When Tom Edwards and Cyndi Culpepper put a house in Port Norfolk up for sale last summer, they thought it would easily bring $330,000.
Edwards had bought the Victorian on Douglas Avenue in Portsmouth in rough shape for about $90,000 in 2004. He and his wife invested about $110,000 more to refurbish the place.
The house didn't sell. In February, the couple hired a new real estate agent who convinced them to drop the price to $291,000. Culpepper said she was reluctant.
The couple are like many Hampton Roads home sellers who have resisted lowering their prices as the local housing market slowed and values across the country dropped.
Through the first three months of this year, the median sale price of existing single-family homes nationwide fell 7.7 percent from the same time in 2007, according to the National Association of Realtors.
In Hampton Roads, the median price inched up 1.6 percent over the same period. But that increase hasn't held.
More recent regional data, through May, now show median sales prices down 1.1 percent from the first five months of last year. The median is the middle point - with half of all prices higher and half lower.
As sellers here have held out on price, the inventory of available homes has piled up.
The number of active listings across the region - including all Hampton Roads localities as well as outlying rural areas such as Western Tidewater, the Eastern Shore and northeastern North Carolina - climbed to 15,183 at the end of May, almost 11 percent higher than the same time last year, according to the Real Estate Information Network Inc., the regional multiple listings service. Current listings are almost five times the number in May 2004, when the local market headed toward its peak, said Vinod Agarwal, an economics professor at Old Dominion University, whose data includes a slightly smaller regional slice.
Listing prices for homes in Hampton Roads may be indicating more angst ahead for sellers. As of the end of May, according to REIN's data, the median price of active listings fell to $289,900, down more than 9 percent from $320,000 a year earlier.
Agarwal, a member of the university's Economic Forecasting Project, said he expects home sale prices to end up down by about 5 percent in 2008 from last year. "In our thinking, resellers of homes will sooner or later realize that if they want to sell their homes, they're going to have to lower their prices," he said.
Sellers' reluctance to come down in price isn't always about making more profit, real estate agents said. In many cases, it's about paying off what they owe.
Homeowners who bought at the pricing peak in Hampton Roads will want to cover their mortgages and still have enough for their next down payment. Others refinanced in recent years, taking on additional debt on the increased value of their homes to pay for upgraded kitchens, roof repairs or a new car.
Juliette Brown, a real estate agent for Nancy Chandler Associates, recently listed a home in the Olde Towne neighborhood of Portsmouth for $450,000. The owners bought it for $360,000 in September 2005, city assessor's records show.
They made many upgrades to the historic house and now, with a growing family, hope to earn enough to put down on a larger place, Brown said. Like other sellers, they cannot give too much on their asking price "because of what they already owe the bank or because of what they need to buy their next house," she said.
No matter their financial needs, sellers must face the reality of today's market if they want to move their properties, agents said. Many look back at a neighbor's sale two or three years ago and want to cling to those prices.
Brown said she bought her house in the Greenbrier area of Chesapeake in 1998 for $125,000. Four years ago, a neighbor's home sold for $375,000. A similar house nearby is listed now at $299,000, she said.
"It's hard for them to understand, to fathom, that it's different from a couple of years ago," Brown said.
They think, she continued, "My neighbor across the street made $100,000. I want to make $100,000 now."
Much in the housing realm has changed, though. The woes of the credit industry have led lenders to tighten criteria, leaving as unqualified many prospective buyers who would have received loan approval a few years ago. Banks today are more reluctant, for example, to write mortgages before applicants have sold their own homes.
When the market boomed three years ago, buyers couldn't be choosers. If the only house available at the right price in the desired neighborhood needed some repairs or sat on a busy street, that's the house a buyer took.
That's generally not an issue now. "If I have 15 houses to choose from, I'm not going to live on that main street," said Joyce Howe, an agent for Rose & Womble Realty Co. "There's a lot of good homes out there."
Keith Abernathy, one of Howe's clients, said prospective buyers in recent years couldn't find an available townhouse in the Sandie Point development in Portsmouth. He bought his condominium there in 1998 for about $150,000 and put it on the market in February 2006.
Listed at $300,000, the three-bedroom condo's appeal suffered when the housing bubble began to contract. Abernathy took it off the market for about six months over the winter 2007 holidays.
This spring, he relisted it at $279,000 and has since dropped it to $269,000. Now, Abernathy is offering other incentives: a home warranty, a year of paid condo fees and $5,000 in paid closing costs.
"There comes a point where you don't want to lower the price and bring the values down for your neighbors," Abernathy said, adding of Sandie Point: "It's one of the best-kept secrets in Portsmouth."
Back in Port Norfolk, Culpepper and Edwards recently told their agent that they would entertain offers as low as $250,000. The couple, who live across the street from their home on the market, has invested in a number of properties in Portsmouth.
"We buy, we rehab, we sell - well, we try to sell," Culpepper said. "Lately, we haven't been very lucky with the selling part."
Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com
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For the record...
Thanks to all that think I am a real estate agent but I am not. My comments are completely based on my experiences as a recent home buyer in this market. When faced with 20 similar houses to buy in April, I COULD have simply relied on price to buy but location, schools, travel distance to work, age of home, and amenities were all apart of the decision process. My housing choice was based on all my preferences and my budget. I think what was different for me this time was that two offers on two different properties fell through. On one, we were only off $1100 but the seller did not want to budge-which is his right. Maybe in another market, I would have found the extra money but instead I went to the next house on my list and was able to negotiate a sale.
Honestly, can you remember the last time Hampton Roads saw a buyer's market? I think many sellers don't realize how to sell in such a bloated market.
The Real Deal
This article feeds to fears and unsubstantiated rumors that drive an economy into recession. Like most journalism today, it is one sided and fails to deliever the news. News doesn't sell ad space; rumor, gossip and fear sell newspapers and therefore support ad space.
The real facts for Hampton Roads, are that the average household income cannot support a mortgage of more than $300K. As we all know, the local economy is based on the Government, the Military, and the infrastructure necessary to support those sectors. Jobs in those fields provide comfortable incomes, but not crazy lifestyles.
The people in this article were naive in their planning and put too much money into a home. Now the value created will be lost because the majority of the buyers are not going to be looking at homes above $300K in this area. Anyone trying to sell a home above $300K is going to fall into this same perdicament. However, houses below this threshold should maintain their value. (Unless, of course, journalist and uninformed bloggers continue to pollute the bandwith).
This is nothing new!
Gas prices are high... Why? The BRIC countries are growing at ridiculous paces and the dollar is weak. There are more folks who want it than there is supply to sell. Housing is no different! When the stock market fell apart (2000-2002), and rates were at 40 year lows, speculators, as well as normal home buyers, were shopping for the same commodity. There was not much in the way of supply, so prices climbed considerably! As far as the return on real estate, the average, as Ethan mentioned, is NOT much above inflation. The "real" return is rather small, but at certain times real estate can surge. The federal government basically forced banks into bad loans, and banks began to buy and hold ticking time bombs in their books. We can blame anyone we want, but fear and greed run all of these markets. Convince someone that they'll miss out on a "good thing", and they'll make stupid decisions. Convince someone that things are never gonna be the same, and I'll be buying whatever it is that "won't ever come back". Warren Buffett has it right. When folks are scared to death, I'm buying. When folks are greedy, I'm selling. As for making a buck, don't give house flippers a hard t
Killed my dreams of homeownership.
This artificial inflation has killed my dreams of homeownership. At least for a couple more years. Where is the criminal prosecution of the fraudulent loan providers and takes? And why in the world are we going to bail these crooks and idiots out?
IMO this free market of ours has been hijacked and our government and leaders allow this to happen. As the economy continues to die expect to see more urban crime and more scandalous dealing exposed.
ODU or Baobabs.....decisions, decisions.....
Baobabs said: "...But the real problem is that your ilk is completely incapable of admitting that the market conditions in Hampton Roads are better than those in most markets around the US...."
From Pilot writer Tom Shean today: "...The weakest sector of the regional economy remains home building, where the dollar value of permits for new single-family homes tumbled 25 percent from the January-through-April period last year, the ODU economists said..."
A 25% decrease in the stock market would be catastrophic. But it's no big deal in the housing market? Says who?
So who should I believe...Baobabs the probable new and used house seller, or ODU, an impartial center of learning? Decisions, decisions.
Too expensive to live here
People in this story are bellyaching because they won't make a 50% profit or $100 grand on top of what they owe? Cry me a river.
It's flat out obscene how quickly housing prices spiked around here. Now with gas at $4/gallon, moving out to Elizabeth City or other places is out of the question.
Can't afford housing here, and can't wait to leave...
Rents are supposed to be higher than owning!
Did you know that traditionally rents should be higher than owning? This is because when you rent, you make your landlord (funny term) come fix everything that is broken. So landlords have the burden of upkeep. It's only in the distorted market, with the notion that there are huge amounts of riches waiting after owning for 3 years. But I'm noticing something else. Recently constructed homes are garbage, rush construction to milk the money while it was good. Often criminals were using illegal labor. On top of this, appliance quality seems to have gone to garbage. Probably all made in China with very little QA. What's more, renters have freedom. They can easily leave if they dislike their neighbors, or get that fat job offer. So why the big rush to buy houses? They have a high carrying cost, that is, the maintenance. The instant riches and virgins promised by the Realtor isn't true in a sane market. They are illiquid in a sane market. They are just houses, easy to build, plenty of land for them... nothing special. Oh yea, people were trying to make up for the gap in their retirement savings and lack of increase in income with rising costs of living.
Adamc--a.k.a. cheerleader for Ethan!
Adam, dearest Adam. I do love your pessimism masquerading as "realism." Neat trick, really. You've been reading too many naysaying, doomsdaying blogs. That much is painfully obvious to everyone here.
But the real problem is that your ilk is completely incapable of admitting that the market conditions in Hampton Roads are better than those in most markets around the US. There is ample data out there if you care to look...e.g....local foreclosure rates, local appreciation/depreciation data in both month over month and year over year form, local current inventory data, local listing times, local sales price to listing price ratios, etc...etc.. Maybe you're not really interested in the facts. Or, maybe you're just confused. I doubt the latter; I fear that you know exactly what you are doing. You just loooove to glom onto any iota of negative, national data and then use the same to cast aspersions on the local market. The fact is that we in Hampton Roads have not seen the ultra-high level of oversupply relative to demand as have many, many other markets around the US.
Yes, you know very well that the truth is that the folks who bought in 2005/6 most anywhere in the US, who paid
stevem, most return for the buck
Stevem - mcmansion gets the most return for the buck. Huge tyvek wrapped box on a postage stamp of lot. Often times the builders use HOA to take care of the roads so they can make the roads smaller to squeeze more profit out of a neighborhood, and the homemoaners get stuck paying for the roads where neighborhoods with legal width city streets don't have this burden (both pay same amount of taxes). Realtor is a made up trademarked term to hide the true profession, new and used house salespeople. This has lead to a false trust of these salespeople, as some sort of financial adviser. The barrier of entry for Realtor is low, and most don't seem smart at all. It's fun to pick apart their stupid lines they say, and in other professions they would be in jail or loose license (guarantee of future returns). With the internet, we don't need Realtors and their 6% burden.
Who's deluded, Babs?
Simple economics would tell you that the gross disparity between home costs and rents indicate a serious problem with home prices. If you go back to a more sensible era (say, two decades ago) and look at the sort of loan a family with a $60,000 income could afford, it is obviously far different than the $300,000 McMansions that have flooded the market.
Your silly cheerleading that somehow housing in general, or specifically in this area, defies well-established rules of investment and economics regarding return on investment is rubbish.
Have a look at this chart:
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
There are still major market corrections on the horizon. This is just the beginning.
Can you hear it?
I can just hear the spoiled little girl in Willie Wonka:
"My neighbor across the street made $100,000. I want to make $100,000 noooow."
The $85K house I bought 20 years ago, lived in for 10 years and then sold for $90K is still just a small rancher in a middle-middle class mixed neighborhood in Norfolk. No build ons, no particular fancy up-grades and 20 years older. It's for sale now for almost $180K. It's still only worth maybe $90 or $100K. To pay any more would be a rip off.
powder puff reporting
Am I the only one here appalled at the shoddy reporting in this frontpage article? This story screamed out for a hard-data analysis of the local housing market. Instead, we got pretty pictures of a speculator's living room.
Well I don't want to see "pretty pictures". I want to see a breakdown of each Southside city's housing market from Jan to May 2008-- the number of homes sold, their median list price vs. median sale price, the number of REO's and foreclosures, and the absorbtion rate. IOW, I want real, factual, local news-- not some pathetic link to the NAR's data on "national metro markets". Who in HRoads gives a hoot in a boot what homes sell for in Worcester, Massachusetts?
Local subscribers want and deserve to know the full story, in our individual cities, in our local housing market-- what the heck does the Pilot think we bother to get a local paper for? It's increasingly all too obvious that since it's up on the sale block itself, the Pilot is reluctant to risk offending its local housing industry advertisers by printing any "bad news" about the HRoads bubble.
This sort of sham reporting on a subject of such vital local importance is unconscionable. No won
City governments helped
Everyone faults the McMansion owner, but think about this. During the runup, there were only two types of houses being built. McMansions and condo/apartments. The reason there were no small affordable houses being built is because the city governments discouraged it. A McMansion on a large lot decreased the services footprint while providing a high tax base. Apartments/condos supported more people on an even smaller footprint. Small affordable houses on small lots meant more services in the form of roads, schools, sewers, and just about everything else. That's why people who wanted to move up from places like Green Run had to jump to Glenwood, while those former residents jumped to 400k+ new homes. Government policy limited the housing pool in order to maximize their tax base while limiting service impact. When you couple in HUD visions of homeownership for all, and Wall Streets quest for higher returns than equity investments, Hampton Roads economic future isn't that hard to predict.
Jealousy, the Root of All Evil...
Everyone posting about "greed" here is just jealous. If you had the compassion to take on a rehab project and the money to put down for the purchase of a run-down house then you too could make money. Everyone makes money one way or another. It is a blessing that some people choose to purchase run-down houses and rehab them, because if they didn't then the neighborhoods (in any of the Hampton Roads cities) would be overwhelmed with ugly houses that people neglected over the years. There is a lot of hard work that goes into rehabbing houses and not everyone is cut out for it. Let them make their money however they choose and they can sell it for however much they want to. As far as their names, that is totally irrelevant and none of yall's business.
speaking for myself
For the past 3 months I've been trying to sell a condo in OV for $98,000 and so far the only people interested are from NY.
Poco
Enough of the junk about her name. It really doesn't have a place here. It's there life and lifestyle. We should leave it at that. Honestly, people who meddle in others personal affairs to me are creepy. No jabs, just asking.
But my realtor said it's different here!
Bao - I didn't say it has gone back to 2001 price levels, I said that based upon the stagnant salary growth since 2001, which has actually gone DOWN since 2001 when adjusted for inflation, that prices will revert to 2001 levels. It's still early in the game. I do know that REO (bank owned) has skyrocketed, based upon listings. I know that inventory is pretty high, I know that there is tons on the high end. I know lots of subprime lenders are gone, and they fueled it. Sure there are still emotional people who will "catch a falling knife." If they hold for 10+ years they will be fine. But in the meantime, it makes way more sense to rent. The housing game is over. Next year option payment ARMS start to reset, look for trillions in losses. Then come the HELOCs. You don't think all those high end cars rolling around Hampton Roads are paid for with salary do you? Nothing like financing a car for 30 years that will last 5.
Oh, Ethan. There you go again...
No, Ethan. You were NOT right. Housing prices in Hampton Roads (this is where we live, after all) are NOT what they were in 2001. Nor will they ever be so. Sure, we have seen slower growth, but no backslide as of yet. You've been predicting backslide for years; yet, we've seen none. In fact, you've been predicting tremendous, monumental backslide on the order of 50 percent...if memory serves. Well, you, sir, have been wrong. While we may see low single digit depreciation this year, we will never, ever see prices slide to 2001 levels as you have predicted. Never, ever. Sorry, but the facts do not support your theories. Additionally, anyone who doesn't understand that Hampton Roads real estate is a long-term investment that has ALWAYS appreciated over time (and better than the national average) despite cyclical stagnation and downturns is clearly deluded.
It's pretty obvious that barbara is a real estate agent
It is so obvious which commenters are a part of the industry: "Right now with such a huge selection of houses to choose from, why should a buyer pick the house with the lowest price? Smart buyers are looking for the whole package: low price, closing cost assistance, brand new kitchens and bathrooms, good schools, great location, safe neighborhoods."
They always try to downplay the price issue, and paint a rosy picture. Phrases like "smart buyers", and "things are turning around", or "It's not nearly as bad here in the xxx area" are dead give-aways. Sorry Barb. You ain't gonna make the commissions you once did. Prices will fall at lease another 20% - 30% before levelling out. The price parity will be driven by the market. Period. People can no longer qualify for cheap loans, and they are also realizing that being house poor really stinks. I am telling my kids to wait 3-4 years before they buy. That is how long prices will drop. It's time the industry came out of denial.
And I still think a wife not taking her husband's last name (at all) IS CREEPY. I once worked for a couple like that. She did not want anyone to know that they were related due to their cr
I hope they get buried...
They are doing nothing but flipping houses...and they expect sympathy? Hopefully it never sells and they take a $100k+ loss!
Hmm
I think Rusty is a realtor. Not only are the incomes unable to support the house prices without reckless lending (that is bringing down the banks), but the tax income for our cities are based on these false values. It's nothing more than Dutch Tulips, women paying $5000 for beanie babies, and people paying $2000 for a playstation 3 before Christmas, when they sell for the ticket price the day after. It's get rich mentality without work, and it can't work unless salaries double across the board. No matter how bad the ratings agencies lie about the value of loans. Senator Dodd got preferential treatment from Countrywide's Mozillo and they are still taking his 300 million bailout seriously. This is corruption.
ROSE
You are correct about the McMansions being cut up and split into low income affordable housing. This is already happening in some areas of northern VA. I recently went into one of those 6 bedroom 5 bath mcmansions around the Chantilly area. It looked like a normal house from the outside, except for the 10 cars parked out front. Each bedroom door had its own lock and usually their own bath. For the ones who did not have a bath in the room they just used the community bath in the hall.
I can see this becoming a huge problem in the areas where the prices are dropping dramatically. This trend will drop the prices even more.
Barbara
I think youre completely wrong about lowering price not raising demand. As of now, I will need to move out of the area to afford a single family houses in a decent neighborhood, or put off buying until my mid 40's. Most people my age are in the same boat. If the prices cut down to the point they were in the mid to late 90's, I may actually stay here. As of now, Im gone. I know a number of people who think the same way, or already left a while ago. There is no economy to support these rediculous housing prices, and the prices likely will never come down remotely close to the wages, so all we can hope for is that housing will stagnate enough for wages to catch up.
Real estate is still a solid
Real estate is still a solid investment here in Hampton Roads, despite what is being reported herein. Headlines like this one are misleading; I suggest: "Flippers Not Getting Rich Quite as Quickly."
Every homeowner's equity position is jeopardized by this type of sensationalized, specious reporting. Homeowners are being done a grave disservice by the Pilot.
Prices should fall
I don't pity these people that relied upon artificially inflated prices to get rich. Free money for people that can't afford to pay it back is what drove the price up and out of reach of people like myself that make a decent living, but refuse to be house poor. I think the people in this article are hilarious. Its not 2006 any more. You are out of people to screw over. Prices are coming down, you aren't going to make $100,000 just for painting some shack in P-Town. I'll try to buy when it hits bottom. People on my street in Portsmouth are crazy too. There is one FSBO that doesn't list sq ft(its ~1300) for 195k. I expect that sign will stay up for many months, West Haven Park isn't a great neighborhood.
Here's another peice of the
Here's another peice of the puzzle.
Bush asked for minorites to get a bigger piece of the america dream in a State of the Union Address. This was done in large part by feds looking the other way to lower credit standards. Here we have the government stepping into and cuasing some of this for political means. This helped to start the overly used, "Perfect Storm" that doomed the market.
So, "The powerful building and realtor lobbyist" is not to blame.
I defined myself as a conservative for the record.
No Sympathy
I have no sympathy for greedy house flippers who contribute significantly to overinflated, artificial housing prices. There is one thing about buying a home as an investment, fixing it up, and selling it for a profit and another thing altogether to get greedy. They bought the home two years ago for $90K and want to sell it for $290K? And putting $110K into a $90K home??? Sounds like a poor business model. That is basically looking to make approx $50K a year on one home flip. These are the same type of people that are artificially boosting the foreclosure statistics because they can't get their unrealistic prices and their flipped properties and just walk away because they still have other properties to sell and the taxpayers are bailing them out.
More people should look at the homes they buy....
as a permanent place to live. Granted it is one of the biggest investments most people will ever make - but I've never bought a home for investment/money-making purposes. Our society has become so transient that living in a home 2-5 years has become more the norm than living in one for life and establishing community roots.
FWIW, Ethan, I agree with *nearly* everything you say -- especially the housing price ripoff!
prices were way out there
That is so funny that it was said houses should deprecate, as cars do. I remember when Buckner Farms was built in 1998-a four bedroom went for 130,000.00 and by 2005 they were asking over 300.000.00 and getting it-why? I can’t feel bad for anyone who spent more on a home then what they could afford. Flipping a home is a risk and that couple knew that and need to bring down the price if they want to sell! I could have sold my home for more needed space, and double my money. We didn’t I wasn’t going to buy a home for what I felt was too much and over priced! How can a home be worth more in a few years, I mean double the price-greed! Now people stuck with over priced homes are suffering-oh well. The price had to come down, it was crazy! Maybe things will be better, and now the families that have been saving for home can now buy!
Good Comments
There are many good comments about this article and I agree with many of you. I think that Mr. Barrett about hit the nail on the head. Our federal regulatory agencies overseeing the banking/credit and investment industry did not do their job. The powerful building and realtor lobbyist
groups also played a hand in getting the loan industry to relax the standards for credit and flooding the market with too many overpriced homes. As one other writer stated in his comment many foreign banks and
investors became caught up in this trap and are about to lose their shirts. The loss of many good paying manufacturing and technical jobs due to outsourcing and insane free trade policies by our government did not help either. The recent increases in oil prices are also going to make things worse. Don't expect anything to be stable in today's 'New
World Disorder'.