NRVLiving - Real Estate. Simplified.

The State of the Market - November 2009

Ever been in a candy shop?  You know, the type where there are candies of all sizes, shapes and colors lining the walls?  The shops where you shove a big metal shovel the size of Delaware into a barrel of assorted candies, and you come up with all different types of sweets?

Yea - that's what the real estate market is like right now.

It's not that it's a huge surprise ... the winter is always slower than normal, so we were prepared for that.  I can't say anyone saw bailouts of the banks, the construction folks, the auto makers, the pizza bakers and the professional matchmakers, but needless to say here we are.

See how I did that, the whole rhyming thing and all?  I know - Eminem I'm not.  Nor am I fan of bailouts of irresponsible mismanagement, but that's a story for another day.

Buyers, if you:  (1) have a job, (2) have money to put down and (3) have good - notice I didn't say excellent - credit, our current real estate market will be like walking into that candy shop and taking your pick of everything that's available.  I don't mean that you'll get it for pennies on the dollar, but the opportunities are there to pick up excellent values right now.  Think about it - if a property is listed now, between the Thanksgiving and Christmas time frame, don't you think that Seller is serious about selling his or her home NOW?  I do, and my Sellers are.  And it's important to note that when I say you need money to put down I don't mean ten's of thousands of dollars.  There are lenders here locally, right now, offering great rates on FHA and other buyer programs that are requiring as little as 3% down, not to mention the free money - yes, free money, not additional loans - that localities like Blacksburg are offering qualified buyers.

Let me post the latest absorption rate numbers for the New River Valley market now, and then check in with folks that might need to sell their home in the next few months.  When it comes to absorption rates, we're looking at how long it would take to sell the existing residential inventory in a particular area, if nothing else came on the market until supply was exhausted.  Anything over 5 months is typically a buyers' market, and anything less than 5 months is typically a seller's market.

Area	# of Active Properties	# of Sold Properties	Absorption Rate	Buyer/Seller Market
Blacksburg	211	12	17.58 Months	Buyer
Christiansburg	258	13	19.85 Months	Buyer
Montgomery County	64	0	64.00 Months	Buyer
Floyd County	115	4	28.75 Months	Buyer
Giles County	54	1	54.00 Months	Buyer
Pulaski	101	5	20.20 Months	Buyer
Dublin	107	4	26.75 Months	Buyer
Radford	70	3	23.33 Months	Buyer

Sellers, the market's not in your favor now when you look at the numbers above.  28, 54, 64 months worth of inventory?  An average of more than two years worth of inventory is a scary thing when you're putting your home on the market, but remember it's not taking EVERYTHING that long.  The average for the NRVLiving Team in 2008 is 101 days, or just over 3 months.  Some have taken less, some will take more, but we're doing our best to expose our listings in every effective way possible.  That being said ... selling right now isn't for everyone.  If you bought a townhouse in Christiansburg last year for no money down and expect a 10% return, it might be a good idea to rent for the home for a while.  Those are products that are having difficulty selling in today's market, and will need some time to settle out.  Nevertheless, there ARE ways to get it sold ... not the least of which includes patience.  There is a lot of uncertainty right now, and it's going to take patience and carefully executed marketing to reach buyers who are ready to execute. 

At the halfway point of the year, I wrote a post looking at what the market was doing up to that point, and compared it to the year prior.  The results were striking, and I'm working on a follow-up for the entire 2008 year that I hope will be helpful.  There will be some in the real estate market who will be happy they held off selling, and others that will regret not buying, but the time is not right for everyone.  Be patient, find an agent who is studying and demonstrating they know the market they're serving, and grab that shovel - there's candy to be had.

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The State of The Market - October 2009

Ah, the leaves in the New RIver Valley are changing.  It's one of my favorite times of the year here - until the winter winds decide to blow.

Just as the leaves will change every year, it's election day today and with a lame duck President in place we'll see change in DC, as well - you DID vote, didn't you?  The leaves change, our leadership changes, and the real estate market ... well, it's changed a bit, as well.

I'll repeat it one more time:

"a slow, steady and calculated approach to the market is going to be important as we move forward towards 2009."

There are opportunities for buyers and sellers, right now, and a slow and steady approach will serve you well.  That being said, I don't think we'll see significant market rebounds in the short-term so Sellers, if you don't have to sell, don't.  As you can see from the following numbers, anything over 5 months is a buyers market and right now, there aren't any buyers markets.  I'm currently working on an end-of-year market report, I'm interested to see how that works out ... stay tuned for that.  Again, when it comes to absorption rates, we're looking at how long it would take to sell the existing residential inventory in a particular area, if nothing else came on the market until supply was exhausted.  Anything over 5 months is typically a buyers' market, and anything less than 5 months is typically a seller's market.

Area	# of Active Properties	# of Sold Properties	Absorption Rate	Buyer/Seller Market
Blacksburg	216	11	19.64 Months	Buyer
Christiansburg	278	14	19.86 Months	Buyer
Montgomery County	67	8	8.38 Months	Buyer
Floyd County	124	6	20.67 Months	Buyer
Giles County	60	9	6.67 Months	Buyer
Pulaski	105	9	11.67 Months	Buyer
Dublin	113	6	18.83Months	Buyer
Radford	72	10	7.20 Months	Buyer

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The State of the Market - September 2008 (Renamed: A Slow And Steady Approach)

August has come and gone, and September has as well.  The leaves are changing ... it's one of my favoritest (can I say that?  Sure I can) times of the year here in the New River Valley.  September has NOT been nice to the stock market, however - there's no secret there, we've passed a bill with economic implications that are really beyond comprehension to try and stabilize it, and oh yea, there's a presidential election going on as well.  Wondering how it all effects housing?  My best guesses here, here, here and here.  As I said last month however:

"a slow, steady and calculated approach to the market is going to be important as we move forward towards 2009."

I believe that, more than ever.  If you look at the first half of the year you'll see prices being soft during a time of year that's typically a much stronger market, and then as we've gotten further into the fall that trend has continued.  According to figures pulled from the New River Valley MLS, volume across the entire New River Valley (which my absorption rate statistics does not cover in its' entirety) is down about 14% from this time last year, the average sold price is down about 11% from this time last year, but the list to sale ratio is 96.3% (compared to 96.2% last year).  That tells me that while prices are down from this time last year, sellers are pushing for lower list prices as well - this is a good strategy.  In a market that's soft, don't rely on the price your neighbor got six months ago.  Stay ahead of the knife and price it right the first time.  One more cautionary tale, and I mentioned it last month ... if you are in an Adjustable Rate Mortgage, and your rate adjusts or expires at anytime in 2009, please contact me immediately.  There are serious implications for many homeowners who will find their payments jumping by hundreds of dollars a month, let's find a local lender who can act quickly to help you refinance and keep your payments low.

When it comes to absorption rates, we're looking at how long it would take to sell the existing residential inventory in a particular area, if nothing else came on the market until supply was exhausted.  Anything over 5 months is typically a buyers' market, and anything less than 5 months is typically a seller's market.

Area	# of Active Properties	# of Sold Properties	Absorption Rate	Buyer/Seller Market
Blacksburg	206	19	10.84 Months	Buyer
Christiansburg	272	17	16.00 Months	Buyer
Montgomery County	68	8	8.50 Months	Buyer
Floyd County	127	2	63.50 Months	Buyer
Giles County	60	8	7.50 Months	Buyer
Pulaski	101	5	20.20 Months	Buyer
Dublin	116	7	16.57 Months	Buyer
Radford	79	7	11.29 Months	Buyer

A full and complete shift into a buyers' market through September, which again is no surprise, it's part of the cycle.  Certainly, news from Wall Street and an election are playing into this, as well as just the typical slow down that happens every year about this time.  I was asked on Monday if I was worried about my job.  Let me be clear ... NO.  People are going to buy and sell during turbulent times.  The market will be different, it will be rocky at times, but if I know how to navigate it and put the pieces in place, it all works out in the end.  Let me repeat - a slow, steady and calculated approach to the market is going to be important as we move forward towards 2009.

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Blowing Smoke? Not Hardly ...

Have you heard?  There are a few things happening in the financial sector that are probably giving you cause for concern.  Truth bet told, they've given a lot of us cause for concern ...

Just a quick note to let you know that there are home loans currently being funded, just as Mark Weddle and  Dennis Duncan said there were.  I'm not going to blow smoke and say that there a lot of companies out there that are having trouble providing credit to buyers, and the stock market is absolutely a scary place to be right now.  BUT ... the mortgage market is not mirroring Mountain Lake. 

In order to make it happen, you'll need three things:

• good credit. There are differing opinions of what "good" credit is, so let me help connect you with someone who can tell you exactly how you stack up.
• money to put down (and it DOESN'T have to be 20%).
• proof of monthly income. Gone are the days of what we called "no doc" loans (thank God).

If these items look familiar, it's because they're all things that lenders have looked for in the past, and that they'll continue to look for in the future.  The mortgage market isn't gone ... in fact, we're closing two properties THIS WEEK that were funded by a local lender just within the last two weeks.  Let me know if you'd like to review your individual situation.  It's not going to be the right time for everyone to buy, but if you can meet the three criteria above it just might be worth your while.

Blowing smoke.

The Emergency Economic Stabilization Act of 2008 - What's It Say?

The bailout bill - also called the Emergency Economic Stabilization Act of 2008 - has been passed, and I know you've been itching to get your hands on a copy. 

You can read the full report here.

But if you'd like a summary (and I'd suggest it might be a bit easier to digest) you should check out the Financial Planning Association's site.

Thanks to Eric for sending this in.

Weathering The Real Estate Storm

Zach Crizer of The Collegiate Times called me early last week and asked "why do people decide to invest in college towns?"  We talked for a few minutes, and later in the week he posted "Blacksburg Real Estate Weathers Financial Storm".

Thanks, Zach, for the chance to talk with you, and to be quoted in the same article as someone as well known in his field as Dr. Koebel was an honor.  He certainly described it in much more intelligent terms, but at least I didn't stutter.

I appreciated the chat, Zach, call anytime. 

Wow.

How To Get Financing In Today's Tough Market

Yes Virginia, there IS a way.

Bailout is what everyone's been talking about lately, and I wanted to find out what lenders were thinking would be happening in the short term, particularly as it relates to Fannie Mae and Freddie Mac products.  According to Mark Weddle, and Dennis Duncan, both of Suntrust Bank, there are some positive sounds coming out of the purchase market. 

Mark Weddle: 

"Two main changes in the purchase market.  The first is that on cash-out refinances, Fannie and Freddie are both requiring  at least six one-time payments on their existing mortgage since the time of purchase.  The second is that if a purchaser has their current house under contract, but it doesn't close before the purchase of their new house, the current mortgage will not apply if two certifications are made (in writing)."

Dennis Duncan: 

"Not many significant changes in the investment arena.  Investment loans are still available, but there WILL be changes to the rates and points paid.  The easiest way to look at this is to consider a $100000 investment scenario:

• a 75% loan to value would see a 30 year fixed rate at 7%, with no points
• an 80% loan to value would see a 30 year fixed rate at 7%, with 2.6 points
• a 90% loan to value would see a 30 year fixed rate at 7%, with 3.38 points

If you want to pay a better rate, then put more money down.  It's been that way for a long time, but will be even more important now."

No significant changes at this point, according to these guys.  Remember - put money down, and solidify your credit.  Those are the two best ways to buy a home in today's market. 

$700 Billion Isn't Monopoly Money - Yet We Print It Like It Is

I've been sitting on this post for a few days.  Last week, the Bailout Bill was all anyone could seem to talk about, and I was one of millions watching and waiting to see what the government was going to do.

And they threw me a curve.  I didn't expect them to vote it down.  I fully expected that they'd get together, vote, then slap each other on the back and head out to vacation.  They took some more time, voted for it and THEN headed out for vacation.  You can read the latest iteration here.

We shouldn't be in this mess to begin with. 

I'm hesitant to play armchair economist here, because truth be told I can't seem to comprehend the scope of a  $700 billion bill that deals with a situation that's not been seen during my lifetime.  How did we get here?  I understand the real estate portion of this mess - banks invested in bad mortgage loans, and now they don't know when they're getting their money back.  That's why it's called a bailout.

There's lots of blame to go around, and a thousand thoughts on what it all means.  (Updated 10/6 11:50am - The Wall Street Journal says Washington's to blame)  I'm certainly not qualified to know who's got it right, and who's just blowing smoke, and the cynic in me thinks that most just like to hear themselves talk.  I'm not going to stare at the heavens, drop to my knees and scream, nor am I going to post anything other than this post.  What I'm going to do is focus on what I can control - providing the absolute best service I can to my real estate clients.  It's what I have, it's what I can do best, and I'll keep moving towards Go to collect my $200.

(Updated 10/6 11:50am - Just started through my feed reader from the weekend and read this post by Jim Duncan.  I like the end ... "Figuring out how we will all be impacted - in as calm, rational and non-panicing manner - is crucial."

Photo credits

The State of the Market - August 2008

It's the home stretch for 2008, and what a year it's been so far - the first half of the year showed that the time to sell a home was actually FALLING a bit, but prices were unchanged for the most part save for a few select areas.  As we head further into fall and winter, I expect we'll see shifts across all area markets to what we'd consider a buyers' market.  There are also many Adjustable Rate Mortgages expected to reset in early 2009 and so I'm wondering if we may see more homes coming on the markets in the next couple of months, as homeowners try to avoid rising mortgage payments.  If you're one of those homeowners and aren't intending to move, please contact me immediately - let's find a local lender who can act quickly to help you refinance and keep your payments low.

When it comes to absorption rates, we're looking at how long it would take to sell the existing residential inventory in a particular area, if nothing else came on the market until supply was exhausted.  Anything over 5 months is typically a buyers' market, and anything less than 5 months is typically a seller's market.

Area	# of Active Properties	# of Sold Properties	Absorption Rate	Buyer/Seller Market
Blacksburg	208	35	5.94 Months	Buyer and Seller
Christiansburg	276	41	6.73 Months	Buyer
Montgomery County	69	11	6.27 Months	Buyer
Floyd County	123	6	20.50 Months	Buyer
Giles County	60	4	15.00 Months	Buyer
Pulaski	108	13	8.31 Months	Buyer
Dublin	123	14	8.79 Months	Buyer
Radford	92	12	7.67 Months	Buyer

This shift into a buyers' market is certainly nothing new, it usually happens every year.  Interesting days ahead though, a slow, steady and calculated approach to the market is going to be important as we move forward towards 2009.

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The First Half of 2008

Now that the first half of the year is behind us, I thought I'd take a look at homes sales in the Blacksburg/Christiansburg/Radford area a little bit more.  At the beginning of the month, in the Absorption Rate post, I showed how every market studied has seen Days On Market go down, along with the average sales price, except for Blacksburg - which has actually gone UP in value nearly 5%.  For the chart below, I used Average Sales Price, but to dig in and look at the real strength of the market it's probably best to look at Median Sales Price.

The Average Sales Prices shown above accurately reflect the homes that have sold, but they don't reflect the trending nature of the market.  To do that, I went back and looked at January - June sales that occured between 2004 and 2008.  In order to accurately the trend, I looked at residential homes (detached, condos and townhomes) that sold in Blacksburg, Christiansburg or Radford during that period and graphed them based on the median sales price of all the homes sold. 

Based on those figures, you can see sharp increases between 2004 and 2006, when the market was really hot.  These were definitive Seller markets, with multiple offers commonplace.  Between 2006 and 2007 we saw a shift back toward more balance, and even a Buyer market in some areas.  The plateau that exists between 2007 and 2008 is likely just that - a plateau.  My analysis is that while we might see a sag in the market continue, with little to no appreciation for several more months, we aren't likely to see the decline, month over month, that many other markets have felt. 

Just for fun, I also looked at the number of homes sold during the same period.  A similar pattern, although a decline between 2007 and 2008.  It'll be interesting at the end of the year to see where that ends up.

Truth be told, I doubt that we'll know the real ramifications of the current market until after the November elections.  It's likely that we'll need be in the spring of 2009 that, with the administration in place, and the shakedown of the bailout - er government support - of Fannie Mae and Freddie Mac complete we'll know the real story.

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