Tag Archives: market

What’s the Blacksburg Real Estate Market Doing?

Since January 1, it seems, real estate agents in Blacksburg seem to have been saying – to each other, to their clients, to anyone – what IS going on in the Blacksburg real estate market?

Historically we follow a traditional bell curve, with more properties starting to come on the market in Mach, climbing to a high around May/June/July, and then falling to yearly lows in November and December … only to do it all again the following year. That’s what it’s USUALLY like.

But 2016 hasn’t been usual, it seems, so this morning – as part of a project for someone else – I decided to look at sales figures YTD in Blacksburg. I was looking only at single-family homes (think detached, not townhomes or condos) in Town limits, and what I found was surprising. I talked a bit about it on Twitter this afternoon – are we connected there?

Blacksburg real estate market 2 3

I have to say, the results are surprising, but this is one reason why I love statistics, because in this case what we feel versus what is actual are somewhat different. While it felt as if the market was moving exponentially faster than in previous years, it really hasn’t been – inventory has followed a traditional track, while buyer demand has increased, thus increasing prices and driving down the length of time homes have been staying on the market. Good for sellers, maybe not so good for buyers, because increased demand doesn’t mean buyers are going to get good deals. Within our office we’ve seen more multiple offer situations this year than in years past, and that’s left some buyers discouraged.

See the 2015 Nest Report, our look at the market, here.

5My opinion? A pendulum swings both ways – we’ll see some of this settle out as the year goes on. But don’t let agents, or lenders, rush you into making a decision, either.

 

 

The Roanoke Times – Rise in Real Estate Activity

The New River Valley real estate market is shifting – no doubt about that – and buyers and sellers will need to adjust. We still have some challenges, but things are improving. Sarah Cox of The Roanoke Times wrote about it in this past Sunday’s real estate section.

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Agents report rise in activity – Sarah Cox, The Roanoke Times, 6/10/12

Several New River Valley REALTORS say consumer confidence is growing

Representatives of the National Association of REALTORS announced at the end of April their belief that the beginning of a recovery in the U.S. housing market is evident. Sales are lowering inventory and might nudge prices to rise higher. The Pending Home Sales Index, which is a future indicator based on contract signings, is 12.8 percent above March 2011 and, as of April 30, was at its highest level since April 2010.

Locally, the same forecast has been voiced by several New River Valley REALTORS, including Desi Sowers, associate broker with RE/Max 8, and Jeremy Hart of Nest Realty and NRVLiving.

Sowers, who was the new River Valley Association of REALTORS’ 2010 REALTOR of the Year, said she has been selling homes “within days of putting them on the market” – and not just homes within reach for most first-time homebuyers. She said she is selling homes ranging from $100,000 to $600,000.

The change is even more marked, she said, at Claytor Lake where sales are primarily of second homes. In the past several years, those homes were “extras that people couldn’t afford,” said Sowers, adding that she thinks consumer confidence is growing.

Sowers said the more expensive homes in Blacksburg have received offers in about a week after being listed.

“Overall, buyers are finally figuring out that this market is not going to last. Interest rates are still good, but rent prices are going up,” Sowers said, noting those looking at homes now are often ones who were renting and waiting until their first homes sold.

Interest rates are still about 4 percent for a 30-year fixed rate loan. There has also been a demand this year coming from those who were renting and waiting for the economy to improve. And during the traditionally high-sales months of the summer, Sowers hopes to see this trend continue.

“I’ve been consistently busy. We are slam packed. It’s fabulous for our market as a whole, and it’s putting money into the economy,” she said.

However, it may not be just consumer confidence or the low interest rates, spurring business. Hart, who attended a business forum recently, said the Corporate Research Center employs about 2,500, and has plans to grow. And then there’s Virginia Tech and Radford, both of which employ professionals looking for homes. Hart said he’s heard complaints about the lack of housing to suit the needs of those buyers.

“I totally agree with that,” he said. “People who want to be in Blacksburg can’t find the quality housing stock without having to pay $300,000 or more. What I’m hearing on online forums is that there is still some struggle [finding those houses]. The average price of a house in Blacksburg is about $250,000, and that’s not going to get you a lot. That’s why people are moving to Christiansburg.”

Hart said the difference in comparable housing from Blacksburg to Christiansburg to Radford is notable. A home in Blacksburg listed for $250,000 might be listed in Christiansburg for $215,000 and in Radford for $180,000, he said.

Hart also have been in 10 situations recently where potential buyers were making one of multiple offers on a house. Those bottlenecks ranged from homes of $100,000 up to $1 million.

“There has been a massive shift in inventory levels, things coming off the market much faster,” he said.

Sowers has advised her clients not to wait if they are considering selling.

“Put your home on the market. There’s a huge flurry of activity, and as far as home prices, the increase is small, but don’t hold out for next year. We are going to see a leveling of prices,” she said.

Hart said the time to list a house is when the owner and the home are ready.

“The homes that are selling are priced realistically,” he explained, adding that it also helps when they are well staged and marketed with high-quality photos. “To those sellers who have gotten discouraged, if you are willing to take an honest look, now may be a good time, but not until you are ready to make that assessment.”

Hart said some of the higher-priced homes he has sold went to those who had cash or were in a position to qualify for a jumbo loan. It is still fairly tough getting a loan, he said.

“I had an agent tell me, ‘I’m preparing clients to expect that they are going to be examined as if they were a criminal.’ This was not meant in a bad way, but they are asked the same questions over and over,” Hart said.

To be prepared for the process, Hart said he asks his buyer to have a lender pre-qualify them for a loan so they’ll know they are looking for homes in the proper price range.

“Once you’re under contract, the lender is going to take a look at everything, so they want to know that we’ve done the prep work,” he said.

Real Estate Market Distribution in the New River Valley

Most of the time when reporting real estate market updates, we focus on sales prices – what’s the high, the low, the median.  The New River Valley Association of Realtors just sent out a market update that I thought was interesting, though, showing, among other things, the market distribution between Sept 09 – Aug 10.  Here’s what it looks like in a pie chart:

It’s an interesting visual.  Montgomery County accounts for nearly 52% of all real estate sold in the New River Valley (760 sales totaling more than $151 million), with the City of Galax coming in at .61% total (9 sales totaling just under $714000).

Nothing earth-shattering here, I just think it’s interesting to see broken out this way.  Below is more data from the report, if you’re interested.

The September 2010 Employment Report Doesn’t Mean Much – Yet

Dan Green wrote a post today about the latest jobs report, and how it impacted home prices in his market of Ohio.  According to Dan’s post:

“… 95,000 jobs were lost in September. Economists expected a net loss of 5,000.  However, if public sector jobs are excluded from the final figures, jobs actually grew by 64,000.  This is a positive for the private-sector, but the numbers still trailed expectations.

Wall Street is voting with its dollars right now and mortgage bonds are gaining, improving mortgage pricing.”

Nationwide there’s a lot of uncertainty and confusion in the real estate market right now; it’s not just confined to the New River Valley.  But in reality, our current real estate market boils down to three things – (1) if people have jobs they buy things, and if they buy things then (2) businesses grow, so if businesses grow then (3) more jobs are created.

It just doesn’t matter whether the recession is over or not (and who really believes that, anyhow?) – if people don’t feel good about their job prospects, or whether they’ll even have a job in six months, they’re not purchasing anything of substance.  That’s why I said unemployment numbers in the New River Valley are going to be so, so important moving forward.  Today’s report improves rates, but it’s not going to have a major impact without significant job creation.

Well? Is It Really A Good Time To Buy New River Valley Real Estate? Part One …

Reprinted from the Wall Street Journal – see the full article here.  Part Two forthcoming, with my thoughts.  What do you think?

Enough with the doom and gloom about homeownership.

Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.

[roiA0915]After all, at the peak of the bubble five years ago, Time had a different take. “Home Sweet Home,” declared its cover then, as it celebrated the boom and asked: “Will your house make you rich?”

But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home.

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

[roiB0915]4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.

5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.

6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

roiC0915

A house for sale in Shelby, Ohio

8. It’s forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity. As a forced monthly saving, it’s a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That’s below last year’s peak, but well above typical levels, and enough for about a year’s worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slumpin western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the “glut” simply won’t matter: It’s concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won’t have any long-term impact on housing supply in your town.

Write to Brett Arends at brett.arends@wsj.com

My Mistake – Here’s The Real Look at the New River Valley Real Estate Market

I’ve spent the morning working on Activity Reports for my listings – they’re a look at a very refined, specific price point for each listing, and shows what’s happened in the New River Valley market in that price point during the last month.  One of the things I found interesting was just how different our market is right now.  While the Activity Report looks at a very specific section of the market, I also wanted to know what real estate had been doing across the entire residential market … the numbers were surprising.

I said in March I thought the real estate market was staying pretty strong, and I’m revising that a bit because, as I’ve told the Sellers I’m working with, I think I made a glaring mistake.  In March, I wrote:

What’s it tell us?  Well, for starters, the New River Valley real estate market as a whole is still pretty strong. With list to sale percentages averaging roughly 97% over the last three years in what’s typically a slow time for real estate (the November through February time frame), home sellers have been able to maintain strong sales prices.  Average sale prices, however, can be swayed by a multi-million dollar sale on the high-end, or an inexpensive sale on the low-end, and so median sales prices might be an even better barometer of strength in the market … In 2008, the median sales price for the first two months of the year was 95.6%.  The following year it climbed to 96.9% during that same time period, and in 2010 the median sales price in Blacksburg, Christiansburg and Radford was 99.9% of the list price.

While buyers certainly have their choice of options available to them when it comes to housing in the New River Valley, the statistics are showing that, even in the slow times of the year, sellers are still getting their asking prices.  Looking forward to seeing if that continues through the year.

One thing is certain – buyers still have their choice of options available to them, and if they’ve got 10% or more of the sales price (err on the side of more) and staying in the home for three years or more, I still think it’s a great time to buy. Where I went wrong in the first quarter of the year though, was in relying on numbers that were skewed by the First Time Buyer Credit – remember that thing?  And I feel foolish for doing it, since we had just gone through a similar situation with the incentives that had been floating around encouraging people to buy cars.  I wasn’t being realistic.  Uncle Sam offered money for cars, and car sales picked up, then when the money was taken away … auto sales dried up.  Then, the First-Time Buyer Credit was instituted, and home sales picked up … until May 1st, when there was a giant sucking sound as buyers left.

It’s true, despite what the trade organizations would have you believe.  Don’t believe me?  Look at the chart below, showing the number of residential real estate closings in the 24060 (Blacksburg), 24073 (Christiansburg), and 24141 (Radford) zip codes over the last four years:

August Residential Home Sales in Blacksburg/Christiansburg/Radford

That’s what’s happening in the real estate market right now.  Over the last four years, we’ve seen a 66% drop in the number of closings during the month of August.  Data for 2007 isn’t available, but if you look at the same zip codes and look at activity January 1 and August 31 you’ll see a similar picture:

Residential Home Sales in Blacksburg, Christiansburg and Radford

While the drop isn’t as steep (35% between 2008 to 2010) when spread over twenty-four full months, it’s still significant.

It’s scary stuff, particularly for home sellers without much of an equity position in their homes (read money put down), and as I mentioned in each of my Activity Reports for August, only three things matter if you’re selling a home right now – Price, Condition, and the Patience to wait.  Look, only in a unique situation is an agent going to sell your home in three days.  Unemployment is still a major concern for many buyers, and without the confidence that their job is going to be there for the long-term, they’re not buying anything.  If you’re selling a home, and an agent tells you it should sell quickly, perhaps you should reconsider whether that’s really realistic before moving forward.  And buyers – I know you’re out there – if you have money to put down and you expect you’ll be in the New River Valley for three years or more, buy.  Let me say that again … BUY!  Values are going to hold steady (they’re within 1/2% of where they were last year), inventory levels will stay high, and sellers are going to be glad to see you walk through the door.

Am I cheerleading?  Nope – my team’s not down 49-0 in the 4th quarter and 3:00 minutes left.  Am I taking a realistic look at what’s really happening?  I think so … and what’s happening is going to benefit those buyers and sellers who are also being realistic.