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Do Sellers in Charlottesville Pay Buyers’ Closing Costs?

in Market statistics on September 4, 2013 December 1, 2014

Sometimes a post in which I pull data to answer a question becomes a bit more than intended. This is such a post.

– Do sellers pay closing costs? – Are we at a sustainable volume of closed transactions? – FHA is helping foreclosed buyers.

Do the sellers pay closing costs? Is one of the more common questions I get, whether I’m representing buyers or sellers.

A quick look at 2013 so far, 1991 homes have sold in Charlottesville, Albemarle, Fluvanna, Greene, Louisa, Nelson. Of those, 518 have something entered into the “seller concessions” field in the Charlottesville MLS, so presumably, about 26% of transactions this year have had some sort of seller concessions.

Last year those numbers were 1,864, 556 and 29%, respectively.**

But really .. what do “seller concessions” mean?

– The seller “paid” the buyers’ closing costs. (not really)

– The buyer is financing the closing costs over the life of the loan.

in other words:

– The seller is accepting a lower net offer

– The buyer is paying a higher net offer.

For example – if a seller is asking $450k and the buyer offers $440k with the seller “paying” $10k towards the buyers’ closing costs, the seller is looking at a net offer of $430k. The seller doesn’t care how that’s structured; they’re looking at a net offer of $430k.

** Just because I’m naturally curious, I looked at the number of closed transactions in the Charlottesville MSA in the January – August timeframe in 2007 â€¦ 2,336. And 2006 â€¦ 2,824. So, from a pure volume perspective, our market is down 30% from the peak. As noted in 2012 – I’ll Know Housing Recovery in Charlottesville When I’ve Seen It

Transactions – volume of transactions – what is normal volume of sales transactions in the Charlottesville MSA? I don’t know; homeownership rates are declining. Last year, 1755 single family homes sold in the Charlottesville MSA (including Louisa). In 2002, 2479 single family homes sold. I’d put the “sustainable” rate of single family home sales somewhere in between those two numbers.

We might be getting close to a sustainable recovery.

One sign of the recovery that I called years ago? Those who were foreclosed on are now eligible for new loans – a year after foreclosure.

6 Things to Watch in 2013 – Confidence and Frustration

always looking for hindsight. Today.

In January two of the six things I noted to watch were:

More confidence in the market as unemployment stabilizes (underemployment is a different conversation). More stability is likely to mean more buyers

Frustration felt by buyers who are seeing prices rise (again). If prices do indeed start to rise again, many buyers will be kicking themselves for waiting. Some are predicting national home prices to rise by nearly 10% this year; if this happens (and I hope it doesnâ€™t), expect to see more discussion about another bubble. But â€¦ if youâ€™re confident youâ€™re going to be in the Charlottesville area for the next 5-7 years, it might be worthwhile to have a conversation about buying a home.

Last week I looked back at Apartments.

Confidence. Buyer (and seller) confidence, consumer confidence, builder and real estate agent confidence â€¦ and frustration felt by buyers as the market turns.

Now that it’s August, I can say with confidence – We’re in an odd time right now. There is a great deal of (over) confidence and a seemingly balanced level of trepidation in the market. The Charlottesville real estate market recovered with a storm in early 2013 – the pace was rapid, bidding wars were common and sellers were justifiably optimistic. Things seem to have tempered a bit now.

Takeaways from this post:

– Builders are building a lot right now. Very few are building communities in addition to houses.
– Single family homes sales are up July to July – Albemarle is up 23%, Charlottesville is up 5% (really – 2 units), and other counties are mostly flat (click through to see the charts at the bottom).
– Interest rates are up – from the mid 3’s in early 2013 to mid-4’s now. (click through to see the 30 year chart for some perspective). Historically, interest rates are crazy low, but the jump from unreasonably low to more moderate has absolutely affected buyers’ buying ability, sellers’ ability to sell and confidence on both sides.

– If you’re considering buying or selling right now or in the next 6 months, ask questions (you could start by asking me) – there are a lot of moving parts in today’s market and every life situation is different. There is no one answer “buy now!” “sell now!”

– Confidence is an individual concern; market sentiment is one thing, but “will I be employed next year?” is something only you can answer. But â€¦ the Charlottesville MSA Unemployment Rate remains relatively low. The underemployment rate? Different conversation.

Charlottesville, Virginia Metropolitan Unemployment Rate and Total Unemployed | Department of Numbers.jpg

Cost of Buying a Home Affects Confidence & Purchasing Decisions

Think about this; as interest rates go up, so does the cost to buy (and own) a home, only for Principal and Interest (not including Taxes and Insurance):

– Loan amount of $300k. Interest rate of 3.5% = monthly payment of $1,347.13
– Loan amount of $300k. Interest rate of 4.5% = monthly payment of $1,520.06

A difference of $172.93 – That’s real money. Grocery money, gas money, vacation money.

On the confidence matter, the NAR succinctly states:

A confluence of factors tempered REALTORÂ® optimism: higher mortgage rates, rapid price gains amid a slow economic recovery, lack of inventory in many areas, and stringent credit conditions.

Well said.

Buyers are frustrated –

– Interest rates are rising

– Many are able to sell their existing homes, but those who want to buy (and have wanted to buy for a while) are finding that Quality Inventory remains low. (I’ll touch on inventory in my next post). Buyers aren’t buying property because they want to buy a property, they’re looking to buy homes.

– Sellers – if you want to sell, price right and make your home as close to perfect as possible.

Mortgage Rates - Today_s Home Loan Rates and Trends | Zillow

Looking in the Rear View Mirror – Previewing the 2nd Quarter 2013 Market Report

in Albemarle Charlottesville Market statistics on July 18, 2013 July 18, 2013

When looking at the real estate market (or any market, really) We’re always looking backward, thinking about today and trying to project tomorrow, next year and five years from now.

We’ll be posting tomorrow our 2nd Quarter Market Report for the Charlottesville area, and we’re making final edits and number crunching today.

I’m inclined to echo Bill McBride at Calculated Risk –

The “wide bottom” was what I was forecasting several years ago, and now I expect several years of increasing single family starts and completions.”

I think we’re in for at least 18 – 36 months of flatness, once the optimism of early 2013 fades and interest rates increase. Nota bene – The data below may or may not apply to you if you’re currently contemplating buying or selling. This is aggregate data – meaning if you’re looking for a single family home in Ivy with 4 bedrooms and 2.5 baths, the data and brief analysis below also includes affordable new construction in the City of Charlottesville, a $1.2 million home in Ashcroft in the County and everything in between. In other words, if you have specific questions, ask me. I’m a real estate agent .

That said, a few tidbits to whet your appetite for data for Charlottesville and Albemarle (Greene, Nelson, Louisa, Fluvanna coming tomorrow) –

Attached homes in Albemarle and Charlottesville* –

153 attached homes sold in Charlottesville and Albemarle in April, May, June of 2013 versus 107 in that same time frame of 2012 – a 70% increase in volume. A full third – 52 – of the attached homes sold were marked as “new.” (interestingly, only 4 attached homes sold in the Charlottesville MSA in that period).

If you’re looking at new attached homes, be prepared for little negotiation on price. If you’re looking at existing attached homes, be aware that you’re likely going to have more (and sometimes better) options as far as price and yard size.

Single family homes sales in Charlottesville and Albemarle

427 single family homes sold in the 2nd Quarter of 2013 in Albemarle and Charlottesville; 411 sold in the 2nd Quarter of 2012. I’d have been happy with flat sales, but a slight uptick is a good sign. In contrast with the attached home new construction numbers above, only 10% – 46- of closed sales in the 2nd Quarter of 2013 were marked as new construction. From my perspective, single family new home sales felt like they were more, but maybe that’s just because I’m around so much new construction all the time. (and this is a major reason I look at and embrace data over emotion and perception)

What impact will rising interest rates have on buyers?

1 – It will push some to act faster.
2 – It will cause some to not buy.

Looked at another way:

Buyersâ€™ Purchasing Power
Letâ€™s look at an example: A young couple is looking for a home and have predetermined that their budget will only allow them to spend $1,000 a month on a mortgage. At todayâ€™s mortgage rate of 4.5%, they could afford a $200,000 mortgage ($1,013 principal & interest). However, if rates jump to 5%, they would have to lower their mortgage amount to $190,000 in order to keep their monthly payment where they need it ($1,020). At 5.5%, the mortgage would need to be no more than $180,000 ($1,022).

The Impact on Prices
This decrease in buyersâ€™ purchasing power will have an impact on home values going forward. We do not believe it will cause a decrease in prices. However, we do believe it will likely cause current rates of appreciation to slow.

Brief Look at Condo Sales in Charlottesville – 2nd Quarter 2013

in Albemarle Charlottesville Market statistics on July 8, 2013 July 8, 2013

Some quick numbers based on the 2nd Quarter market data for the Charlottesville MSA:

In the Charlottesville MSA: 35% fewer condos closed when comparing 2nd Quarter of 2013 to 2nd Quarter 2012 – 51 this 2nd Quarter versus 78 the previous 2nd Quarter. Why?

The answer is due in large part to the fact that the Walker Square and Riverbend condos, two of the largest condo conversions in the area, have sold out after long histories of conversion, rapid price appreciation, dramatic depreciation, ownership shifts and general market turmoil.

Consider:

– Last 2nd Quarter, 22 units sold in Walker Square. This year, that number is 5,

– Last 2nd Quarter, 8 units sold in Riverbend. This year, that number is 0.

One condo myth dispelled – condo financing is available in the Charlottesville area; you just need to know where to look.

Click through for the data.

Next up: attached homes in the Charlottesville MSA.

Real Estate Prices and Interest Rates – National Real Estate News I’m Reading this Morning

in Albemarle Charlottesville General Real Estate on June 26, 2013 June 26, 2013

Home prices seem to be rising in the Charlottesville MLS – keep in mind with this chart that it’s for the entire Charlottesville MLS.

Interest rates are rising, but let’s keep some perspective.

(thanks to Keith for the chart)

Here’s the thing – if you’re buying a home and you are confident you’ll be there for at least five to seven years (many of my clients now are looking at 15-20 year timelines), be aware of the potential for price drops, but also focus on what your total cost of ownership will be versus renting.

Development in Charlottesville – Future and Present

in Charlottesville Growth on May 15, 2013 May 15, 2013

Bill Emory asks some great and important questions about current and future development in Charlottesville, “Charlottesville” being the “City of Charlottesville” not “Charlottesville MSA” or “Charlottesville and Albemarle.” A must-see photo essay.

The overreaching question is: How do we move to excellent urban planning?

(and how do we connect Charlottesville and Albemarle and the greater Charlottesville area?)

Thanks to Sean for the pointer.

Brief Market Snapshot for Charlottesville Area – May 2013

in Albemarle Charlottesville Market statistics on May 3, 2013 May 5, 2013

Homes are selling fairly well in the Charlottesville area. For this post, I was looking less at house prices, where things are selling, etc. and more for a snapshot of the market’s speed.

Per the Charlottesville MLS (and acknowledging that the numbers will shift as end-of-the month-closings are entered into the system:

Some things are looking pretty good â€¦ Initially I was working with data from the Charlottesville MSA, but I had to pull the data apart and limit my query to Charlottesville and Albemarle, single family and attached homes. I wasn’t looking for hard numbers (yet) but more a sense of how fast things are selling, and hopefully what the list-to-sale ratio was in April.

In Charlottesville and Albemarle in April, for only single family and attached homes (not marked as “new construction”: (yeah, I know this would look super-cool as a snazzy info graphic, but we make decisions based on data and insight rather than pretty pictures, right? 🙂 )

– ~~112~~ 122 homes sold in April in Charlottesville and Albemarle

– 8 had continuous days on market of 3 or less — average DOM was 2; homes sold for 99.3% of the asking price – Price per square foot: $151

– 32 had continuous days on market of 15 or less — average DOM was 7; homes sold for 98% of the asking price – Price per square foot: $145

– 43 had continuous days on market of 30 or less — average DOM was 10; homes sold for 97.8% of the asking price – Price per square foot: $143

On the other side of the days on market conversation:

– 43 had continuous days on market of 90 – 120 days — average DOM was 189; homes sold for 94.6% of the asking price – Price per square foot: $148

– 10 had continuous days on market of 120 – 180 days — average DOM was 140; homes sold for 95.5% of the asking price – Price per square foot: $143

– 25 had continuous days on market of > 180 days — average DOM was 240; homes sold for 93.9% of the asking price – Price per square foot: $154

Ok â€¦ I couldn’t stop â€¦ I was curious about how many non-new construction homes sold this April versus last.

From 4/1/12 – 5/1/12 in Charlottesville and Albemarle:

– 155 homes sold last year versus 122 this year – a 21% drop. (holy cow)

– Breaking out new construction – 24 sold last year versus 20 this year.

There’s always more data to look at â€¦

Short story: YOUR MARKET will vary. But – price your home just right you’re going to be better positioned to sell your house faster for closer to the asking price. Here’s the thing – there’s an outside chance you might sell your home for a little bit more if you wait for that one buyer.