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I’ll Know Housing Recovery in Charlottesville When I’ve Seen It

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The housing recovery in Charlottesville (and presumably everywhere, but knowing this market is hard enough) is kind of like pornography.

I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description [“hard-core pornography”]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that. [Emphasis added.]

—Justice Potter Stewart, concurring opinion in Jacobellis v. Ohio 378 U.S. 184 (1964), regarding possible obscenity in The Lovers.

How will the “recovery” be defined? Is now the time to buy? (or sell?)

First, we’ll know by hindsight. When we have the luxury and the benefit of 12 to 24 months of looking back, we’ll be able to tell.

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.

Price – stability or appreciation showing themselves

Foreclosures and short sales – fewer than today to none.

Shadow inventory – known and dispensed with; no longer a question of uncertainty.

So … is the housing market in Charlottesville recovering?

Calculated Risk says:

The debate is now about the strength of the recovery, not whether there is a recovery. My view is housing will remain sluggish for some time, and I expect 2012 to be another historically weak year, but better than 2011.

Maybe.

Consider this snapshot, from which I’m trying to :

In Charlottesville and Albemarle:

– 107 homes went under contract between 15 April and 1 May 2011. 64 of those were single family. 23 were attached.

– 144 homes went under contract between 15 April and 1 May 2012 – a 26% increase! – 92 (30% more) were single family. 23 were attached.

In the Charlottesville MSA (Charlottesville, Albemarle, Fluvanna, Greene, Louisa, Nelson):

– 156 homes went under contract between 15 April and 1 May 2011. 109 (70%) were single family.

– 186 homes went under contract between 15 April and 1 May 2012. 132 (71%) of those were single family.

That sure looks like we’re on the path to recovery, right?

In the MSA in the above timeframe, 22 of those contracts in 2011 were either short sales or foreclosures (6 & 16, respectively). In 2012, 19 of those were short sales or foreclosures (8 & 11, respectively). “A 14% decline in distressed contracts!” surely is a better headline than “3“, right?

It’s too early to tell with respect to foreclosures/short sales/distressed sales

Charlottesville Foreclosure Rate and Foreclosure Activity Information | RealtyTrac

My personal favorite:

“When will U.S. house prices recover? Likely never. But that’s no reason not to buy.” and believe it or not, the article reaches some salient conclusions, echoed by many if not most of my recent buyer clients’ decisions –

That’s why prospective buyers should stop focusing on the vague hope that house prices will jump from here and focus instead on the functional value houses provide for the money. In most markets, they provide enough of that to make buying a good deal.

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Seeking a Stable, Consistent Volume of Real Estate Transactions in Charlottesville

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I look at too much data. I admit it. In this post, I’m posing just a question – when looking at the past ten years of real estate data** in the Charlottesville, Virginia area, what is a “normal” level of real estate transactions and is there a correlation between transactions and population growth? And how can my buyer and seller clients (and readers) apply this knowledge?

My hypothesis is that once we achieve a stable, consistent volume of real estate transactions – equilibrium if you will – we’ll be able to definitively say that we reached “bottom” or “stagnation” and start to consider such things as “appreciation of real estate values.”

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When Evaluating the Charlottesville Real Estate Market, IGNORE National Data

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Take your lede : – Home sales up 14% in Charlottesville and Albemarle year over year. – Home sales up 19% in Charlottesville MSA year over year. – Foreclosures continue to climb in Charlottesville and Albemarle. – Questions abound regarding second half of 2010; where will we find the bottom of the market? – If you have questions about or would like more detailed analysis, please contact me.

…Simple (though notsoumuch in reality) What I’m reading: – Harvard’s State of the Nation’s Housing Market (PDF) and listening to an excellent podcast with Nicholas Retsinas , Director, Harvard University’s Joint Center for Housing Studies . (did you know that there was an exhibit at the Smithsonian on McMansions ?) – Core Logic’s Home Price Index Report for April 2010 – Virginia’s Housing Price Index, for single family homes year-over-year, is up 6.5%; for single family homes excluding distressed properties, is up 3.6%. Virginia is one of the five best states for year-over-year price appreciation excluding distressed sales .. but mostly that’s irrelevant in my opinion as the bulk of those sales are most likely comprised of Northern Virginia sales. – The Federal Housing Finance Agency’s House Price Index for First Quarter 2010 The FHFA (formerly OFHEO) say that in the Charlottesville MSA house prices have dropped 6.98% year over year, 1.86& in the 1st Quarter 2010, and have appreciated 12.68% over the past 5 years .

… Home Sales are Up 19% year over year in the Charlottesville MSA: Sales are up in Charlottesville MSA Year over year.jpg Homes sales are UP 14% in Charlottesville and Albemarle : Home Sales UP in Charlottesville and Albemarle - 2010 versus 2009.jpg One point: Charlottesville’s Unemployment is lower than the national average. Charlottesville's Unemployment is lower than the national average. Prime example of the irrelevance of national, aggregate housing data, which is good only for political talking points and respective agendas: Foreclosure starts for the nation and Charlottesville and Albemarle: National foreclosure data, courtesy of the HUD Scorecard, using RealtyTrac data: National Foreclosure data - Mildly irrelevant For Charlottesville, using RealtyTrac : Charlottesville Foreclosure Rate and Foreclosure Activity Information - may 2010 For Albemarle County, using RealtyTrac: Albemarle County Foreclosure Rate and Foreclosure Activity Information - Trends Albemarle County Foreclosure Rate and Foreclosure Activity Information - May 2010 What have median home prices done in Charlottesville over the past five years?

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Charlottesville Real Estate Radio – WNRN 27 December

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Firm Walks Away From 5 Properties Short Sales: 11 Short Sale Frequently Asked Questions Short Sale Help – HAFA Foreclosures in Charlottesville: Two properties with $100k price reductions A quick look at some of the foreclosures in the Charlottesville/Albemarle area shows that there are foreclosures ranging from $25,913 to $1,010,000 Biscuit Run may become a park: – Charlottesville Tomorrow – cvillenews – The HooK Tax Credit: Who qualifies for the homebuyer tax credit? … From NAR Tax Credit information on RealCentralVA HR 3458 – For our purposes, known as the “homebuyer tax credit act ” More on Home Sales – nationally Why U.S. Home Sales Are Both Up and Down New-Home Sales Drop 11.3% As Impact of Stimulus Fades Home Sales up as Buyers Respond to Tax Credit – National Association of Realtors (read with the biased grain of salt) More on Home Sales – Charlottesville/Albemarle Predictions and Prognostications: Prepped but Didn’t Get to: U.S. Lifts Limit On Aid To Fannie, Freddie Shadow Inventory The nationalization of America’s mortgage problem Resources for Accidental Landlords As Slump Hits Home, Cities Downsize Their Ambitions Fannie, Freddie and the Struggles of HAMP OFHEO – Rankings by *Metropolitan Statistical Areas and Divisions Percent Change in House Prices with MSA Rankings** Period Ended September 30, 2009 OFHEO says Charlottesville real estate has appreciated over 5 years OFHEO says Charlottesville real estate has appreciated over 5 years

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Upcoming Stories

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To be posted in no particular order: – Market update – Market Projections for 2009 – Walkable Neighborhoods – where are they in Charlottesville and Albemarle? – Building communities – why the recession is good for neighborhoods and communities – Dwellicious – End of the year thoughts and predictions – about local politics, growth, the Real-VA triad (RealCentralVA, RealCrozetVA, RealWaynesboroVA) and their plans – Request for stories/topics you want to see covered here – I’m going to pick a few houses and track their sales histories over the past ten years – where’s the real appreciation?

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(Other Peoples’) Thoughts on the Mortgage Crisis

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The first step should be the following law: If the government must step in and provide any sort of financing or guarantees for any part of a public company’s business, then all officers and directors lose all rights to severance pay and all outstanding vested or unvested options or warrants immediately become canceled.

… Unless you live in California, Las Vegas, South Florida, or the Rust Belt…which either experienced high levels of mortgage fraud, illogical appreciation, or economic tough times due to indigenous ‘industrial age’ industry…your local housing market is no worse off than it was before Wall Street’s most recent ‘Black Monday’.

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