This report from Moody’s is going to get a lot of mileage in the blogosphere and in the main media, in no small part due to the fact that it predicts negative housing prices. I have uploaded the pdf below for your perusal.The closest-referenced MSA to us is Richmond. A brief state-wide analysis is at the Rebellion.In short, properties in our market will most likely continue to appreciate, but at a more reasonable rate. There will be pockets of pain, which I will write about this weekend, but as a whole, our market remains good – different, but good.The Charlottesville market is different and somewhat insulated, primarily thanks to the University and (for better or worse) much of the good press that our community receives. We are not that different from all other markets, but we seem to be much better off than Northern Virginia, from where we can usually draw significant correlations.David Lereah, Chief Economist of the NAR, might have the most challenging job in the USA right now. How can you tell whether we have hit bottom unless we can definitively tell that we are on our way back up?Pending home sales rise. The Pending home sales index reflects contracts written, not houses sold (by “sold,” I mean “closed”), so it is supposed to be a more up-to-date number.Homeownership is up. And it costs a lot more than it used to.Put simply, in my humble opinion, no one knows what the market is going to bring next year.
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Housing appreciation slows
I had a neat little post all ready to go referencing these two articles – Housing’s rate of appreciation slows…. (Free link)- and then the NYTimes comes out with their spin on the data – Home Prices Fall in Nearly One-Fourth of Metropolitan Regions…. The Office of Federal Housing Enterprise Oversight (OFHEO)’s quarterly report (PDF) was released the other day and has been the talk of the town.As a region,The South Atlantic Census Division including Florida, Delaware, the District of Columbia, Virginia and Maryland experienced its most significant price deceleration since at least the early 1980s. Its four-quarter appreciation rate fell from 17.43 percent to 13.74 percent. Even more specifically, are we really in a position to masticate and gnash our teeth over this?Charlottesville’s MSA*National Ranking – 641-Year Appreciation – 14.52%Quarter Appreciation – 4.11%5 Year Appreciation – 79.93%*MSA = Charlottesville, Albemarle, Greene, Fluvanna, NelsonNational statistics are a good guide to what is happening to the local market. Whether the County of Albemarle enforces its proffers will impact our market far more than what happens in Peoria (which has had a 22% increase in price over five years). Importantly, the agent bubble continues to lose ground – only about 30% of all area Realtors have had five or more transactions!The housing market continues to combat the culture of fear being propagated by the media…. What does it mean when the Government is using bubble visuals to depict the housing market?
Charlottesville area housing sales
Following up on Liesel Nowack’s story this morning in the DP, fast on the heels of the Virginia Association of Realtors’ release of home sale data:First on low interest rates’ impact on the boom – did they have an influence?… For a (per usual) far more in-depth review, read Samuel Miller’s post entitled “Low Rates Did/Did Not Fuel the Housing Boom.”Did rates fuel the housing boom?… Rates impacted the psychology of buyers (and sellers, who usually purchased after they sold) by offering nearly “free money,” from an historical point of view…. (from Inman, subscription required:) The study, “The Great turn-of-the-century housing boom,” is here)”That the increase in home ownership cuts across so many different categorizations suggests that the overall home-ownership rate is not merely reflecting changes in the distribution of the population among the categories. Something fundamental about the home-ownership process has changed,” the study theorized.What’s changed, the economists say, is mortgages…. Specialized firms have sprung up to capture different segments of the market, such as origination, servicing and securitization, the authors say.Year over year, pending sales are down in the CharlAlbemarle region* by 22%…. Mortgage Rates Decline, to 6.48%Mortage rates dip for fifth straight week (USA Today)Houses are not normal, liquid commodities; they are serious investments that require careful analysis of many, many factors prior to purchasing…. That is a “good thing.”Further reading:OFHEO Housing Price Index for Charlottesville*The Association of Realtors includes Louisa County in their statistics, despite its omission as part of the Charlottesville MSA.
That’s a lot of Realtors
Based on this number – 173,323 (population of the Charlottesville MSA)And this number – ~1300 (number of Realtors in the CAAR)There is one Realtor for about every 133 people living the Charlottesville Area.Only 315 Realtors have had more than five “sides” (transactions, either a closed listing or buyer-represented sale) since January of this year. 447 have had between one and four “sides.” Hmmmm … with any economic upward trend, people will flock and flee when the curve starts to fade … Hat tip to the Freakonomics guys.
Regional transit authority inches forward
Charlottesville Tomorrow has the report and podcast of the MPO’s creation of a Regional Transit Authority…. By “regional,” they mean “Charlottesville” and “Albemarle” and not “UVA.”… They are the only ones who can build a damn road. Why aren’t they at the table?Julia Monteith, Senior Land Use Planner, representing the University of Virginia … indicates the University is taking a wait and see approach since past attempts to have a regional authority have not moved forwardYou can’t blame them. To be a true regional system, it would have to include the other members of the MSA. Look at where the workers come from – 6,000 from Fluvanna…. 2,100 from Waynesboro area.But hey, it’s a start.
Charlottesville Housing “Overvalued”
Their methodology is here. USA Today is good at presenting pretty shocking pictures.The good news – The Charlottesville MSA is the 82nd most overvalued MSA in the country…. (Please note the touch of sarcasm) We have seen a pretty dramatic increase – the area was statistically considered (by this data) to be 0.2% under-valued in the 1st Quarter of 2002 and now the area is 29% over-valued. Wow.Do you see the difference between these two statements? From the report: After determining what house prices should be, in this statistically normal sense, we compare those theoretical prices to actual prices to determine the extent of over-, or under-valuation.From USA Today’s byline: Metro areas’ first quarter housing prices with the greatest percentage above and below what they should be:Having someone say arbitrarily what a house price “should be” removes (to me) the free market’s influence. When buyers choose not to meet a Sellers’ asking price – that is showing that the house is over-valued. Locally, sellers seem to still not realized that the value of their home is not set by what they need to make; it is what a ready, willing and able buyer is willing to spend. They are slowly coming around – there have been nearly 80 price reductions in the MLS in the past three days.
Charlottesville is #12
Charlottesville (CharlAlbemarle or the Charlottesville MSA) is now ranked as the 12th best in the “Small Metro Areas” category in the 2006’s Best Cities for Relocating Familiesâ„¢ study. This may be an important “study” in that it appears to be targeted towards businesses relocating their employees. From the people behind the Best Places rankings and two relocation companies.”A number of measurable features can affect the ease with which a family can move to a city and the ease of settling into a new life there,” according to the announcement. “Traditional factors such as commute times, tax rates and average home cost and appreciation are combined with more diverse cost of living and quality of life variables — like the ability to qualify for in-state tuition, the service quality of local utilities, auto taxes, and per-capita volunteerism.”Frequently I work with people who move to the area “because of all the great press about Charlottesville.” This study, marketing to the companies who will be moving their employees, may very well help bring better jobs and people to the area. Never having been to Fargo, ND and my only real “knowledge about the place being the eponymous movie, I can only wonder why they are ranked two spots higher than CharlAlbemarle.I would love to see more of the actual data in addition to the final rankings. A hat tip to Inman (subscription required). The press release is here (pdf).