Since she put her Norfolk rental home on the market four months ago, Robyn Hofheimer has lowered the asking price three times. Still no bites.
Hofheimer, 31, and her husband own two houses in Norfolk. They live in one and rent the other. Now, the couple want to sell both and move to Virginia Beach, where they grew up. Timing isn't on their side.
"The market is just not moving out there at all," she said.
At the peak of the housing boom three years ago, it took less than a month on average to sell a home in Hampton Roads. Economists at Old Dominion University expect the average will rise to nearly three months by the end of this year.
In the past two years, the number of homes for sale in Hampton Roads has skyrocketed to historic levels amid the largest housing market slowdown in more than a decade. In August, 14,894 homes were unsold - nearly four times as many homes as were on the market in August 2005, according to the Real Estate Information Network, the local multiple listing service. Its figures include South Hampton Roads, the Peninsula, and outlying regions including Williamsburg and northeastern North Carolina.
At the current sales rate, it would take 10 months to work through the backlog of homes for sale. At the peak of the housing boom, the supply ran as low as one month. The ODU economists say a four- to six-month supply is normal.
At the same time, foreclosure-related filings in the Hampton Roads region have more than tripled in the past year, according to RealtyTrac, which reported that in August one in every 959 homes in the region was in some stage of foreclosure. If foreclosures continue to rise, that pushes more homes onto the market.
As the supply of homes for sale rises, the number of potential buyers is falling. A tight credit market is making it harder to get a mortgage, and this month the federal government did away with a program that allowed buyers to get a no-money-down mortgage.
"Fewer people are qualifying for loans," said Ron Foresta, president of Rose & Womble Realty's resale division. "Either the down payment is not there, or they have low credit ratings."
The result is falling home prices across the region and long waits for homeowners hoping to sell their property.
Builders and homeowners alike have marked down asking prices and are offering incentives to get contracts. Realtors have said it is common to see a price on a particular home fall $25,000 in one month.
The median price for a new home in South Hampton Roads was $325,000 in August, down 4 percent in the past year and nearly 20 percent in the past two years, from $404,090, according to estimates by the local multiple listing service.
Individual homeowners have been reluctant to lower asking prices. In August, the median price for an existing home was $231,000, down 2.9 percent from a year ago but up slightly from 2006.
Real estate experts said many homeowners are asking unrealistic prices.
"Sometimes they don't necessarily listen to what their agent is saying," said Shirley Conner, a broker with Prudential Decker Realty. "A lot of people start out at what they would like to get for it. Then when they don't get any showings, they reassess it."
Vinod B. Agarwal, an economist at ODU, said individual homeowners usually take longer to lower their prices because they are more vested in their homes.
"Sellers see that their neighbor sold their home last year for $400,000, and they still think they should sell theirs for $450,000," he said. "Until the sellers realize that this is no longer the same market as 2005, it's going to take awhile to get through this inventory."
Agarwal predicted existing home prices will fall by as much as 5 percent in the next three months.
Gina Wilkinson, a real estate agent for Prudential Decker Realty, said homeowners with financial problems are coming into the market in droves, hoping to sell a home and unload a mortgage they can no longer afford.
"You've got people who can't sell properties because they haven't really owned them long enough to have any equity in them," Wilkinson said. "I run into people all the time who took money out of their homes but didn't put that money back into the home. Yet they have a new BMW in the driveway."
Some home sellers seem to be getting the picture. Two weeks ago, Mari-Ann Messick put her Virginia Beach house up for sale in hopes of trading it in for one closer to the beach.
Messick, 45, and her husband bought the three-bedroom home in the Lake Shores neighborhood in 1992 for $142,000. She listed the house last month for $345,000.
"Two and a half years ago, we could have easily gotten $400,000 or $425,000 for our house," she said. "Now I wouldn't even dream of listing it for that much. Nobody would even look at it."
The glut of existing homes is making builders retrench and look for ways to keep revenue coming in as new home construction slows.
"All of us are down right now," said Terry Gearhart, vice president of marketing for home builder Terry Peterson Cos. "Everyone had to adjust pricing. We have to move inventory."
Gearhart stressed there are still pockets of strength across the region, including his firm's Sajo Farm development in Virginia Beach, which has homes starting around $300,000.
He said sales have been so strong at the 295-home community that Terry Peterson is considering raising prices.
For buyers, the abundant supply normally would make this an ideal time to start scanning the market for deals, with plenty of options and low interest rates. But turmoil in the banking system has potential first-time buyers such as Denise Watson a little wary.
Watson, 37, of Norfolk, and her husband have never owned a home. The couple live in base housing at Norfolk Naval Station. She is a nurse, and her husband is a military policeman.
"We thought about buying a house last year," she said. "But the people we knew in real estate told us to hold off until this year."
Now the couple has mixed feelings.
"You don't want to buy a house for $350,000, then six months later it drops to $300,000," she said.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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Ira, isn't your question
that the Dems voted down some FM2 oversight? I said yes, but, what seems to be overlooked is what happened to the sub primes after the investment banks got a hold of them. What happened to AIG was over leveraging for a quick buck. The same holds true for the CDO's. The subprime loans by themselves would not take down the economy. Wall Street got drunk on them and off we went. So many people want all the blame to be on the mortgage holder and the Dems. Why don't we blame the concept of a mortgage, period? That started all of it. Before such lending became available, you had to buy a house for cash. I understand the impact of sub prime and its effect on housing prices, but the rampant trading and investing in exotic and fraudulently rated investment vehicles was strictly a Wall Street issue.
joanie and Don
First Len: No you didn't. You don't seem to understand the subject. More importantly, my letters were an attempt to dispute YOUR political finger pointing. When confronted w/ the true cause and shared blame you bob and weave aaround the subject. Please stay focused.
Joanie is correct that deflation is happening. That could be good or bad, depending on how much cash you have. It is pretty simple, people will sell stuff for less when in need. Those w/ liquidity can buy more stuff for less. It is also an indicator of reccesion and depressions though. The fed cannot do much except add money to the pot via interest rates. Either way, hold onto your hats. Those who want a political blame or solution will be selling their stuff soon as they do not beleive in cycles. Don, I do not believe oil is part of this. Obviously demand is lower and the actual cost has been inflated due to trading and recent stoms near refineries. Thanks for the thoughts Joanie.
So, Ira, I did answer your question
The seeds are FM2, but the crisis is greed on Wall Street. And AIG is a big part of what I am talking about. The details may vary, but the body is still dead. If it weren't for the leverage and fraudulent investments instruments using the subprime mortgage loans, the problem would be minor. Throw in general credit abuse (personal and international), which, BTW, is very much a result of the war and the shrinking income of the middle class, and you have what we are now facing. The US economy held off this mess for about 6 years on the credit card and home equity loans of the wage earner. Now the wage earner is under water. So, actually, what you want me to say, that the Dems voted down some FM2 reform, is insignificant. So please take a closer look at the real issues, which are rampant greed and malfeasance in the investment world. If you want a good example, look at Iceland's woes…nothing to do with the Dems and FM2.
so len
You'r not going to answer the questions?
BTW, AIG is a little different. Well...a lot diferent actually.
Don
It appears your post describes deflation. That is why the Fed and the world banks lowered their rates today, the money supply was getting tight. Your best friend during deflation is cash and liquid assets. Your worst enemy is debt and illiquid assets (home or land).
My bad
My bad
"the author didn't fail math, you failed reading comprehension."
But was an insult needed?
Ira, I am saddened that you are tired of it
But I have said over and over that the "seed" may have been FM2 and the Dems didn't help in that respect. But Lehman didn't go under because of FM2, nor did Bear Stearns, nor AIG. They were all crushed by horrible bets made by greedy executives who were interested in the short term profit that bad paper obfuscated by mathematical chicanery allowed, strictly so they could collect bonuses. And those collapses are what we are dealing with now. The easing of the leverage requirements in 2004 made it even worse. 35:1 is irresponsible and outrageous. So while the focus was on FM2, the secret deals in Wall Street blindsided our economy. And, that is what makes me tired. Tired of conservatives not recognizing that you cannot leave capitalists unsupervised, because they will bet the bank, collect the fees and leave us with a sorry mess. Don, on the oil question, I am not that well versed in oil economics/finance, but I will poke around because it sounds fascinating.
The Oil Standard?
There is something peculiar going on here that I haven't completely figured out. There has been no major increase in the supply of oil, nor any deep drop in demand, yet, as the Dow has fallen, so has the price of oil. If we assume that the value of oil has remained steady, is the Dow really falling, or is the value of the dollar rising, or at least falling more slowly than other currencies?
The real measure of wealth is not how many dollars you have but what your dollars will buy. If oil is a good standard of measure, then it would seem that in terms of how much oil the securities in my IRA will buy, the fall in the Dow really hasn't hurt me.
I understand economics pretty well, but I am not that strong on finance, (some of you will know the difference) so, AM, Ira, Len, what do you think is really going on? Is this really just a worldwide contraction in the money supply that really doesn't mean much?
real estate agents and Mortgage companies say
Real Estate agents and Mortgage Companies told you to "sign here". You can buy a $250K house even though you only qualify for a $100K home, and home values always go up. Wrong!
Now who do you blame?
I blame the buyer, the agent, and the mortgage company.
You get a new credit card in the mail. Do you throw it away? No! You go on a shopping spree.
For the most part people are to blame for their own spending habits with no though of tomorrow, and not a penny in savings.
Easy question Len
Did McCain co-sponsor a bil that was aimed DIRECTLY at the FM's due to their interior abuses?
Is the reason this bill did not pass due to opposition from Democrats?
Your trying to alleviete blame from where it belongs. We are all tired of it. Just answer the questions yes or no. If you cannot, just waive your flag quietly.
Ira, if Rick Davis is McCain's campaign manager
then there can't be any tighter connection to FM. The man lobbied for in for many years and collected fees up until last month, when the feds took over.
Besides, the real meltdown was not from FM2 or the CRA. It was what Wall Street did with those mortgages afterward. Like I said earlier, if it was just the 6% or so of the total mortgages that are not performing, our economy would just shrug that off. But Wall Street had the oversight removed over the years and went to town on fraudulent investment vehicles, fraudulently rated AA and AAA, and fraudulently passed on to international investors. That was the problem and is the main cause of this mess. BTW, I think Obama cares a lot more about the economy of this country than anyone on Wall Street ever did. Those charlatans tried to finish what Bin Laden started, by bankrupting us. Face it, they need adult supervision in the future, they have proven that they are not reliable nor patriotic.
Len and Ethan
Len, you state capatilism works well but it is clear Obama doesn't think so. Besides, from a registered dem, Don is pretty close. After the problems arose at the FM's McCain sponsored a bill to addregulation. Obama, Frank, Dodd, and Schumer took a lot of money from the FM's. They created a party line block of the legislation. It made no sense. All politics aside, if it had passed you and I wouldn't be talking about this.
Ehtan, I know many western markets have had sharper declines. While I have not tried to verify your example I am suprised as I hear Austin is nice. My point though was your predictions of 50% drops on homes is absurd. It simply will not happen. This will level out. You better better buy in the next (best guess) 18 months. Bad economy or not, building materials are rising. Inflation is about to make the rich less rich.
don, you can't blame the dems 100%
Again, the slight seed of subprime was blown out of proportion by the investment banks over leverage of CMO's and anything else they could pitch.
The amount of failed mortgages alone would not even dent our economy hadn't Wall Street, through SEC deregulation or non-enforcement, gone crazy with high flying repackaged investments. The collapse of AIG was just through such high risk credit default swaps, leveraged out for pure bonus greed.
Put the true blame where it belongs-greedy Wall Street investment banks handling fraudulent instruments, no oversight, lax accounting, and our overtaxed credit, both domestic and foreign. Capitalism works quite well, but capitalists need to know that someone is watching, otherwise they cannot help but fall all over themselves stealing us blind.
Definitely bi-partisan
This is definitely bi-partisan, and neither major candidate has shown any true understanding of the issue. Ron Paul seemed to get it. Don't let the main stream media fool you, the "crisis" is not limited to sub-prime. Alt-A and Prime mortgages were made to people who will be unable to pay as well. It's just a matter of what kind of credit the borrower had going in. Credit Suisse's ARM reset chart shows when the Alt-A and Prime loan damage is do. The gov't saving housing is a joke, and a slap in the face to the 30%+ that rent. Rewarding mistakes or ill behavior at the cost of those who did not participate is wrong. Also, it's a fallacy to believe people will want to stay in homes that aren't going to make them rich in a year or two. If the neighbor got the same house from a REO auction for half the price, why is Joe going to continue paying the high mortgage? It's called jingle mail.
wink wink and other puerile comments
"Do we NEED the deficit we have, do we NEED the economic mess we have? No!"
I agree, which is why Obama is a recipe for disaster. He has proposed almost $1 trillion in new spending (read: government handouts to Democrat constituents) AND wants to lower taxes. He couldn't pay for it before, but now the government is committed to an $857 billion bailout which means the government has less money to spend. When asked which of his proposed spending initiatives he would cut, Obama basically said "none."
"This country cannot afford McCain."
Wrong - this country cannot afford Obama. At this point, I almost hope Obama wins because it will be Carter II. He'll inherit an economy in the toilet with high gas prices with no real plan to fix. It will assure he has a one term presidency and the American people won't trust a Democrat for another dozen years.
Real Estate Agents
Real Estate Agents have the used the "sellers" need to be "real" about their asking prices when in fact they tell the sellers what to list for or they don't take the listing. What about the agents getting "REAL" with their commissions. 6 to 7% is alot money for what they do, but its the "going" rate.
I've had a house for sale for 2 years. Yes, I did think that I would make money going into it. However, I listen to my listing agent and let them set the price and even purchase a home of equal value. I have now lowered the price $140K and still can't sell. I will have to take $20K below what I paid and the agents 6% commission to closing. Sad story...not at all...bail me out...not at all.
I'm just sick and tried of reading all the excuses of why houses won't sell when most are false facts.
well gosh darn Joe
There you go again looking behind instead of ahead. Wink, Grin!
So Untrue
You can hang the deficit on Bush honestly enough, but the housing bubble, and its sub-prime mortgage collapse sequel are 100% Democrat creations.
In 1977 Clinton signed the community Reinvestment act passed by a Democrat Congress. Fannie Mae was expanded under Clinton and encouraged to make the Sub-prime loans the CRA needed to gain control of over half the mortgage market before Bush even took office. Bush and Congressional Republicans, including McCain, asked for a regulator with authority to oversee Fannie and Freddie, but those efforts were blocked three times by Senate Democrats. The top recipients of Fannie and Freddie campaign contributions, were all Democrats, with Obama receiving more per year in office than anyone else.
The mainstream press may let Democrats get away with pointing their lucre stained fingers at Bush, but as much as Bush has disappointed me, this one is not his fault.
heh Ira
Ira - my rental is a 8 story concrete building, with elevators, 45 units. Not well upgraded, but it's an older building. Anything built like it today would be of much less quality. 2 bed/2 bath, water views, 9' ceilings, noise isolation good enough that the neighbors can't hear my noisemakers (including bari sax :-) I still think I pay too much, as there are better places opening up. I figure all of the new construction in the area will be garbage but will drive down rents. WRT $100/sqft minimum, I don't buy it. In 2 minutes I found 3000sqft+ partially bricked homes with pool + all the bubble trim for less than $300K in Austin. WRT appliances and house lipstick, too much markup from the builder. Either buy it from desperate about to be foreclosed people, or get slightly used commercial equipment. I generally prefer commercial. $3500 VCR for $100, $1000 audio amps for $300. Commercial equipment is always better than consumer gear, like all the cheaply made appliances that are being shoved into bubble homes. Cheap jukn failing a day outside of the warranty, EVERYWHERE. I bet most bubble houses won't last the 30 years of the mortgages. Thrown up for mega profits.
so true....
This country cannot afford McCain, and need has nothing to do with it. We've had 8 years of Bush out of people's WANT and look where it has led us. Do we NEED the deficit we have, do we NEED the economic mess we have? No! And we don't NEED McCain to continue Bush politics.