Hampton Roads Housing/Real estate/and Economy

[Telmnstr]

Check the last video of VB city council meeting. Around the 55th minute mark, an affordable housing development was proposed and so many people went up to speak, begging for some in the city. Virginia Beach is definitely an overvalued market.

Nothing better than taking people's tax money to build public assisted housing for the middle class.

Let the others loose, there will be plenty of affordable housing soon!

Northern Virginia people fleeing to Hampton Roads to find affordable housing? Perhaps, but lots of the tech workers I know are talking about leaving as they aren't finding the job satisfaction they would like from their employers.

Here in Hampton Roads, we have a good amount of speculation / flipping going on, but we don't have the INSANE overbuilding they do in Northern Virginia. I took a drive up there to buy a HAM radio for a project a year or so ago, and man oh man. There was literally soooo many townhomes under construction, it was just insane. I can't sum it up.

Then when I was up there in January we hopped off in NoVA to get diesel and it was nothing but construction as far as we could see. And that was a different exit.

So once their market corrects, there will be affordable housing there too.

Edited June 28, 2006 by Telmnstr

[Telmnstr]

1) Probe around the CNN Money (same thing as Money mag) website and you'll find that they predict HR prices will increase another 5% this year because of people fleeing the even more overpriced DC market.

Interesting. It could still go up. And if history is correct, it should go down, then do a "dead cat bounce" where people jump in, driving it up, then it really goes down.

2) How do you define speculation? Is it someone who is buying a home to live in as well as hoping that this investment will appreciate at the 15-20% clip it has been the past few years? Or is it someone who is buying the house to flip it in a couple months? The Florida, California, and Vegas markets are the flippers markets because of their even more rediculous appreciation. Those places are way overvalued.

Very true. I think the mindset of anyone ignoring the fundamentals in favor of future gains is speculation. Look at these crappy condos in Norfolk. $300k+ for an apartment, not to mention the high condo association fees (which can easily increase). It's an apartment. You get no land, before the huge run up in RE prices the buildings werent' worth what a few of the units are selling for.

Then you have people buying condos and houses because they assume the prices will go up. There are several indicators of this, but it's really a hard number to get. Also, "vacation homes" get in the mix. Investments don't really play out right now. I don't think you could buy any houses using conventional lending and cover the costs in rent.

Hampton Roads is overvalued just as Flordia and California are. Sure the values aren't as high, but the fact that housing went up so much in a few years is sign. Nothing has really changed that much about the region. The same jobs were availible back then. Sure there has been some growth in gov't sectors, but not THAT much. Also, those jobs are prime to get cut when we get a fiscally responsible president in office (there is alot of pork spending in gov't... ).

[erdogs]

I'm still waiting for the bubble to explode and leave us all in a modern day depression.

[rusthebuss]

People have been screaming that the bubble is going to burst for years. I'm not going to hold my breath for it to burst.

[Telmnstr]

Check the last video of VB city council meeting. Around the 55th minute mark, an affordable housing development was proposed and so many people went up to speak, begging for some in the city. Virginia Beach is definitely an overvalued market.

MUCH MUCH MUCH thanks for that!

Man, it's so nutty. People forget that some 3 years ago $180k would buy a nice 2400 sqft+ 2 story place in a good neighborhood.

It's sad that they are talking low income being $180k.

If I still lived in Virginia Beach and grew balls, I could have gone up there and said I support it because by the time it's developed the market should be in shambles and those places will be much lower than $180k.

It's nothing but funny money buying these expensive properties! My friend who briefly considered moving back from Silicon Valley to Hampton Roads (He made enough in 4 years to buy a place cash even at bubble prices) and sent his wife back to look at places. Every used house she looked at was empty, which is an indication that people used bridge loans to move to new places without selling the first, or they are owned for flipping.

[Telmnstr]

People have been screaming that the bubble is going to burst for years. I'm not going to hold my breath for it to burst.

No, for about a year to a year and a half.

If you want to see why, go look at the statistics on the number of ARM and other loans coming off of teaser rates and are able to adjust in 2007 and 2008. The numbers are absolutely staggering. And without home values going up quickly, people won't be able to refi because the values of their houses won't get them enough money to cover the costs of refi.

And many of the people that bought in 2001 and such, who should be able to sell, have used their homes as ATM machines, cashing out every dollar they could to buy SUVs, plasma displays and vacations.

Man I need to start a blog.... HRHousingCrash

If you are really interested in reading about all of this, there is a former mortgage industry person who used to put out lots of good information. He left the industry because it's dead (duh, another sign). He has archives that are pretty fascinating. You can see it at http://www.housingbubblecasualty.com/ .... check the archives. It's golden.

[hoobo]

You know, I'm gonna jump on the Telmnstr housing crash bandwagon. When all these predicted foreclosures happen, banks and lending agencies will want to unload them quickly to recoup at least part of their investments. Then I'll swoop in and nab a couple properties are bargain prices.

On second thought:

Again, these are tough stats to gather and monitor, but lets just look at them as ballpark figures.

So I'm supposed to be believe this blogger without a doubt. C'mon. Besides, he's talking about the SoCal market which is heavily reliant on sub-prime loans since the home-to-income ratio is approaching 10. HR's ratio is 4.5-5, which granted is high compared to Raleigh and Charlotte, but is in line with other eastern coastal markets like Charleston, Wilmington, Savannah, and Jacksonville. HR's ratio is lower than DC's. Money magazine predicts HR's home price will grow 5% this year based on just that: DC being too expensive and people fleeing to other markets (i.e. Baltimore, Richmond, and HR).

Anyway, HR is not the hot bed of sub-prime loans that SoCal is, so this bloggers seniments don't translate well to HR but they do to the California, Florida, and Hawaii markets.

Edited July 4, 2006 by hoobo

[Padman]

Most of my life I've been pessimistic and skeptical about both real estate and stock market investments. I'm glad to say that my instincts have proven me very wrong over the long haul. However, a short term focus seems to magnify the sharks and the lemmings a great deal, and individual investments of any kind can be very risky. I think you're instincts about such things should not be ignored as long as you remain open to the bigger picture. The investment world seems to be full of bottom feeders and middle-men, but most people involved in the business are ethical. At least real estate represents something that is tangible and meaningful, not just a lot of brochures and slogans.

[Telmnstr]

You know, I'm gonna jump on the Telmnstr housing crash bandwagon. When all these predicted foreclosures happen, banks and lending agencies will want to unload them quickly to recoup at least part of their investments. Then I'll swoop in and nab a couple properties are bargain prices.

On second thought:

So I'm supposed to be believe this blogger without a doubt. C'mon. Besides, he's talking about the SoCal market which is heavily reliant on sub-prime loans since the home-to-income ratio is approaching 10. HR's ratio is 4.5-5, which granted is high compared to Raleigh and Charlotte, but is in line with other eastern coastal markets like Charleston, Wilmington, Savannah, and Jacksonville. HR's ratio is lower than DC's. Money magazine predicts HR's home price will grow 5% this year based on just that: DC being too expensive and people fleeing to other markets (i.e. Baltimore, Richmond, and HR).

Anyway, HR is not the hot bed of sub-prime loans that SoCal is, so this bloggers seniments don't translate well to the California, Florida, and Hawaii.

True, that blogger is in California (which I believe in 2005 was something like 80% interest only and negative amortizing loans ... if that isn't scary I don't know what is). I don't believe things are that much different in Hampton Roads. I went to Pilot Online about 2 months ago to hunt down some lenders to ask them what percentage of loans are IO and NegAmort. No one would answer. But at that point in time EVERY one of the lenders on the Pilot Online real estate mortgage companies listing had things like NO DOC LOANS, and INTEREST ONLY and all of the other scary stuff. The lenders make more money moving the loans that aren't really in the unsophisticated buyers best interest. I bet there are alot of these loans out there. I do notice the local radio had a bunch of ads for refinancing. Mortgage activity nationwide is at something like a 4 year low (which if that isn't an indicator of something I don't know what is).

*shrug* I'd just like to see a return to the fundamentals. You know, cost of housing in line with incomes. That isn't the case right now.

It isn't going to crash overnight. It will take a while.

[Telmnstr]

I think Tel's freind is probably the janitor!

Janitor of what? Granby towers?

Or @ JFCOM in Suffolk?

I do know a janitor but he is up in Newport News and works for the city. I don't remember any janitorial staff at J7 in Suffolk.

[erdogs]

Your really getting tiresome. Is there anything about you that is'nt negative?

[rusthebuss]

Housing prices will not crash. The cost of building is shooting up as fast as the housing prices are. Then you won't have people building because there is no profit in it. Gas is driving everything up from milk to lumber.

[vdogg]

Tel, I have to agree on this one. I give everyone a lot of latitude in expressing their opinions about whatever they wish. This being a discussion forum having an opposing viewpoint is vital to having a debate that explores all sides of an issue. That being said I have to tell you that when a person has a consistently negative attitude about everything they tend to invalidate themselves as having a serious opinion. I often wonder if you believe half the things you say, or whether you often say things to get a rise out of people. I've always suspected latter but as of late that opinion has been reinforced. Just my two cents.

[hoobo]

At some point we will get a responsible president that is going to cut lots of gov't fat and eliminate lots of gov't jobs (reducing that median income in Hampton Roads), but we can worry about that later.

Good thing there's Congress and balance of powers. See, congressmen are elected by a smaller group of people and if they don't deliver pet projects to their constituents, the people get upset and vote them out of office. The president cannot single-handly cut government fat or government jobs.

Also, $360,000 is the median for a house in HR? Interesting. I like how you mess with statistics. For such a large population (number of homes in this case), a statistician wouldn't use a median value to evalutate that population. He'd use a mean because that takes the average. The median is the most common value. The mean price is $240,000. Say the largest group of homes with the same value, $360,000, only contains 3000 units, you will have skewed the cost of all the homes in the area by using the median. You're playing with numbers. However, if you were looking at a single neighborhood (which would be a sample of the population) then you can use a median value.

Edited July 3, 2006 by hoobo

[PeninsulaKiddo]

Housing prices will not crash. The cost of building is shooting up as fast as the housing prices are. Then you won't have people building because there is no profit in it. Gas is driving everything up from milk to lumber.

A valid point. If the costs hadn't risen so rapidly I think we'd be seeing a lot more in the high-rise department (steel and concrete being absorbed so rapidly in foreign markets such as China), but nevertheless we have seen great strides in our skylines the past decade, and I don't see it slowing considerably.

I don't see the doomsday scenario that... some... predict for Hampton Roads. When you look at a market like SoCal, you see a huge economic downturn that preceded the drop in prices and stagnation of development. In the Miami area, overbuilding was VERY apparent---investors proposed as many as 100,000 condos at once, which was never really that intelligent nor realistic in the first place. Hampton Roads, on the whole, appears to be developing WITH the demand, not in anticipation of its fickle swings. And as Russ has said previously, this "downturn" has been forecast for longer than a year or two, yet we continue to see an INCREASE in construction permits and units flooding into the market. And not-surprisingly, a lot of these units are rapidly absorbed into the Hampton Roads market, not just with locals living in them, but also out-of-towners. The area is becoming a major weekend retreat for Beltway workers to the north and in the Northeast. I'm not saying that having Granby Tower filled with 90% empty condos is a good thing, but the investment is good in our region. Now we just need to balance it out with the lower-income housing, and by lower-income I mean middle-class... That's the gyst of my analysis of where developments are in Hampton Roads. Feel free to disagree, but that's the dumbed-down version of how our market has been since I've been on Urbanplanet.

[Telmnstr]

Housing prices will not crash. The cost of building is shooting up as fast as the housing prices are. Then you won't have people building because there is no profit in it. Gas is driving everything up from milk to lumber.

Cost of building?

The supplies? Up a bit but nothing that justifies the recent run up in prices.

The labor? Hardly. While the contractors are charging rates as if they are hiring legal employees, I bet you will find large numbers of illegals are being used to build the properties. Minimum wage.

The land? This is where the cost is. Just as properties are sold for lots of dough, asking prices for property is high. I've read that builders are starting to walk away from optioned land in many areas.

Average days on market is currently around 30 in Hampton Roads according to realtors reporting market conditions over at Realty Times. This is the peak selling and buying season, before the kids go back to school.

The great unraveling has begun. Lots of sellers trying to offer closing cost assistance, and welcoming inspectors, and offering their plasma TVs. You didn't see that a few months ago. It will get better once amature investors can no longer afford to pay multiple mortgages because of adjustable rate mortgages. Lets hope the fed keeps increasing the interest rates and the mortgage rates follow.

[Telmnstr]

Tel, I have to agree on this one. I give everyone a lot of latitude in expressing their opinions about whatever they wish. This being a discussion forum having an opposing viewpoint is vital to having a debate that explores all sides of an issue. That being said I have to tell you that when a person has a consistently negative attitude about everything they tend to invalidate themselves as having a serious opinion. I often wonder if you believe half the things you say, or whether you often say things to get a rise out of people. I've always suspected latter but as of late that opinion has been reinforced. Just my two cents.

I am negative on taxpayer money going from residents of an area to fund developments of the rich to make them richer (31st street in Virginia Beach, where the city of Virginai Beach ignored it's taxpayers). I'm negative on the housing bubble.

Trader Tower? Heck yea! I dig it, even though the people I've known that worked for Trader Online hated it. The building is nice, and is a nice addition to downtown Norfolk. New hotels? That is cool. Virginia Beach town center is okay with me, I too have always wanted a skyline in Hampton Roads.

If you want Hampton Roads to properly grow, then I think you would be for a housing market and credit bubble correction. Your not going to attract much of a young workforce if they can't buy houses on the salaries offered by our employers.

Just because there are new tall buildings going up in Virginia Beach and Norfolk doesn't mean everything is rosy. Just look at the past articles in the Pilot referencing groups of 14 to an apartment living in Virginia Beach, working at the oceanfront in the summer (Instead of hiring local kids to help them earn money for college, oceanfront business owners like Richard Maddox prefer to use foreign workers that arrive for summer programs, probably because they have no local parents to complain if there are workplace violations).

*shrug*

Sorry if I'm grim :-) Most of what I read makes sense to me, and follows along with what I'm seeing with my young friends that work in the local technology and computer fields. There is a storm ahead.

[Telmnstr]

Also, $360,000 is the median for a house in HR? Interesting. I like how you mess with statistics. For such a large population (number of homes in this case), a statistician wouldn't use a median value to evalutate that population. He'd use a mean because that takes the average. The median is the most common value. The mean price is $240,000. Say the largest group of homes with the same value, $360,000, only contains 3000 units, you will have skewed the cost of all the homes in the area by using the median. You're playing with numbers. However, if you were looking at a single neighborhood (which would be a sample of the population) then you can use a median value.

The $360,000 value comes from the listings on Realtor.com. I agree that it's not the best statistic to go by. If the prices of homes are falling, and buyers are getting a much better place for the price, then this will not show up in these statistics. I'm not playing with numbers on purpose, I'm using the only thing availible to me. For instance, while the numbers I have access to say that the number of homes for sale are up to 3,362 homes on the market -- the real number is much much higher (I'm using http://www.benengebreth.org/housingtracker...rginia/Norfolk/ which is based on Realtor.com. Realtor.com is private, and doesn't replicate data with the privately held REIN MLS for Hampton Roads). Every once in a great while a realtor will post actual numbers over at RealtyTimes.com, which are much much higher than realtor.com/housingtracker. Housing tracker has kept a steady sampling, so it provides some sort of market indicator (along with the fact that I see for sale signs friggin EVERYWHERE).

It would be nice to have solid numbers, but it is not in the best interest of the real estate cartel to constantly publish those numbers. I do wish I had access to the real numbers, I'm certain it's compliments my argument better than the Housing Tracker site. I talked to a friend about scripting up something to compile the information by scraping REIN, but REIN would probably notice the systematic traffic, and it's against their TOS and my friend doesn't want to loose access.

Be sure to check out other markets on Housing Tracker... Orlando, Miami, Atlanta (is looking nice!), Pheonix.

Something like 10 years worth of housing coming on the market in Miami.

Miami is the city where the heat is on, dancin' all night till the break of dawn!

Section 8 gonna have granite and stainless steel!

[hoobo]

Cost of building?

The supplies? Up a bit but nothing that justifies the recent run up in prices.

The labor? Hardly. While the contractors are charging rates as if they are hiring legal employees, I bet you will find large numbers of illegals are being used to build the properties. Minimum wage.

The land? This is where the cost is. Just as properties are sold for lots of dough, asking prices for property is high. I've read that builders are starting to walk away from optioned land in many areas.

Average days on market is currently around 30 in Hampton Roads according to realtors reporting market conditions over at Realty Times. This is the peak selling and buying season, before the kids go back to school.

The great unraveling has begun. Lots of sellers trying to offer closing cost assistance, and welcoming inspectors, and offering their plasma TVs. You didn't see that a few months ago. It will get better once amature investors can no longer afford to pay multiple mortgages because of adjustable rate mortgages. Lets hope the fed keeps increasing the interest rates and the mortgage rates follow.

Wait. Do you want a real estate crash, and by crash I mean more than 10% correction over the next couple years, to occur?

[hoobo]

The $360,000 value comes from the listings on Realtor.com. I agree that it's not the best statistic to go by. If the prices of homes are falling, and buyers are getting a much better place for the price, then this will not show up in these statistics. I'm not playing with numbers on purpose, I'm using the only thing availible to me. For instance, while the numbers I have access to say that the number of homes for sale are up to 3,362 homes on the market -- the real number is much much higher (I'm using http://www.benengebreth.org/housingtracker...rginia/Norfolk/ which is based on Realtor.com. Realtor.com is private, and doesn't replicate data with the privately held REIN MLS for Hampton Roads). Every once in a great while a realtor will post actual numbers over at RealtyTimes.com, which are much much higher than realtor.com/housingtracker. Housing tracker has kept a steady sampling, so it provides some sort of market indicator (along with the fact that I see for sale signs friggin EVERYWHERE).

It would be nice to have solid numbers, but it is not in the best interest of the real estate cartel to constantly publish those numbers. I do wish I had access to the real numbers, I'm certain it's compliments my argument better than the Housing Tracker site. I talked to a friend about scripting up something to compile the information by scraping REIN, but REIN would probably notice the systematic traffic, and it's against their TOS and my friend doesn't want to loose access.

Be sure to check out other markets on Housing Tracker... Orlando, Miami, Atlanta (is looking nice!), Pheonix.

Something like 10 years worth of housing coming on the market in Miami.

Miami is the city where the heat is on, dancin' all night till the break of dawn!

Section 8 gonna have granite and stainless steel!

Ok, I just railed on the median price only to find that the price I was referencing is median price and I recalled an incorrect value. So I went back to the CNN Money website to find where they get their data from the National Association of Realtors. I searched that and ended up at Realtor.com. From there, I linked over to Realtor.org. Realtor.com is the NAR's home buying website while Realtor.org is their research website. Their 2006 first quarter median price for HR was put at $221,000. So where did you come up with the $360,000 figure again?

2006 First Quarter press release

In the South, the median existing single-family home price was $179,700 in the first quarter, up 6.6 percent from a year earlier. After the Orlando and Gainesville areas of Florida, the strongest increase in the South was in Ocala, Fla., at $159,800, up 30.8 percent from the first quarter of 2005. Next was the Virginia Beach-Norfolk-Newport News area of Virginia and North Carolina, where the first quarter median price of $221,100 was 27.1 percent higher than a year ago, and Deltona-Daytona Beach-Ormond Beach area of Florida, at $212,600, up 25.4 percent.

Just for comparison, the 2005 Q4 figures were at $220,500 and 31.6%. After doing more research, these numbers are for single-family homes. Statistics on condos/co-ops are kept separately. The NAR has 2006 Q1 median prices at $159,700 with a YoY change of -5% (yes, that is a decrease). HR condo prices peaked at $184,700 in 2005 Q3. Home price, though, are at their historical high.

It looks like the HR market is stagnant, which is good. As the year continues, the YoY increase should continue to decrease. Seeing how things are going, it looks like a +/-5% change over the next couple years. I don't expect single-family homes to drop in price. I do expect condo prices to get hit some more because of all the new condo and townhome projects in development, although prices on those developments are fairly high. However, if job growth in HR continues at the current rate, then the market should be able to absorb all the units under-construction especially since housing starts are dropping (i.e. planned developments are postponed therefore supply will be stagant as well).

Vdogg, I think this discussion is better suited for the housing thread on the main HR board. Sorry about this.

Edited July 5, 2006 by hoobo

[vaceltic]

The median is not the most common value. The median is the midpoint of home prices. 50% of homes fall below that price and 50% fall above that price.

[vdogg]

Vdogg, I think this discussion is better suited for the housing thread on the main HR board. Sorry about this.

moved

[hoobo]

The median is not the most common value. The median is the midpoint of home prices. 50% of homes fall below that price and 50% fall above that price.

Oops. So, the mode is the most common value. Mean is the average. And median is the middle/50th percentile. Never did like sadistics.

[vdogg]

Never did like sadistics.

Freudian slip?

[vaceltic]

Freudian slip?

I think you have said it correctly hoobo. My job makes me gonzo sometimes