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Thanks for Reading RealCentralVA in 2013 – and Hopefully 2014

in Albemarle Blogging Charlottesville General Real Estate on

Thank you. Thank you for reading this year. Your time, your insight – on and offline – is a huge part of why I do what I do here.

I’m planning some stories for 2014 – obviously a bunch of new stories but also quite a few that have never made it out of “draft” status in my moleskin or my writing program.

The wonderful thing about real estate – both as a career to practice and as something about which to write – is that every year is different and interesting. Having written well over 4,000 stories since January 2005 here (some of which are pretty good) there remains plenty to write.

Some of the things that are on my list for 2014 –

– Unemployment and its affect on the housing market

– New construction – more is coming – what will its impact be on infrastructure and the resale housing market?

– The impact of new mortgage rules – Qualified Residential Mortgages are finally being implemented, and while the rules haven’t yet been finalized (or written) this new wrinkle will affect the housing market.

– The new proposed legislation that affects real estate stuff

– I’ll continue to localize national real estate advice. This is a wonderfully useful overview of the home buying process, with at least one detail that doesn’t apply to the CharlAlbemarle area – when buying a home, you wire the money.

– What do you want to read about? What interests you?


And next-to-lastly, a request:

If you want to stay informed every time I write a story, I’m asking you to consider subscribing; you can do so here (it’s the second option).

If that’s too much email (and for me, it probably would be) – you can subscribe to my monthly note , which is where I write some of my best (and definitely my best-edited) stuff.

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Three Charts Depicting the Charlottesville Real Estate Market Entering December 2013

in Albemarle Charlottesville Fluvanna Market statistics on

Curiosity stole an hour of my morning … I intended to update only the Crozet “When do homes come on the market” spreadsheet, got lost there for a bit and decided to look at the Charlottesville MSA numbers.

2012’s Charlottesville MSA sales trends – looking at when homes came on the market, when they went under contract and when they closed.

When do homes Come on the market in Charlottesville - 2012

And 2013

Well, this is interesting.

When do homes Come on the market in Charlottesville MSA - 2013

And the differential between 2013 and 2012.

When do homes Come on the market in Charlottesville - 2012 versus 2013 - differential

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What is “Usual and Customary” in Charlottesville? – Part 2

in Albemarle Charlottesville General Real Estate on

Ipswich, Waterfront, Ipswich Campus, The Big Question Mark Sculpture

Part 2 of 2. Part 1 is here.

Continuing the “what is usual and customary” question and answer series …

What’s “normal” in the Charlottesville real estate market? It’s a question that’s asked of me by buyers coming from other markets (agents, too) and sellers who haven’t sold a house before (or for many years). Note: what you see on HGTV is not what is “usual and customary” in the Charlottesville market. (or any market on Planet Earth).

“Usual and customary” is always changing. Radon inspections weren’t usual and customary a couple years ago; now they are. Heck, buyer agency wasn’t usual and customary 15 years ago.

Q: — Who attends the home inspection? Appraisal? Termite/Radon inspections?

A: A buyer’s agent attends all of these, with the home inspection being far more important for them to be onsite than for the termite or radon inspections. Meeting the appraiser can be tricky – sometimes if the appraiser has a lockbox key and MLS access, we never get the call to schedule. I try to meet all appraisers onsite, as I like to pick their brains about what they’re seeing in the market as they see the market through a different lens than I do.

Q: Recording and possession. Is recording done the same day as closing? Are keys transferred when closing docs are signed or when transaction is recorded?

A: Usually recording and possession happens on the same day, although I advise my buyers to not have a moving truck on the front lawn the afternoon of closing … I’ve had this happen, something went wrong and many tears were shed, curse words flew, phone calls made and a few nights in a hotel for the buyer highlighted why I advise what I do. Frequently the keys are given to the buyer at closing, with strict instructions to not enter the property until recordation has occurred.

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Questioning the Data – 3rd Quarter Nest Realty Market Report

in Albemarle Charlottesville Market statistics on

2013 Q3 Cville Nest Report - 5 Year Sales Trend

The third quarter of 2013 ended with a neither a bang nor a whimper, but a nice, consistent breathing pattern. As it stands right now, recovery seems to be in full swing.

I’ve said for years to question the data – whatever its source (it’s why I tend to provide raw data for readers to vet). If you’d read the market report from CAAR last week, you’d have been reading inaccurate conclusions different conclusions than the ones in our report. I won’t go point-by-point through the discrepancies (but will in my monthly note), but will say simply: the conclusions are wrong. We look at data differently using the same sources. As I’ve said for years – question everything (even the stuff I write – and ask me your questions).

Download the full 3rd Quarter 2013 Nest Report

If you watch national news you’d see:

– September existing home sales fall 1.9% (USA Today)
– USA Today is much the same as the NAR’s blog post
– Existing Home Sales in September: 5.29 million SAAR, Inventory up 1.8% Year-over-year (Calculated Risk)
– and then we have Zero Hedge: Existing Home Sales Plunge At Fastest Pace In 15 Month As Affordability Drops To 5 Year Low

Those trends are evident in the Charlottesville area as well. As prices rise, sales volume drops.

Some quick year over year numbers for the Charlottesville area:

MSA – sales volume up 19%
Albemarle – volume up 16%
Charlottesville City – volume up 16%

Single family home prices, long the bellwether for the housing market:

MSA – up 10%
Albemarle – up 16.2%
Charlottesville – up 12.5%

Your micro market will vary.

Update: so I upset a few folks with my calling the CAAR report “wrong” and “inaccurate”. I apologize for my tone, but remain 100% confident that the numbers I and we present are accurate. We do use different methodologies when looking at the data.

I’m not trying to pick a fight and could have been more diplomatic in my original post’s tone. For that, I apologize. I cannot apologize for presenting accurate data to my readers and clients.

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What is the list to sales price ratio for homes in Charlottesville?

in General Real Estate Market statistics on

I have long told my daughters to question everything and never accept at face value what they’re told. Same goes for real estate data.

What’s the list to sales price ratio for homes in Charlottesville?

Avg Sale to Orig List $ Ratio - Greater Charlottesville

It’s a good question.

The list to sale ratio is a great number to know – whether you’re buying a home, selling a home (or advising buyers or sellers). This ratio is a solid indicator the movement of the market, whether sellers are pricing well and correctly and whether buyers are paying close to asking price. Unfortunately, at its aggregate, it’s a garbage number. If you’re trying to use this data point as you try to figure out the market – ask questions. Always.

I randomly picked 10 sold homes from the Charlottesville MSA across the price ranges from $100k to one million. (I did this last in 2010 in which I chose 6 homes … the results were the same.

– No foreclosures or short sales

– Sold in September 2013

– No new construction

– Determining Days on Market was a challenge as well. Some of the homes I selected were on the market for less than 30 days while I made an editorial

Take the below for example. The “Original List Price” for this listing was $439,000. The actual original listing price was $510,000 – when the home was listed previously with another firm.

– Taking the top level analysis from the MLS yields: the list to sales price ratio was 94.9% of asking price.

– Running the numbers manually puts the ratio more in the 88% range. (if you were to include the listing prices from the original list date ~ 4 years ago …)

– The real, actual list to sales price ratio for the randomly-selected homes – just over 80%.

This story is neither scientific or necessarily representative of what the market-wide list to sale price ratio may be. This is merely a reminder to question. Everything.

Continuous-days-on-market.jpg

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Government Shutdown Threat to the Charlottesville Real Estate Market

in General Real Estate on

Update 1 October 2013:

From the NAR’s page:

Federal Housing Administration

HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. You can expect some delays with FHA processing.

Update 2, 1 October 2013 – lending seems to be ok in face of the shutdown, for the most part. A greater challenge will be the IRS –

A less-talked about impact of the shutdown on housing is the impact on the Internal Revenue Service (IRS) and the Social Security Administration (SSA). The IRS has announced they will not process any forms, including the issuing of tax return transcripts (Form 4506 T). The Social Security Administration will retain a skeleton staff, but may prioritize new claims, resulting in difficulties in verifying Social Security numbers.
Some lenders and brokers have been able to race to get these documents certified for loans they currently have in the pipeline before the shutdown.
…
But new mortgage applications may face delays without these crucial documents. So far, secondary market participants, including Fannie and Freddie, have been unwilling to alter or suspend overlay requirements which require these documents in order for a loan to be sold onto their books.

The biggest threat is uncertainty. And decreased confidence in the market and the government. That said …

So the government might shut down … so what? (with respect to real estate). VAR Buzz has a starter:

Fannie and Freddie will continue to operate. They aren’t funded by the government; they make their money via fees.

However, FHA, VA, and USDA loan applications won’t be processed.

Using current data from the Charlottesville MLS, about 18% of all transactions in the Charlottesville MSA would be potentially directly affected by a government shutdown, assuming the above is accurate (and I believe it is). Again, right now, there appear to be about 500 homes under contract in the Charlottesville MSA. Carry out the math and we’re looking at about 100 transactions likely to be affected.

CNN:

If an application for an FHA-insured loan has not been approved by the time of the shutdown, it will have to wait until after the shutdown ends.
FHA-backed loans accounted for 45% of all mortgages used to purchase homes issued in 2012, according to the Federal Reserve. The FHA alone insures about 60,000 loans a month.

FHA loans in Charlottesville presumably account for nearly 9% of transactions. So far this year, per the Charlottesville MLS, VA loans have made up about 6% of all transactions, USDA about 4%.

Nearly 20% of transactions might not seem like a lot – until you’re one of those FHA, VA or USDA buyers – or sellers waiting for the FHA loan to fund and close. Then that’s all that matters. Everything is affected when these are delayed – movers, attorneys, real estate agents, utilities, jobs, schools, household goods – everything.

Update: per @rqd and then USA Today – more uncertainty.

43. Does that mean I can’t get an FHA mortgage? No. The Federal Housing Administration says it “will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market.”

44. Does that mean I can’t get a VA mortgage? No. The Department of Veterans Affairs says loans are funded via user fees and should continue. However, during the last shutdown, “loan Guaranty certificates of eligibility and certificates of reasonable value were delayed.”

Some of the things I’m reading this morning trying to educate myself:

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Comparing 2012 and 2013 – When Do Homes Come on the Market in Charlottesville?

in Albemarle Charlottesville Market statistics on

I hadn’t updated this chart in about 18 months, and I was curious … one of the most common questions I get is “when do homes come on the market in Charlottesville?” Typically this question comes in one of three conversations: (I’m going to do a series answering these questions – to be published the next two Wednesdays) –

– I’m thinking about putting my house on the market – when does the Charlottesville market start? (short answer: Take pictures now)

– I’m thinking abut buying a home in the spring – when do most homes come on the market? (short answer: Fall/Winter is the best time to begin your home search. And an even better time to hire buyer representation so your search process is less frustrating, more efficient and better.)

– I’m curious. What’s the market like? (note the third chart to see what my curiosity led me to)

A few differences between the following charts and the one from January 2011:

– “Charlottesville” = Charlottesville, Albemarle, Fluvanna, Greene, Louisa, Nelson (in 2011 I didn’t include Louisa)

– Only Single Family, Attached and Condos results are included – not “proposed” – meaning not new construction, paper lots, aren’t included

That said –

Let’s look at some numbers. 2011 was interesting, with the new listing bump breaking the traditional mid-year inventory decline right after the start of the autumn school year – a trend that occurs every year.

And 2012?

list-contract-closed-Charlottesville MSA 2012

So … how’s 2013 looking?

– The contract peak was in May of this year versus April of 2012 – As I said in my monthly note recently, the frenzy of the early spring filled with hope and confidence was tempered early.

– Inventory levels for 2013 are pretty much on track – across the MSA – with 2012.

When do homes Come on the market in Charlottesville MSA? 2013

The differentials between 2013 and 2012 are fascinating. Look at the peak in Contracts.

– I’m speculating that the increase in inventory in July/August is due in part because some sellers saw the hope in the market and success their neighbors were having in selling and thought that now would be the right time for them to try to (finally) sell.

Differential - 2013 versus 2012 -When do homes Come on the market in Charlottesville

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