I'm not sure why a lot of the agents on this site thought the Hampton Roads area was immune to this down turn. I know real estate is local, but I believe that if it doubled during the "boom" it's got to come down. Stay within historical guidelines like not spending more than 3X your income, in a good school district that fits your family's needs and you'll be fine. Also, remember that a typical return in a healthy real estate market is 4% a year. So what I've done to "gauge" my interest on a home is to find out what it was worth at a healthy point in history, let's say 1998 or even 2002, and then add 4% a year for appreciation. This is what the home should be listed for. If you'll do this you'll find that almost any desirable area around here is still 30% to 40% over priced. You'll also notice that rent in these areas aren't that far off of these historical "norms". Why buy a home with a $2500 mortgage when you can rent it for $1400?
If true (bear in mind, she was citing internal lender research from the banks she is handling REO's for) this is a chilling statistic.
I beleieve local HRoads prices will fall dramatically-- another 20 to 30% over the next 2 years. And so they should-- according to US Census data, the HRoads area experienced the 3rd highest price jumps in the entire nation over the past 5 years. Only Honolulu and Miami had bigger overall price increases, & they were both considered "Glam" cities-- not like pokey old HRoads.
And to realtor Doug: when you speak about sellers forced to 'price under the market' to compete with REO's, etc-- you are making it sound as if "market value" is some magic number that exists independently up there in the sky somewhere-- unrelated to, other than, and different from, the actual latest close comparable number. LOL.
In an area where 3/2's sold for 210 last summer, yet the latest valid comp in that area for a 3 BR 2 Bath is $185,000, then, hey!- $185K IS the new FMV---- (whether its a REO, FSBO, or whatever it is.) It is NOT an "under the market" price.
It IS the "market price".
Like it or not, there are not 2 sets of "market prices"-- the actual market price reflected in the sales records, and another magical one that exists only in realtors heads.
So, what about those VA Bch prices??
What is the increase over March 2008? What are the February 2008 numbers?
Only long term data and looking at historical trends will provide any meaningful information. And even then we have to know we are in uncharted financial territory.
This CNN article uses historical data and trends:
No rational person could have thought the prices could remain at the unrealistic levels the have been.
And yes, there are some areas that are more stable and will only see modest declines, but the areas that are getting hit...freefall...........
Your posts are so full of mis-information and opinion, I don't even know where to start. On your very first post you stated a renter can't rent a $400K house for $1,400 per month. Sorry, you are incorrect, although these correctly priced rentals are obviously in short supply. While there is a wide range of price-to-rent ratios (PRR) in VB, one thing is certain, the VB PRR also experienced a bubble and rental properties that are overvalued are taking a beating in 2009 which will increase in 2010 and 2011.
To construct the local price-rent ratio use the OFHEOâ€™s existing home sales index and the ownerâ€™s equivalent rent index published by the BLS. This makes it all too clear that there is some trouble coming on the rental market.
You asked where I got the home sale data from? From the VB database of course. If you don't know where that is, you can just look at the vbgov website like everyone else does until it's updated.
These people call themselves realtors?
The last Ichecked the military has been here for hundreds of years, since the Revolutionary War. How can the military be our saving grace in an overheated market yet managed to to maintain an "undervalued market" for 300 years (this per your first response)?
In my opinion, people attending ODU for a few years and leaving are not the right candidates for home purchases at this time. On the other hand, I've been looking my self at some places in Norfolk since I have to pay for my kids room anyway - thinking it may be better to pick something up and rent it out for the next 4 years or so but don't know if it's worth the hassle -
Appraisers are still pulling a few tricks as of about two weeks ago. He did it on my neighbors re-fi. Im guessing it was justifiable by some of the guidelines appraisers follow, but there is no doubt is was a stretch.
Also, schools out? I have to quit dropping off the kids every morning.
The hvcc update effective May 1 is more of an issue between the banks and the appraisers - not agents. If you think that this is something that is well received by appraisers, you may want to do some more research on that.
It's unfortunate that your 'friend' had such a bad experience and there are point of contacts for him to seek resolution.
Agents like to pretend there's no problem. They want to flood you with the numbers and exaggerations. It is in the truest form a dog and pony show. Don't be fooled by this. Think about what's happening now. Yes, its spring, schoolâ€™s out, residents are leaving and new interns are looking for a place to stay. Of course the numbers are increasing, itâ€™s a beautiful time of year to get out and look for a house. Then there's the military (OUR BUFFER) in this area and God bless them and what they sacrifice for us. Did you know that if they don't sell the house for what they bought, the government uses our tax dollars to pay them the difference. One example- an agent used this to sell service person X at maximum value and then turned around and bought it at a loss to again turn around to sell it at maximum dollar. The whole time my friend thought the agent was doing him a favor because everything was short notice. His jackal agent was there to again profit on a personâ€™s circumstance. It makes me sick to see this and then agents act like there no problem. A maximum effort by vetted appraisers doing their job and NOT COMING IN AT THE PRICE YOU WANT will take the greedy agents out of the equation. This is why as a buyer you do not use ANYONE your agent will try to push onto you except maybe the home insurance rep. The agent recommended inspector, attorney, mortgage rep, etc. are on the same boat as your agent to churn out the deal as fast as possible before the buyer realizes what's happening.
Agents will talk allot of trash and then you are supposed to give up 6% for this garbage? If they were not as good trash talkers they would be selling cars, think about it. There needs to be legislation to modify how agents are paid b/c a commission based on a sales price is in no ones better interest other than the agentâ€™s. Yes, agents, I know all of the HAs involved with listing, showing properties, negotiating a contract, setting up and tying loose ends, and of course bringing it all together to closing. Buyers and sellers beware and educate yourself. Ask lots of questions, if you're going to pay so much money think of it as you're paying for a personal tutor in Real estate and an excellent agent will welcome that.
Nelene Gibbs, Realtor, e-Pro
William E. Wood & Assoc.
mail to: email@example.com
I just heard something a little disconcerting, it's seems a lot of the regressive price sales like the one above, along with a few hundred more, are being aged and kept off the public radar. Im guessing this has something to do with the current tax assessment process.
I bet there is some serious trouble brewing at the VB assessors office.
On the rental question, I guess the question is property purchase date vs.assessment date vs. rental inception date, and reasonable rent escalation or even reductions. So people who bought rental properties pre-bubble vs. top of bubble are in vastly different situations. A bubble buyer for a rental is going to be in trouble.
I think you can read back on some of our posts and see that we have actually told people that it is sometimes better to rent. If I had a home valued at $400 and I could only rent it for $1400, I would not be happy about it but hopefully, i would have a low enough mortgage to deal with it. In my personal experience, my property that is valued in the low 200's currently rents for $1300. One valued at $400 would rent for approx. $2000 - $2500, depending on a few factors. I am sure it is different in other areas..some may be valued at 4 and rent for 14, I just don't see it anywhere around where I live.
I'm still confused about quoted sales price on Blackbeard!!
We both agree with that Lori is right about home Inspections? She put it beautifully, but I want to address your statement about rental prices. I like you Jeff and I want to help you so:
$400,000 x 6% (interest rate) = $2400/ month (principal and interest) correct?
Then add another say $3838 / 12months = $319 for taxes. I used Listing# 0906039 from REIN as of today for that number.
No, my insurance is about $100 / month, but my house isnâ€™t $400k, only $350k, so we will go with the lower number to be safe. I have Farmerâ€™s, call for a quote.
2400 + 319 + 100 = 2819 correct?
This is a close estimate of a monthly payment for a $400,000 home, but Iâ€™m probably on the low side. I can do exact numbers too, but this is much faster and can be done in your head.
So, we know that landlords are all about making money right? Unless a landlord needs to lose $1400/ month for some reason I donâ€™t see them renting a $400,000 home in any city or state for $1400.
To be fair you said a monthly payment of $2400. At 6% interest that works out to roughly:
$2400- 400(taxes and insurance) = $2000 / 6 % = $333,000 for a home.
So, I have an idea. Letâ€™s look on Zillow.com for $330k-$350k homes and email each of those people who have their email address in there and ask to rent their homes for $1400/ month. Say something like you were wondering if they would consider renting for $1400/ month with a 2 month deposit up front. Also that you will do a credit check and employment verification and fill out their application, but you need to know by tomorrow.
I will email 3 people and you email 3 people and letâ€™s see if anyone responds. Iâ€™ll post any response I get in the next 2 days and you do the same, Jeff.
Think of it as a way to test your theory. Iâ€™m very curious because we have a rental department in my office and I can probably find many people to rent those homes. In fact Iâ€™ll do all by myself if you donâ€™t want to. Iâ€™ll post any responses here and you can verify. Well, everyone can check, but please donâ€™t flood anyoneâ€™s inbox. A rental that valuable is too good to make angry.
Also, did anyone see todayâ€™s headlines in the Virginian Pilot? 4% drop for the first time in decades? Ron Vilanueva says people who live on the water have maintained their value. It says 75% of homes will drop an average of 4% and 8% of homes stay the same. Where else in the country are they saying that? I will tell you, nowhere. We live in a major metropolitan area and our property values are basically stable according to this article. Hmm, does that support my opinion that we have a buffer here of some sort? I think it does.
I'm still confused about the price quotes that were quoted for the house sales. I think he may be talking about the condos there, not the house on Blackbeard. I think Zillow had my house as an apartment complex one time.
Yes, I called an appraiser an inspector. My bad, I was just sticking to the terminology used. Guess I should have corrected. Thing is, Lori is right; people have many options in how they dispose of real Estate. I wasnâ€™t really trying to focus on that, but it does have a bearing. My point of view is and was that the military are keeping our area more stable than the rest of the country. Also I would like to limit the scope of my statement because to completely cover every reason would be exhaustive. I simply believe that most military are trained to listen to good advice. Read Danâ€™s post and he tells us exact what Iâ€™m saying. We have a very large ratio of military to civilian citizens. Sure we have a lot of investors and remodelers and small companies trying to make a living thru real estate, just like everywhere else. I checked Realtytrac.com and our numbers according to them are quite low in fact when I put in my zip code it came up 8123. My ZIP Code Foreclosure Rate Ranking down at the bottom of the page in the Trends/Market View section of that web site. So according to them, out of however many zip codes there are in America, my zip is 8123rd. That doesnâ€™t sound too bad. I guess we donâ€™t need to sweat it all that much after all. Also, I read a few articles about how people are looking to this web site for accurate info about trends in Real Estate. Seems that the consensus was that if they tracked info the same way all the time then the numbers was probably pretty close, but not exact. The real problem is that most people donâ€™t know who to trust about the overall foreclosure rates, or where to find truthful numbers.
Where did you see that sales data? From what I see, the house was placed in a trust. A lot of people do that. Also, on the 'in depth' VA inspection ?? In all of the homes that I have listed and sold (and bought myself), the VA has never done a home inspection or even required that a home inspection be done. The VA sends an appraiser out to the property. The appraiser may point out something (just like an FHA or even conventional deal) that they see that needs done i.e. chipping paint on a home built prior to 1978, and sometimes misc. repairs. You've got your termite/moisture inspection but the guildlines for that are nothing like the OPTIONAL home inspection that a buyer may (and should) choose to perform. I'm not posting to agree or disagree with your sales quote, just would like to know where you've bought that the VA comes out and inspects the house for you. Don't bite my head off for asking, guidelines could be different, just have never seen a VA home inspection done - ever.
Now that is something to get excited about. He got a $649k home for free WOW!! How can I do that? Hmmm.
LOL, see how not knowing ALL the details of the transaction IS VERY MISLEADING. You guys don't know anything other than what you read on these various web sites. If you were involved , Please tell us exactly what happened there. I'm sure it's not what we expect. Not knowing all the details of each deal makes it hard to say that one specific home is a good indicator of current conditions. If you want to know the true scoop go here: http://www.vahomeownersalliance.com . If they lie you are free to sue. Here's some answers for people at this site; http://realtytimes.com .