market, assigning responsibility is a difficult matter, Griffin said. ‘The timing is such that we can’t tell the difference,’ he said.”
i.e. county board members decided to get a free/cheap political point by
creating policy that mimicks what was happening already. Textbook local politics.
“The high number of homes for sale is slowing the pace of transactions, and possibly depressing prices.”
Wait, so having more options available makes willing buyers less willing? Maybe, just maybe, it’ something else… or maybe it’s just analysis paralysis… when there are 40 homes that meet all your criteria, how do you choose just one?
caution! Audio
http://tinyurl.com/33wybx
‘It used to be that I’d try to figure out how to get a house for the checker at the grocery store or the maid at the local hotel. It’s very, very hard to do that anymore.’”
It used to be that these workers had no expectations of owning a home and were OK with life long renting. What changed other than the rampant need to strip these people of any free money they had and sell them on a housing solution they couldn’t afford ?
Besides, if those people really wanted to advance from their station, they should look at their hardships and get an education or start a business — hard to do with a huge resetting mortgage. Renting: it’s not just for wealthy globetrotters, it’s for you, too, sack boy!
People in this socio-economic class are constantly chasing the next “Get Quick” scheme. With no-money-down options on houses, they were actually allowed to try for one (after it was no longer possible to get rich quick).
Just a note to say that what makes America (the United States) work is the American Dream… when people stop believing they or their children can be the next Bill Gates or Nelson Rockefeller, we get social unrest and a number of other chronic class-related problems. Realistic dreams are good, not being able to dream them is bad, very bad.
And then you can have self serve grocery checkers like our stores…
And our stores too!
May mortgage foreclosures jumped 90% according to realtytrac (reported on bloomberg). That’s ll hurt.
I can see foreclosure rates continuing to climb at the same rate for some time. I think so far we have not seen the bulk of the problem, which will materialize once the ALT-A resets begin in 2008 - 2010. I would not be surprised by 2009 if you need at least a 750 credit score, 2 years employment (proof), 20% down, NO credit card debt outstanding and references - Can you remember the mid to late 80’s?
I sure do. We built our house then. We had no debt on cc or cars or anything. We put 33% down, part of which included our paid for 6 acres. Payments including tax & ins could not be more than 28%. Total payments could not exceed 36%. Boy how times have changed.
Virginia Pilot is my paper, and I have one of the first comments on the page. However, they stripped out my youtube link. My comment on their article originally had a link to “The Economy Right Now” video (to the tune of Right Now by Van Halen). Oh well.
It’s great when other people’s comments mention the falling home values.
Median household income for the area is $60K, median house price on housingtracker is $360K. I used to like it here, now all I can think about is DC. If I’m going to overpay, might as well build more equity for retirement and be around better tech companies. The majority of the better paying tech jobs here are all gov’t contractors. SAIC, Lockheed, BAE, CSC, L3, and the like.
I posted the other day about how many new homes and resales in HR/Williamsburg had finally “gotten it” and were capitulating, but many existing homes are still going on the market at 2005 “wishing prices”. Doesn’t matter, the market is finally caving, and with inventory STILL going up, it should be really bad - er, good - after Labor Day.
Just noticed the Implode-o-meter at 82!!
Put me down for 8-2-07 as the day it hits 100.
I think there has only been 5 or so in the past month, so I’m not sure they will hit 100. However, for the sake of giving a date, I’ll go for January 31st 2008 (bad tax wise, but better for your employees if you can keep them employed through the holidays… I’m giving credit for someone having a heart, so if I”m wrong, look for December 10th.)
Next best-seller and weekend seminar blockbuster:
“Ownership Sucks: How to Change Your Mind About Home Ownership and Find Peace and Financial Security in Renting”.
I thank the heavens for this blog. I’ve been waiting out the market since 2004 and now that I see things are getting even worse, I’m comfortable sitting on the sidelines as a renter with little debt who is amassing savings and waiting for the bottom. However, I have someone in my family who is trying to sell her house (she’s already bought a new house), and I told her that she needs to drop the price about 40K to get buyers to even look at it. She won’t do it. I told her that housing in our area is overpriced by 40%, salaries aren’t going up, we’re experiencing a huge correction, that there’s an ARM reset tsunami starting to crest in late 2007 and peaking in 2008, and that her house won’t be worth what she’s asking until 2011 at the earliest. She won’t budge. I even pulled the comps from our local paper — I’m not a real estate agent — and they showed that comparable houses in her neighborhood are selling for 60K less than what she’s asking. I told her that if she doesn’t drop the price and get it sold this summer, she’s going to be a landlord for the next 4 years. It’s painful to watch. She’s stuck on a specific amount she wants to clear, regardless of what the market says her house is worth, and it’s dropping every day. I’ve done all I can do. I feel like I’m watching a financial train wreck and I’m mute. However, I would have been totally unaware of all these facts to the depth of detail that I have but for blogs like this. Thanks, Ben.
A year later she will say, I should have listened to you. Now it is hard for her or other home onwer to admit defeated. But it is better to sell at 60K less than 160K less.
“She’s stuck on a specific amount she wants to clear, regardless of what the market says her house is worth”
She and a plethora of other sellers. The market could care less. A buddy of mine is doing the same thing, only he hasn’t bought another house. He is following the market down bigtime. He could have garnered his today price 6 months ago, but is too far behind the curve with his price cuts. He still doesn’t get it. These people are simply delusional.
foreclosures soaring.
good news batman.
Got 20% down & 1 year supply of popcorn?
The Morning Call Cheerleaders are too funny. Today the reported averages houses are selling under 250k in 51 days. There are at least 6 or 8 homes within 3 blocks of me under 200k that have been sitting since January or before. Why won’t someone call this RAG out on taking figures from REALTORS. I live in Emmaus, PA by the way, great schools, clean living. If nothing is selling here, it’s not selling anywhere else. This paper makes me laugh so much, well time to hit bathroom, I think I’ll use the real estate section this time!
‘You have more houses on the market than otherwise would have been because it is such an attractive market.’”
So according to Asfar, the glut of houses only goes to prove how good the buying and selling activity actually is.
Asfar is an economist.