Hampton Roads home prices begin to show signs of slump

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