Let’s put that myth to rest. Properties are selling in the Charlottesville/Albemarle area … but –
Two properties clients of mine were interested in recently went under contract.
What made them sell?
Property #1 – in the City of Charlottesville (property links will expire in 7 days)
Came on the market in March – asking price of $199k. One moderate price reduction in September. One dramatic reduction on 30 October – four offers followed.
Property #2 – in the City of Charlottesville
Came on the market in February for $630k, $50k price reduction in March. Property expired and went to another Realtor – new asking price of $489,9k. A few moderate price reductions leading to the final one to $375k. The property went under contract seven days later.
Lessons learned –
1 – Price it right from the beginning.
2 – If the market says the price is high, reduce it. Beat the market down, don’t chase it.
3 – Sometimes, what the Realtor is doing is not the problem – it’s the price.
4 – This is the hard part – try to maintain objectivity. What you need to make to buy the next house is irrelevant to what your home is worth today.
5 – Both clients found me because of this blog.
Point of clarification: we wrote an offer on the first one and “lost” and serendipitously never made it to the second.
Technorati Tags: charlalbemarle, charlottesville
The point here, of course, is that:
#1 There was a massive RE bubble Nationwide, perpetuated by a Nationwide Credit Bubble.
#2 It ISN’T “different here” – these properties finally moved after nearly 50% haircuts because Charlottesville is likely overvalued by that much as well.
Transaction volumes will not return until pricing reverts to historical, inflation adjusted averages, if even then. My crystal ball says we return to at least 2003 pricing – because “Charlottesville is Different” – while the national averages return to 2001.
Hi Jim.
Ok, so on property 1, if the sale price is close to the offering price I see via the link you kindly provided, then the house went for 25% off listing price.
Property #2, based on the figures in your post, sold at a 41% discount to list.
These are big discounts. Which prompts me to ask — for either or both of these properties, what was the basis of the listing price? Did the clients view comps from a couple of years back in deciding the price at which to list? Knowing something about the list decision would tell us alot about the market, b/c it may be that both properties were eventually steeply discounted b/c the lists in both cases were way too high even for the buyers market of a couple of years ago. But if the lists were sensible in the not-long-ago market context, then these examples you’ve given us are data points that suggest just how far sellers must discount in order to move inventory. And if discounts of 20-40% are already necessary, well — wow.
In any event, if you can tell us, I’d be *really* interested in what drove the decision on the listing prices for both properties.
AC
Every local market is “different” until it isn’t. Just ask people in Naples and Bakersfield and Detroit – there’s nothing similar demographically or geographically about those local markets, except the fact that the bottom has fallen out from housing in each of them for totally different reasons.
There’s scant evidence I’ve seen (save for the spin coming from the NAR “economist” – and I use that term very loosely) to suggest that this won’t be the worst housing downturn since the Great Depression. Gross oversupply coupled with a dramatic contraction in demand can only result in drastic pricing corrections. Add to that the prospect of a recession, a weak Dollar and record energy prices, and it’s not a very pretty picture. None of those are “local” events, especially when local governments wake up and realize that they face serious challenges in revenue collection the next time they have to do assessments. A lot of municipalities have gotten fat and happy on the back of home-price appreciation.
One way to mitigate the situation might be the reintroduction of easy, cheap credit, but anyone paying attention to the markets knows that that cannot happen for years given the extreme damage to the infrastructure that fed the housing beast over the last five years. The idea that interest rates “remain at historically low levels” is a nice marketing pitch, but it simply isn’t true. Sure, 6% on a 30-year fixed is a good rate from an historical perspective, but it’s a heckuva lot higher than the <2% teasers on Option ARMs that were prevalent 18 months ago.
Great comments – thank you.
As to the pricing theory and ultimate closing prices, I have no idea. I’ll know what the closing prices are when the properties close.
Don’t get me started on the NAR “economists” – they may have been reputable and respected before the moved into that top position, but I’d argue they now are more like the press secretary in the White House or Baghdad Bob.
Assuming that 20-25% (which I think is a safe assumption) of loans in the “boom” area were risky – it’s going to take awhile for all the ramifications to shake out.
Excellent point about the gov’t coming back to the teat for more. I wish I could do that – if I’ve spent all my money, just go and take more from my clients at gunpoint.
As to 2008 …it should be interesting.
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