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Robo Signings in Prince William

Sep. 21, 2011
Categorized in: Foreclosures/Short Sales

This article in the Washington Post talks about "hundreds" of robo signings in Prince William County over the past few years. The truth is, I'd be surprised if it were only in the hundreds given the number of foreclosures there. I suspect they've hit the tip of the iceberg.

I'm happy to see organizations like VOICE (Virginians Organized for Interfaith Community Engagement) working on this problem. Wall Street has plenty of lobbyists. Who's speaking up for the homeowner caught in the middle of this mess?

Flying Off the Shelves

Jul. 12, 2011
Categorized in: Buyers

It's been a long time since I've seen my buyers having so much trouble finding houses to buy. In some areas inventory (high quality, well-priced inventory) disappears almost as fast as it hits the market. The western side of Prince William county, including Gainesville, Bristow and Haymarket fit that description. The southeastern side of the county, not so much.

But even in places like Bealeton and Remington, in the lower price ranges there is very limited inventory for sale and the good stuff goes fast.

There is an increasingly steady drumbeat of press articles around this amazing buying opportunity, that might be part of it.

Meanwhile, the many reasons sellers don't want to sell if they don't have to haven't changed, which continues to limit inventory.

So, is it a great time to buy? Interest rates are low, prices remain low (although beginning to edge upwards a slight bit) and those are good things. The lack of inventory and continued economic uncertainty would suggest continuing to proceed with caution. Every situation is different. But if you're staying put over 5 years, I like your odds of at least breaking even when you sell.

The Danger of Buying a Condo

Mar. 2, 2011
Categorized in: Buyers

As this article from the Chicago Sun Times makes clear, buying a condo can be a lot more complicated than other real estate transactions.

Lenders have been very cautious for several years now about mortgages on condominiums. The truth is that many condo associations are essentially broke. Since the owner only owns from the drywall in, all other maintenance falls to the association. If they've got no money that maintenance may not happen, causing all property values to fall.

The article talks about the other issue causing banks not to lend on condos, too many rentals in a building or development. Of course, if you can't sell your condo because no one can get a mortgage and you have to move, you're likely going to rent your condo out, exacerbating the problem.

Prince William county is where we see the most condos in the area I sell in regularly. But there are a few condos in Culpeper and Fauquier as well.

If you're thinking about buying a condo, start working with your lender early in the process. Have them check out any association you're looking at to make sure it's not on their blacklist. And, as with buying any property, do your homework!

Can Anyone Afford to Buy Here?

Feb. 22, 2011
Categorized in: Local Market Conditions

Housing Virginia has a great tool called Sourcebook that allows you to take a look at the affordability of housing in Virginia by county. And it allows you to look at the data in about a dozen different ways. I've looked at the local counties and it's an interesting picture.

First of all, I think you'll be surprised at the overall affordability of the homes in Culpeper, Fauquier, Rappahannock and even Prince William. The national standard for when a home is considered affordable is if the payments are less than 30% of a family's income. By that measure, all of these counties are easily rated as being affordable. And, renting is cheaper than owning in three of these counties. (Prince William is the exception.)

If you look at the Housing Cost Burden, you'll see that the burden appears to be easing in some of these counties. Prince William is a good example of that. This statistic measures how many households are paying more than 30% of their income in housing costs. Unfortunately, in places like Fauquier County, this number is not only too high, it appears to still be rising. (Although note that the data stops in 2009 for this statistic.)

One of the charts that paints the most dramatic picture of what's happened in our housing markets is the Loan Activity charts. For the most part, each county looks like a giant backwards check mark. Except that the short part of that check mark is pretty darned flat! Prince William even shows some additional declines after beginning to bounce back.

Overall, I recommend taking a good look at these statistics. They will be most helpful to anyone trying to decide whether to buy or rent right now. But they will give any buyer or seller a good snapshot of what our market looks like right now.

Prince William Wild Appreciation

Apr. 28, 2010
Categorized in: Prince William County

I was listening to The Kojo Namdi Show this week as they discussed immigration and was shocked to hear Corey Stewart, the Prince William County Chairman of the Board of Supervisors say that home values in the county will increase 27% this year.

Am I shocked they're going to be up that much? No, if you look at current market statistics they already look to be up that much year over year, maybe even more. The data supports his statement.

I've written a lot of offers in Prince William County over the last few months. Every single property we wrote an offer on has multiple offers. One had 12 offers, 9 of them cash. So, no, it doesn't shock me that prices are up that much.

I am shocked a politician is that well informed about our market.

I also continue to worry about that kind of jump in price right now. Those were the kind of crazy price increases we saw before the whole market went kablooie (that's a technical term). I am having trouble believing that this is an indication of a healthy market.

What do you think? Too much, too soon? Will we crash and burn again or are these prices just the proof that the market over-corrected?

March Local Market Numbers

Apr. 13, 2010
Categorized in: Local Market Conditions

It's been a few months since I've written about the overall market stats for the area. So, let's see what's changed.

We'll talk about Rappahannock first for a change. How does it compare to a year ago? 86 listings now compared to 76 then. 6 sales in March 2010 compared to 3 last year at the same time.

Note: Remember, real estate is seasonal and year over year numbers are a much smarter comparison than month to month.

The one Rappahannock statistic that jumps out is the number of new contracts in March. There were 8. That's the highest number of new contracts in one month since August, 2006.

Culpeper has 433 active listings compared to 464 last year at this time. While sales in other counties jumped in March after a couple of slow months, March still looks pretty flat in Culpeper. But the median sales price is up almost 10% year over year. That's 2 months in a row that have shown price increases. If you look over a longer time horizon, it's certainly easy to make the case that prices remain flat to slightly higher. The number of contracts ratified in March is down, year over year, but up significantly month over month. Last year at this time there was an increase in contracts from February to March. As always, I'm reluctant to speculate on what these tiny data points mean, other than to say, stay tuned.

Fauquier County also shows declining inventory, 516 now vs. 556 a year ago. Sales are 73 in March of 2010, a significant increase from the 43 in March of 2009. In fact, you can pick just about any metric you want in Fauquier, including price, and it's up. The absorption rate would indicate a very balanced market. That's slightly misleading since there's little inventory available at the lower price ranges.

Prince William County continues to be the place where the buyers are lining up to buy. As an example, a listing came on the market in Gainesville this morning and by this evening when I tried to take my clients to show it, I was turned away and told it was already under contract. Inventory has dropped year over year from 3079 a year ago to 2595 now. Sales have dropped though, from 750 a year ago to 559. I believe that has more to do with a lack of properties in the lower price ranges rather than a lack of interest by buyers. And inventory is coming on the market at a slower pace. Last year in March 1219 new properties were listed. In March 2010 only 964 properties came on the market. Prices reflect the shortage of inventory. Prices have been climbing in Prince William County for months now.

It's a great time to be a buyer in our area if you don't mind bidding wars and competing against cash offers! It's a great time to be a seller if you are not expecting prices at 2005 levels!



Healthiest Virginia County?

Feb. 17, 2010
Categorized in: Miscellaneous

There's a new study out showing, by state, how each county ranks in terms of overall health. The factors included are:

Health Behaviors

Clinical Care

Social and Economic Factors

Physical Environment

I think I might disagree with the results. But wide open spaces improve my health more than immediate access to doctors. Apparently that's not a widely held belief!

Fairfax County came in at #1. Prince William county is #10. Fauquier is #21. Rappahannock County is #46 an Culpeper County is #56.

What do you think? Personally I think Rappahannock is a heck of a lot healthier than Prince William!

Cash Wins Bidding Wars

Jan. 5, 2010
Categorized in: Buyers

Sunday's Washington Post had an article on how cash rich investors are the bane of first time home buyers.

The example they use is in Prince William County but it's happening throughout the region.

Cash is kind, there's very limited inventory and deals with mortgages often fall through.

If you were a seller, what would you do?

Tax Credit Local Impact

Nov. 13, 2009
Categorized in: Local Market Conditions

I could take a look in detail at the October numbers for Culpeper, Fauquier and Prince William Counties. But they don't show any shockingly different results or trends. And, I thought it'd be more interesting to take a look at the impact of the First Time Home Buyer Tax Credit in our area.

Obviously, without interviewing every buyer it's impossible to know the precise impacts. But I think it's fair to compare the pace of home buying in each county over the past few months and see how we were doing a year ago without the tax credit and how we've done this year with the credit.

Culpeper is first up. Here are the total sales May through October both in 2008 and in 2009:


Month 2008 2009
May 63 43
June 57 57
July 54 42
August 64 53
September 53 65
October 58 49

Hmmm...if anything the volume of sales is lower in 2009 with the tax credit available.

How about Fauquier?


Month 2008 2009
May 49 70
June 67 68
July 117 62
August 57 65
September 53 65
October 49 66

The evidence is more mixed here. Was the increase in August, September and October because of the tax incentives?

Here's how Prince William looked:


Month 2008 2009
May 724 753
June 834 701
July 866 693
August 838 671
September 934 588
October 841 628

Clearly there was no help from the tax incentive in Prince William County.

I'll do Rappahannock County, just to be consistent, but I'd tell you the results there without even looking:


Month 2008 2009
May 3 7
June 4 6
July 2 3
August 5 2
September 1 3
October 4 3

This is Rappahannock County. Trust me, there weren't many first time home buyers in that lot!

The overall picture is not one that suggests the tax credit had any appreciable impact at all. Were a few extra homes sold? Probably. Was it enough to make any appreciable difference in the market? It seems unlikely. The only argument you could make for that would be that the market would have declined significantly without the tax credits. I'd be hard pressed to find data to support that argument. We'd likely have been in the same relatively flat pattern we've seen for some time now.

So, how do you feel about the extension and expansion of the home buyer tax credit now? Is it worth your tax dollars?

2009 Predictions Updated

Aug. 18, 2009
Categorized in: Local Market Conditions

At the end of 2008 I made some predictions about what the real estate market would likely look like for this year.

We've now got enough data from the first half of the year to take a look at how accurate I've been.

First of all, I predicted that the Obama administration would intervene in the housing markets and that this intervention would make a difference in the real estate market locally.

I got this one partially right. They did intervene almost immediately with a moratorium on foreclosures. You could argue about how much it helped, but we did see some let up on the loads of foreclosures coming on the market in the 1st quarter. And I would argue that it gave some mortgage holders time to rethink their strategy. Some of them decided dumping large numbers of foreclosures in the same market at the same time was not all that smart!

But I also anticipated that the adminstration would use that extra time to put in place a real plan to reduce the number of foreclosures. Unfortunately, this administration's plans, like those of the Bush administration before it, have proved inadequate to the challenge at hand.

The one measure that I would say has made a considerable difference in this market is the $8000 first time homebuyer tax credit. There are homebuyers out there buying homes purely because of this incentive. Between that additional demand and the reduction in the dumping of scores of foreclosures, we have indeed, seen some bottoming.

I was partially right and partially wrong on the inventory question as well. I anticipated that while the overall trend would be down, year over year, that we'd see a rise in inventory briefly in early spring, 2009. This is a seasonal pattern and I expected to see what we've normally seen. I was wrong and the decrease in inventory continued, even through the early spring. There was a blip of an increase in Fauquier County. And Rappahannock continued it's tradition of bucking the trend with an inventory that continues on an upward trajectory. But overall, inventories have declined steadily throughout the year.

I suggested prices would stabilize during the summer months. I may still get that right, we'll see. What it looks like right now is price appreciation at the lower price ranges, price stabilization in the mid range and continued price declines in the upper price ranges. The average sold price is down 31% year over year in Culpeper County thus far. The median sold price is down just 11% (close to my prediction of 10%). In Fauquier the average price is actually up an astonishing 45%, with the median sold price down 8.69%. In both of these instances I'd pay a lot more attention to the median number. The average is too easily skewed by large transactions. In Prince William county the average price is down about 5% and the median down 6.67%. But anyone trying to buy a home in Prince William under $400K knows how tough the competition is. Prices are definitely increasing in that market segment.

The number of homes sold for the year looks like it will slightly beat my projections. We're slightly ahead of where I thought we'd be right now. Barring a large drop off, we'll beat my projections, probably by 5-10%.

At this point, nothing I said makes me look like an idiot, always a good feeling! But it's only August!

Want to go out on that limb with me? What are your projections for the rest of the year?


June Market Stabilization

Jul. 12, 2009
Categorized in: Local Market Conditions

There is nothing dramatic in the numbers for June. This is good news. The market is relatively stable at this moment.

With the exception of Rappahannock County, inventory remains almost unchanged from May. Rappahannock had a huge jump (for Rappahannock) from 89 to 100 homes for sale. But they also had another good month for sales with 6 homes sold.

In Fauquier, Culpeper and Prince William Counties there was a change of a few properties in the overall inventory. But look at year over year and it's amazing how much we've improved. Prince William has roughly half the inventory it had a year ago. No wonder we're seeing things go under contract in days with multiple offers!

While Fauquier and Culpeper haven't seen the dramatic decrease we've seen in Prince William, each of them has at least 30% less inventory now than a year ago.

As you'd expect, the county with the lowest inventory, Prince William at less than 4 months, shows the most stability in prices. Culpeper and Fauquier both have roughly 8.5 months of inventory and prices still appear to be declining there. But the stats are a little misleading there. Year over year stats show a price decline of approximately 25%. And, while June stats show a price decline over May, the month to month numbers are not very reliable in this category. Because the volume of homes sold in any given month is relatively small, the numbers are easily skewed. Still, prices remain at bargain basement levels.

We are bouncing along the bottom in my opinion, maybe moving up a little in Prince William County. The big question here is still, how long will we stay on the bottom.

I'll be working over the next couple of weeks on a look back at my 2009 predictions and how I'm doing so far. Stay tuned for that and your chance to make fun of my skills as a prognosticator!

May Numbers

Jun. 12, 2009
Categorized in: Local Market Conditions

May proved to be mostly a month where the numbers went sideways.

Whether you're looking at Culpeper, Fauquier, Prince William or Rappahannock County, there are no dramatic changes.

There were some subtle signals that things have slowed down a tad in Culpeper county. Both new contracts and sales actually fell last month.

In Fauquier county inventory actually rose, ever so slightly (3 houses). But sales jumped month over month from 54 to 70, well above last year's pace at this time.

Prince William continued to shed inventory with only 3.7 months of inventory now available. I continue to see buyers discouraged with what they're finding available under $400K in Prince William.

Rappahannock County had the biggest jump in sales with 7 units selling last month. This being Rappahannock and the universe being so small, it appears to be a big jump (SALES TRIPLED!). But inventory is exactly where it was a month ago and we're unlikely to see any sudden movements in this quiet corner of the market.

Overall, signs would still seem to indicate we're at or very close to a bottom. Prince William still looks to be on its way back up with price appreciation. And, with a tiny amount of inventory available, prices there will likely continue to rise throughout the summer months.

No Money for Us

Jun. 9, 2009
Categorized in: Real Estate Legislation

Governor Kaine announced the Virginia recipients of the Neighborhood Stabilization fund grants yesterday. Unfortunately, neither Fauquier or Culpeper made the cut. Incredibly, Prince William county doesn't appear to have gotten a dime!

This would have had a small impact, but every little bit helps.

There was a little money given to Shenandoah, Frederick and Warren counties, $2.5 million for all three combined.

I'm not sure you could argue they are harder hit than places like Culpeper. In fact, I'd make a pretty good argument against that.


It appears Prince William got funds as part of an earlier $7 million award, along with Fairfax county.

The original announcement said there was $20 million available for the Open Submission portion of the program and another $10 million available for the Competitive Program. Between the $17.5 announced yesterday and the earlier $7 million awards, there should be another roughly $5 million available. So there may yet be funds available for Fauquier and Culpeper.

The Bad and the Ugly

May. 28, 2009
Categorized in: Local Market Conditions

There have been some positive signs lately in the real estate market. And, being an optimist at heart, I probably tend to focus on those pieces of news. (Let's face it, it's easier to get up and do this every day if I'm optimistic!)

But I don't want to be an unthinking cheerleader for the industry. The news is truly mixed right now and I want to highlight a couple of pieces today that give you the other side of the picture.

Bloomberg has a piece today on the latest mortgage delinquence/foreclosure numbers. To say the numbers aren't pretty is to put a little too good a spin on it. The delinquency rate and the numbe of loans entering foreclosure are both the highest since 1972. And, these are not sub-prime loans. We're talking about the loans any lender, in any market, would have thought were good. These are foreclosures occurring because of a combination of a terrible economy and the huge decrease in the value of the homes. If you lose your job and your house is worth half of what it was 5 years ago; even if you put 20% down, there's a good chance you've got a problem. If you have to sell quickly there may not be buyers at a price that gives you even enough to pay off your mortgage. Foreclosures continue to drive prices down and they continue to come onto the market at an alarming rate. Even locally, whether you're talking Prince William, Fauquier or Culpeper counties, the foreclosures are a continuing problem.

Meanwhile, the Wall Street Journal (subscription required) takes a look at whether a home is even a good long term investment. The article is not exactly an encouragement to buy instead of rent.

Here's the heart of their argument:

Yet look at the numbers. Since 1987, when the Case-Shiller index of 10 major cities begins, it's risen from an index value of 63 to 151. Annual return: Just 4.1% a year. During that period, according to the Bureau of Labor Statistics, consumer prices rose by 3% a year. Net result: Home prices produced a real return of just 1.15% a year over inflation over that time.

Critics may point out that the analysis is unfair -- after all, it starts counting near the peak of the 1980s housing boom. Fair enough. Look at the performance since, say, early 1994, when home prices were near a historic trough. Surely someone who bought then has made a bundle.

Not necessarily. Since then the ten-city index has risen from a value of 76 to 151. Annual return: 4.7%. Inflation over that period: 2.5%. That's still only a real return of 2.2% a year above inflation.

They go on to add that a home could cost you an additional 2% in things like property taxes, insurance, repairs, maintenance, etc.

I'm not saying I agree with their analysis. They admit that focusing on these 10 cities is not necessarily a representative sample. But I do think that not everyone should own a home and that it's important to think it through carefully before you buy, especially now.

National Price Declines Don't Tell the Whole Story

May. 26, 2009
Categorized in: Local Market Conditions

The nationwide numbers out today show that, year over year, home prices continue to decline. That decline was over 18% nationally. Because everyone hears national numbers, rather than local, the tendency is to assume that whatever you're hearing is also the situation locally.

Year over year, our numbers look worse than the national average. The latest numbers available from the local multiple listing service show year over year price declines between 23-32%. But that's only one piece of the picture.

If you're buying a foreclosed home or possibly even a short sale, you may not feel the pricing power you were led to believe you'd have. You see, all the buyers are looking in the same price range. So, even if there are 25% fewer buyers than there were a couple of years ago, if they're all looking at properties, say, on the western end of Prince William County under $350K there is little or no buyer leverage.

So, the pricing picture is considerably more complicated than what you hear in the national press. I'm not blaming them. You can't write a coherent article about prices everywhere! Just be aware that the picture here is a little more nuanced.

The other piece of information in the home price report was that prices nationwide are now at 2002 levels. I suspect we're not quite that low yet. But I haven't yet had an opportunity to do an analysis. I am seeing people who've been in their homes five years or more still under water.

And, if you're wondering when we bounce back up, this Bloomberg article wasn't particularly optimistic:

 “There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower because of the size of the bubble,” said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard & Poor’s.

In short, don't expect any rebound in prices soon. I believe from a price perspective we'll bounce along the bottom for quite some time, perhaps a couple of years before we begin very slow appreciation.

If you're looking for a ray of sunshine, one analyst on CNBC suggested yesterday that we could fix the housing problem any time we wanted by increasing the number of immigrants.

April Market Numbers

May. 14, 2009
Categorized in: Local Market Conditions

April results are in and for the first time in quite awhile we're seeing a small uptick in inventory in most counties. It's not large enough to be a concern at this point. In fact, given that we're in the busy spring/summer season, it's surprisingly small.

In Culpeper there are currently 494 homes for sale. That's still less than we had in January. And it's a huge improvement over the 800+ homes for sale there a year ago. Sales remain strong with 62 homes sold as opposed to 48 last year at this time.

Fauquier remains flatter. Inventory also rose slightly here. There are 569 homes for sale here now as opposed to 556 a month ago. And we're still much better off than April of 2008 when there were 764 homes for sale. But sales aren't much better than a year ago. 54 homes sold in Fauquier County in April. 49 were sold in this period a year ago.

Prince William was the exception to the increase in inventory. It continues to shrink there; good news for sellers, not good news for first time home buyers. There are 2944 homes for sale in Prince William county, roughly half of what was for sale there a year ago at 5880. Sales decreased very slightly month over month: 741 this month vs 750 last month. But homes are still selling much faster than they were a year ago when only 639 sold in April.

Rappahannock County showed a very large jump, from a percentage point of view. There are now 89 homes for sale here vs 76 last month. 27 new properties came on the market, a lot for this small county. That's the highest number of new listings coming on the market in one month in the last four years. But the number of contracts written also jumped to 5 even though sales fell to 2 last month. Large jumps in inventory in Rappahannock previously have resulted in a subsequent withdrawal of many of those listings as people tested the market and then changed their mind about selling. We'll see if the same scenario plays out this time around.

Overall, the market appears to continue to recovery. The only worry here is the seemingly unending stream of foreclosures coming on the market. Between foreclosures and short sales there appears to be no likelihood (except in Prince William) of price increases any time soon.

March Market Numbers

Apr. 14, 2009
Categorized in: Local Market Conditions

Prince William county continues on its headlong pace towards a seller's market. There's now only a four month supply of inventory in Prince William county. And, that's not because there's no inventory coming on the market. 1116 new listings were added last month. Meanwhile, 1200 went under contract. We are seeing many fewer new listings added than a year ago at this time. 1631 new listings were added in March of 2008. Meanwhile, closed sales were at 750 in March of 2009 compared to 502 a year ago. Meanwhile, the average sold price crept up from last month's $204K to $210K this month.

I'm not expecting big leaps in pricing in Prince William county. But given the short supply and the increasing demand I think we'll likely continue to see small gains in prices throughout the spring/summer season.

I'm thrilled at the progress we're making in Culpeper. We're down to 8 months of inventory there. Last year at this time there were over 800 homes for sale. This month there are only 464. Last year in March we sold 42 homes, this year 58. There is a March jump in new listings in Culpeper and the other counties, but nothing like the jump we've seen in recent years. And, as long as the net result is still declining inventory, the indicators seem pointed in the right direction.

Prices are still falling in Culpeper County, but I predict we'll see some stabilization by the end of the season. There are already signs of that in the bidding wars on properties priced under $300K.

Fauquier is moving in the right direction, but more slowly than Culpeper or Prince William. We've still got almost 13 months of inventory in Fauquier County. As in the other counties, the lower priced tier of homes is moving pretty quickly. But there's an awful lot of inventory above $350K that's just sitting. There are fewer foreclosures in Fauquier and, in some sense, that's hurting the market. Many of the buyers out there are bargain hunters. And, the bargains are harder to find in Fauquier County.

Still, the inventory is down to 556 as compared to 734 at this time last year. But unlike Culpeper and Prince William County, Fauquier's inventory actually rose this month compared to last month. That's not unusual for March, but is unusual compared to what's going on around us. Last March 35 homes sold in Fauquier County. This year in March it was 43. Again, we're headed in the right direction, but slowly.

Prices are still falling in Fauquier. The average sales price is $224K now as opposed to $318K a year ago. Fauquier is the hardest county to make a case for price stabilization this year. I don't anticipate stabilization in prices until we get a lot closer to six months of inventory. We may hit that level if we have an extraordinary spring/summer season. For now, my bet is that Fauquier prices remain the most likely to continue to fall.

Rappahannock County shows inventory rising slightly (76 compared to 71 a year ago). New listings were 17 in March of this year compared to 11 a year ago. There was 1 new contract in March and 3 closed sales. Those are typical Rappahannock numbers. This is the county that tends to be more sheltered from the real estate trends in the rest of the area. Prices do seem to still be falling in Rappahannock, although it's hard to identify by looking at the overall trends. And, Rappahannock residents continue to take their properties off the market rather than suffer the loss in value.

Disappearing Shadow

Apr. 7, 2009
Categorized in: Local Market Conditions

In the tough seller's market of the last few years a lot of sellers have tested the waters by putting their house up for sale, and, in the end, retreated. All those houses that will theoretically come back on the market when the market improves are called shadow inventory.

We're looking at two basic kinds of shadow inventory. The first is individual owners. They want to sell, maybe even already tried and are just waiting for the right moment to put their home on the market.

The second kind of shadow inventory is foreclosure inventory. The banks are reportedly sitting on 600,000 homes nationwide that they've already foreclosed on, but aren't yet putting on the market.

Both of these categories have the potential to dramatically increase inventory, which has been steadily dropping for at least a year now.

The thing is, I'm not overly worried and I think the danger has been exaggerated.

Yes, there are a lot of homeowners who still want to sell. But it's not just the low number of sales that keep them from trying. They also don't want to sell at these prices. And, if they're going to wait for prices to recover even a quarter of what they've lost, I think they're looking at waiting several years. Some of those homeowners will have changed their mind by then. They'll remodel the house to suit their needs and they'll stay. Those that do still sell will not do so in one huge mass. Some will have a higher tolerance for lower prices and will sell sooner. Others will likely wait a year or two or three. I don't believe there will be some magical month where all this "shadow" inventory pops onto the market at once.

The foreclosure properties are a bigger concern. But I'm still not convinced it will be a huge problem. A lot of those 600,000 homes will be in CA, FL, NV and MI, places hit harder than we were. So, the numbers will likely be smaller than people anticipate. Secondly, the bulk of these are likely to be at the lower price ranges. We've actually got a shortage of inventory at those price levels. In places like Prince William County and even Culpeper County, a lot of inventory would be absorbed very quickly by first time buyers. And, I believe the banks are deliberate spreading out the foreclosures in order to manage their losses. It's not in their interests to dump everything on the market at once.

So when someone tries to scare you with all the shadow inventory waiting to hit the market, take it with a grain of salt. It may not be all that bad!

Banks Walking Away

Mar. 31, 2009
Categorized in: Foreclosures/Short Sales

According to an article in Sunday's New York Times, it's not just homeowners that are walking away.

Apparently more and more banks are deciding some properties just don't have enough value to be worth the foreclosure process. When you consider that NAR (National Association of REALTORS) has estimated that the foreclosure process can cost a bank $60,000, properties at the low end of the market quickly become more trouble/expense than they're worth.

Of course, if you're a municipality with vacant, deteriorating homes where no one is paying any property taxes, you've got a big problem.

We haven't yet seen much of this in our area. Prince William would, perhaps have been most vulnerable to this with their high volume of low cost condos going into foreclosure. But the prices fell fast enough and demand jumped enough that the problem has been dodged.

There seems to be no chance of seeing this kind of thing in Fauquier or Rappahannock Counties. Culpeper does have some foreclosed townhouses selling below $100,000. But the numbers are very small and there seems to be enough demand in that price range to absorb what comes on the market.


Mar. 25, 2009
Categorized in: Local Market Conditions

I'm going to do it! I'm calling a bottom!

You can tell me I'm crazy. And, I won't entirely disagree. Bottoms are unknowable when you're there. You know it's the bottom after the fact when the statistics confirm it. So, anyone who tells you this is the bottom is, at best, guessing.

And, I will admit that this is an educated guess. But I look relentlessly at the numbers, day in and day out. I watch for trends. I study this stuff as though I was prepping for a final exam.

And, everything I see makes me believe we're at a bottom here. In places like Prince William I think it's clear we've already passed the bottom and all those people who are still waiting had best hurry up! Prices are already starting to rise.

In places like Fauquier and Culpeper it's much less obvious. There's still too much inventory and we have a ways to go to get to "normal". But the trend is solidly in the right direction. Even now, at the end of March when there should be tons of new inventory coming online for the spring market, inventory is still dropping. But new buyers are coming out.

Let me add one note and one caveat.

This is a sales bottom. I don't believe we'll see sales numbers fall from here, other than the seasonal dips we would ordinarily see. This is not a price bottom everywhere. In Prince William I believe prices have bottomed as well. I think you'll see small appreciation in Prince William this year.

In Faquier and Culpeper I believe you're still looking at a very small downward adjustment this year, perhaps flat if we get very lucky.  And we will not bounce off the bottom quickly. Expect relatively flat prices next year as well.

And, the caveat is, this assumes that we are not, in fact, entering another Great Depression. It assumes that the recession lingers through much of this year but that there is some recovery in 2010.

And, if the plan Republicans are introducing today for a $15,000 tax credit should become law, we could even see more price appreciation than I'm currently predicting. A note that this new tax credit is predicated on the buyer being able to put 5% down on the house.

Happy bottom!


Piedmont Real Estate Blog

Blog by Julie Emery
Amissville, Virginia

An ongoing dialog on real estate news, opinion and trends in Northern Virginia and the greater Piedmont area. Julie is an Associate Broker at Frankly Real Estate Inc, 6304 Crossroads Circle, Ste 102, Falls Church, VA 22044


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