Hampton Roads Housing/Real estate/and Economy

[urbanvb]

Local companies push simulation industry in D.C.

WASHINGTON - Nearly 30 high-tech businesses, including some from Hampton Roads, converged on Capitol Hill on Thursday to pitch the potential of the modeling and simulation industry.

story

[vdogg]

Condo Hotels-Real Estate in Paradise

[hoobo]

Found this article on home price valuation:

Home Price Valuation

and it lists HR as 16% overpriced. It appears that anything between +/-15% of the calculated (by Local Market Monitor) equilibrium price is considered fair value. Richmond at 7% overpriced and Raleigh at 10% underpriced fall into that fair value category. HR is just overvalued as is Baltimore and Jacksonville at 17% and 20% respecitively. Compare that to Boston and Vegas at 33%, DC at 37%, LA at 57% and San Diego at 70% overvalued.

The thing about home prices in HR is that there's never been a jump like this in recent history. Other markets have experienced such shocks before. But in HR, prices have inched up at inflation rates usually about 2-4% a year. This spike is unprecedented and is mainly fueled by three factors: overheated DC market, low mortgage rates, and coastal location. DC's house price rise has been going on since 2000. Baltimore followed in 2002. Then HR started feeling the DC effects in 2003. Finally, Richmond started in 2004.

Did some checking on the cited sources. Local Market Monitor (link) is a real estate investing resource that acts much like a stock analyst. The OFHEO is a government agency that calculates the latest home prices for MSAs and tracks the increases over the years back to 1975. The FFIEC is an another government agency that monitors lenders, banks, and other financial institutions.

[Padman]

That's interesting stuff and intuitively seems about right for our area. I guess some local cities may have to rethink their recent reductions in their real estate taxation base when things fall back in line. I hate to think about what that might mean for San Diego.

[Sky06]

The prices may be out of reach for the majority of locals, but they are not marketing to the majority of locals. The market has certainly softened to a degree, but the sky is not falling. I would doubt you will see much if any price adjustment other than up.

I'd have to agree. I'm amazed at how some people believe no one here can afford to live in such a building. Which doesn't quite explain how people can afford $500k homes on postage-size lots in Va. Beach, buy hummers, go to the OBX every weekend, go out to eat 3 times a week, etc. etc.

The simple fact is that developers wouldn't last long in this business if they didn't do their homework. Some make mistakes, but most probably don't. Clearly, enough people can afford to live in Granby Tower. Look at the Westin, Harbor's Edge (1 tower sold out, a second close to it if not already so), and all the other projects on Boush, Granby, Ocean View, Shore Drive, Town Center, etc. Are these and other developers building just because everybody else is? No, they're building because they've researched their A's off and know what they're doing.

Now, if part of the issue is sales of units, I'm convinced this is because of one simple overwhelming cause: daily negative media coverage of things like the Ford Plant. Just how many dozens of articles have we had shoved down our throats? How much can you milk one story? I'm sad to see people lose their jobs, but this will have no affect on our market's ability to support projects like Granby Tower. Yet, if I were new to the area or a potential investor, I'd probably believe the sky is falling too. It's like a few years back when a bank branch in Franklin closed and 2 people lost their jobs. Front page on the VP. In that same issue, back among the tire ads in the back of the business section, Chesapeake announced the creation of 3000 jobs from a Japanese firm. Hmmm.

[vblocal]

I'd have to agree. I'm amazed at how some people believe no one here can afford to live in such a building. Which doesn't quite explain how people can afford $500k homes on postage-size lots in Va. Beach, buy hummers, go to the OBX every weekend, go out to eat 3 times a week, etc. etc.

The simple fact is that developers wouldn't last long in this business if they didn't do their homework. Some make mistakes, but most probably don't. Clearly, enough people can afford to live in Granby Tower. Look at the Westin, Harbor's Edge (1 tower sold out, a second close to it if not already so), and all the other projects on Boush, Granby, Ocean View, Shore Drive, Town Center, etc. Are these and other developers building just because everybody else is? No, they're building because they've researched their A's off and know what they're doing.

Now, if part of the issue is sales of units, I'm convinced this is because of one simple overwhelming cause: daily negative media coverage of things like the Ford Plant. Just how many dozens of articles have we had shoved down our throats? How much can you milk one story? I'm sad to see people lose their jobs, but this will have no affect on our market's ability to support projects like Granby Tower. Yet, if I were new to the area or a potential investor, I'd probably believe the sky is falling too. It's like a few years back when a bank branch in Franklin closed and 2 people lost their jobs. Front page on the VP. In that same issue, back among the tire ads in the back of the business section, Chesapeake announced the creation of 3000 jobs from a Japanese firm. Hmmm.

Some interesting numbers were released by the U.S Census in the December 2005 update...First of all Virginia Beach has the 4th HIGHEST median income in the country (Right behind San Francisco, Anchorage and Westchester County, NY. Check these numbers out for yourself...It was front page news in December...Also remember that Hampton Roads is a $ 62 BILLION dollar per year economy, and one that has not posted a negative RGDP (Regional gross Domestic Product) since the depression era...The military, military related companies and the port contribute over $400 million in steady / consistent spending power to the area which the U.S. Government terms the area as "nearly recession proof...The Ford plant and associated suppliers contribute (according to the HR Chamber of Commerce) nearly $200 million in local economic support. So, $200 million out of a $62 Billion local economy is hardly (at 4% or 5 %) an issue to be overly concerned about...The truth is, that this area is hungry for higher-end offerings. And with the pre-construction demand / sales for the high-end projects being above expectations, it is obvious that these numbers mentioned above accurately portray that there is and that there will be a healthy market for these types of projects...I believe that what a national developer stated a couple of years back about th people of Hamton Roads is true...He stated that "he had never seen such a group of people that had such a low esteem in what the area is truly ready for" And what he said that the area is "ripe" for is high-end development and retail...So we need to accept that we are no longer a low end market. We are finally getting the exposure and offerings that we can support and deserve.

[rusthebuss]

Local job market heats up as U.S. economy simmers

[Telmnstr]

Some interesting numbers were released by the U.S Census in the December 2005 update...First of all Virginia Beach has the 4th HIGHEST median income in the country (Right behind San Francisco, Anchorage and Westchester County, NY. Check these numbers out for yourself...It was front page news in December...

Uh huh huh I hit up wikipedia and keyed in San Jose and Manhattan, and both have a higher median income than Virginia Beach. Your figures must be adjusted for something.

Also remember that Hampton Roads is a $ 62 BILLION dollar per year economy, and one that has not posted a negative RGDP (Regional gross Domestic Product) since the depression era...The military, military related companies and the port contribute over $400 million in steady / consistent spending power to the area which the U.S. Government terms the area as "nearly recession proof...The Ford plant and associated suppliers contribute (according to the HR Chamber of Commerce) nearly $200 million in local economic support. So, $200 million out of a $62 Billion local economy is hardly (at 4% or 5 %) an issue to be overly concerned about...The truth is, that this area is hungry for higher-end offerings. And with the pre-construction demand / sales for the high-end projects being above expectations, it is obvious that these numbers mentioned above accurately portray that there is and that there will be a healthy market for these types of projects...I believe that what a national developer stated a couple of years back about th people of Hamton Roads is true...He stated that "he had never seen such a group of people that had such a low esteem in what the area is truly ready for" And what he said that the area is "ripe" for is high-end development and retail...So we need to accept that we are no longer a low end market. We are finally getting the exposure and offerings that we can support and deserve.

Well whoever is hungry for even higher priced real estate or goods, I'm not sure where they work. The Trader Publishing developers making $40K aren't the ones. The govt contractors, some are more tight pursed than others. I have friends with degrees working for them and they are hard pressed to get enough money to afford their entry level condos.

Now if you own a chrome rim shop, perhaps it's a different story.

Don't confuse wealth with debt!!! As of late, it's been real easy for people to borrow large amounts of money. Lenders have been real lax, and this has led to lots of real estate speculators buying things like condos in towers with the intent to hold for a year and then resell, pocketing "an easy" $60K - $100K in cash. If you listen to people in the mortgage industry, on the back end some of it gets as lax as allowing $990,000 USD loans with no proof of income, no proof of employment, no documentation. All that was required was proof that the borrower was able to steadily make payments for half the loan amount ($500K) for 12 months. If that isn't scary....

I am generally a positive person (Well, used to be), but I keep up with this stuff non-stop, and do not see it getting better. Miami has _10 years_ of inventory coming online now.

I get most of my information these days from www.thehousingbubbleblog.com, which tends to link to news stories from major news sites. The commentary is great. While most of it misses Hampton Roads, once in a while you will see posts mentioning our little region here. One I recall was someone who's coworker in Northern Virginia bought 2 townhomes and 1 house here in Hampton Roads to flip to make lots of money, and is now stuck not being able to sell them.

Be careful with what the Pilot reports. I only read it online, but do read it daily (and comment on the stories often :-). Real Estate is a big market for the papers, so they aren't going to going to bite the hand that feeds them something around 25% of their advertising revenue.

Yes, we have lots of military work. No, we aren't recession proof. When the gov't gets responsible again and cuts back the gov't spending, it can and will effect our region. Do you remember NADEP/NARF? I don't want to bite the hand that has fed me, but lets face it, the gov't is really frigging sloppy with money and wastes tons and tons and tons of taxpayer money. It's almost like acceptable welfare in many cases.

As a nation, we all can't work for the gov't and sell each other houses forever.

It would be nice to see housing-for-sale-vacancy rates, and also what the statistics of loans in our region is. How many people have bought on neg amort, IO and adjustable ARM loans. I've seen people say as much as 20% of all housing loans in the US are adjustable, taken out when interest rates were at record lows. There is brilliance for you.

[mistermetaj]

Uh huh huh I hit up wikipedia and keyed in San Jose and Manhattan, and both have a higher median income than Virginia Beach. Your figures must be adjusted for something.

This is strait from wikepedia:

Va Beach: The median income for a household in the city was $48,705

New York City: $38,293

Manhattan: The median income for a household in the county was $47,030, and the median income for a family was $50,229.

Your problem is, you are mistaking New York City with Manhattan which is merely a bourough. I am a native New Yorker (from Queens), and a lot of people make that mistake, so I understand.

[metalman]

That's right.

As Virginia Beach has boroughs-Princess Anne, Lynnahaven, Bayside, etc, etc...

New Yorks are on a much larger scale Manhatten, Bronx, Queens,

Brooklyn (Kings), and Staten Island.

Mistermetaj, My father was born in Queens also, and my mother grew up in Brighton Beach and later they families moved to Nassau county. That is were most of my extended family is now (cousins, grandparents, aunts, uncles)

[hoobo]

I am generally a positive person (Well, used to be), but I keep up with this stuff non-stop, and do not see it getting better. Miami has _10 years_ of inventory coming online now.

I get most of my information these days from www.thehousingbubbleblog.com, which tends to link to news stories from major news sites. The commentary is great. While most of it misses Hampton Roads, once in a while you will see posts mentioning our little region here. One I recall was someone who's coworker in Northern Virginia bought 2 townhomes and 1 house here in Hampton Roads to flip to make lots of money, and is now stuck not being able to sell them.

Why should we care about Miami? HR is not Miami. HR is not Vegas. It is not Phoenix. It is not Boston. It is not San Diego or LA or DC. If you want to compare HR with another area, pick a place that is more in line economically and socially like Jacksonville, Baltimore, or Richmond. Anyway, what about Miami gaining 200,000 new jobs over the past 3 years? Do you think that might be fueling the housing boom there and causing more speculation on growth?

In addition to your favorite housing site, try out localmarketmonitor.com. It's an analyst's view (much in the same vane of Graham/Buffet) of the housing market. He tries to put a valuation on major markets. HR is overvalued but not on the level of a Miami or DC and nowhere near the California markets. I talk about this more on the housing thread.

[Telmnstr]

This is strait from wikepedia:

Va Beach: The median income for a household in the city was $48,705

New York City: $38,293

Manhattan: The median income for a household in the county was $47,030, and the median income for a family was $50,229.

Your problem is, you are mistaking New York City with Manhattan which is merely a bourough. I am a native New Yorker (from Queens), and a lot of people make that mistake, so I understand.

Ah yes, sorry. I do realize that Manhattan is not New York City. My thought process was that the original poster had missed other high income regions in his post that Virginia beach is one of the wealthiest cities when using median income in the country.

Also are your stats for 2000 census or 2005 census? Pretty wild that people make so little in the city. I was just there last weekend.

San Jose has a higher median income and wasn't in his list. So that still shows there is an error, or perhaps some sort of adjustment.

[Telmnstr]

Why should we care about Miami? HR is not Miami. HR is not Vegas. It is not Phoenix. It is not Boston. It is not San Diego or LA or DC. If you want to compare HR with another area, pick a place that is more in line economically and socially like Jacksonville, Baltimore, or Richmond. Anyway, what about Miami gaining 200,000 new jobs over the past 3 years? Do you think that might be fueling the housing boom there and causing more speculation on growth?

In addition to your favorite housing site, try out localmarketmonitor.com. It's an analyst's view (much in the same vane of Graham/Buffet) of the housing market. He tries to put a valuation on major markets. HR is overvalued but not on the level of a Miami or DC and nowhere near the California markets. I talk about this more on the housing thread.

Miami values have skyrocketed due to low interest rates and lax lending in the same way that some 59 other markets have. They had a runup before us, and are falling before us. Perhaps it is an indicator of what is to come.

In terms of job growth, be very careful. Many of the jobs are related to the real estate cycle. So when real estate cools off, the jobs go away. Plus when consumers can no longer borrow against their house, consumer spending will drop. This is why Americans had a negative savings rate in 2005.

Speculation and mania is the reason for the run up in prices.

Thanks for the tip on localmarketmonitor.com! I know that CNN had Virginia Beach as 27% overvalued. That sounds about right. Rising interest rates will kill the prices, and resetting adjustable loans will flush out a bunch of homeowners freeing up even more inventory in a market that already has skyrocketing inventory.

It's leverage. I have a local friend that now has a house worth about $1 mil, and 7 other less expensive houses, and $180K in cars in the driveway.... all on a $80K salary. Borrow on one house to get more, then the others jump in value, then borrow again and again. It's an easy game until you can't find a renter or loose your primary job.

[Marco757]

Just another tidbit about NYC the greatest city in the U.S.

The median income for a household in the county was $47,030, and the median income for a family was $50,229. Males had a median income of $51,856 versus $45,712 for females. The per capita income for the county was $42,922. About 17.6% of families and 20.0% of the population were below the poverty line, including 31.8% of those under age 18 and 18.9% of those age 65 or over.

Manhattan is one of the highest-income places in the United States with a population over 1,000,000. In particular the Upper East Side, ZIP Code 10021, with over 100,000 inhabitants and a per capita income of over $90,000, is one of the largest concentrations of extreme wealth in the entire United States. Nevertheless, like all large cities, Manhattan does have some large enclaves of concentrated poverty.

_________________________________________

Just a comment concerning va beach I'm happy and all for the high ranking because it brings positive press to the region, but it's a suburb (or suburban city as wikipedia aptly names it) so of course the numbers are high. Zone any suburb as a city and the rankings go sky high...va beach doesn't come close to any of the top 100 highest ranking median income places to live.

[sugoiben]

Zone any suburb as a city and the rankings go sky high...va beach doesn't come close to any of the top 100 highest ranking median income places to live.

Ya, couldn't quite swallow that one either, considering the numbers where I live:

Falls Church, VA:

Median income for a household in the city: $74,924,

Median income for a family: $97,225

from wikipedia: http://en.wikipedia.org/wiki/Falls_Church,_Virginia

[Padman]

Beware of comparisons when the units of analysis are not comparable. As already aluded to, Virginia Beach is still a fairly affluent suburban area, although it is maturing. Norfolk and Portsmouth still contain the typical inner-city characteristics of lower income households and impoverishment. Looking at metro regions (in some form) is really the only valid way to make these kinds of comparisons. Then it might be useful to look at percentages of regional households earning over 120% of the area median income and so on.

[Telmnstr]

Beware of comparisons when the units of analysis are not comparable. As already aluded to, Virginia Beach is still a fairly affluent suburban area, although it is maturing. Norfolk and Portsmouth still contain the typical inner-city characteristics of lower income households and impoverishment. Looking at metro regions (in some form) is really the only valid way to make these kinds of comparisons. Then it might be useful to look at percentages of regional households earning over 120% of the area median income and so on.

Yea, another thing that would be useful is average versus median. People making nothing, and making megabucks, can distort the median values. Right now the median price of homes sold in the region might increase a few thousand each month, but in reality buyers are getting much more (or less) house.

On another note... a friend of mine works for Norfolk Public Schools, and he tells me stories about how they are getting more and more schools that are eligable for reduced lunches. They just got their first high school that is now in the program or some such. The way a school gets in the program is when a certain percentage of students come from dirt poor families. He said for the schools it is increasing each year. Not a pretty picture, when the kids are supposed to be a future. We will get have a future of kids with chip on their shoulders full of hate, and more violence. He also was talking about how a very insanely large portion of the students (by statistics) will never travel more than 6 or 7 miles from the home they live in now, due to growing up in poverty. Pretty crazy.

I also think it is funny when Myera Oberndorf and other local leaders applaud Star Track records (NERDS, Neptunes, Chad Hugo and Pharrel Williams). I guess they haven't listened to the Clipse and other local artists totally promoting black on black violence.

[mistermetaj]

Just another tidbit about NYC the greatest city in the U.S.

The median income for a household in the county was $47,030, and the median income for a family was $50,229. Males had a median income of $51,856 versus $45,712 for females. The per capita income for the county was $42,922. About 17.6% of families and 20.0% of the population were below the poverty line, including 31.8% of those under age 18 and 18.9% of those age 65 or over.

Manhattan is one of the highest-income places in the United States with a population over 1,000,000. In particular the Upper East Side, ZIP Code 10021, with over 100,000 inhabitants and a per capita income of over $90,000, is one of the largest concentrations of extreme wealth in the entire United States. Nevertheless, like all large cities, Manhattan does have some large enclaves of concentrated poverty.

_________________________________________

Just a comment concerning va beach I'm happy and all for the high ranking because it brings positive press to the region, but it's a suburb (or suburban city as wikipedia aptly names it) so of course the numbers are high. Zone any suburb as a city and the rankings go sky high...va beach doesn't come close to any of the top 100 highest ranking median income places to live.

I agree, NYC is the greatest city in the world. On the other notes however, these city comparisions are based on population. Call it a suburb or not, it is still the most populous city in the state. Most suburbs dont have a population of over 500 000

[hoobo]

I hope the NYC greatest city in the world comments are tongue in cheek. Wouldn't want Gilmore to hear that. Some of us Virginians weren't too thrilled when Guilliani stated that Virginia should be grateful for importing the trash of the world's capital city.

[wrldcoupe4]

On the other notes however, these city comparisions are based on population. Call it a suburb or not, it is still the most populous city in the state. Most suburbs dont have a population of over 500 000

Still, even though Virginia Beach is a City, it is incredibly suburban for the most part. I know that's beginning to change though.

Not many urban cities can claim poverty rates this low. It's pretty typical of many suburbs though.

About 5.1% of families and 6.5% of the population were below the poverty line, including 8.6% of those under age 18 and 4.7% of those age 65 or over.

[vdogg]

HR office market outpaces nation

Hampton Roads commercial real estate vacancy rate is faring much better than the national average in both the office and industrial marketplace. The office vacancy rate in downtown Hampton Roads is now at 6.9%, as compared to the national average of 11.9%, and better than rates in many other cities across the country such as nearby Richmond at 11.2%, Baltimore with a rate of 13.5%, Miami at 12.0% or Philadelphia with a rate of 15.2% according to statistics from Thalhimer/Cushman & Wakefield.

[erdogs]

Maybe we can get that 50 storey tower now. I hope the biders for the Snyder lot have read that.

[rusthebuss]

When they say DT Hampton Roads, where is that or which city are they referring to?

[erdogs]

When they say DT Hampton Roads, where is that or which city are they referring to?

Good question, I was wondering the same thing. I think they might have been using that in general to the downtowns as a whole. All seven cities.

[rusthebuss]

Good question, I was wondering the same thing. I think they might have been using that in general to the downtowns as a whole. All seven cities.

How is that fair then to compare to other cities? Is this some kind of number tweeking then?