Brick’s Blog

     That’s Chicken Little and it’s not someone you want to be. Did you hear the NEWS. Home prices were off 1.8 % in 2007. OMG, the sky is falling. It was the first time that home prices ever fell in 40 years of tracking this information. Let’s see the DJIA can swing that much in a day. When the DJIA trades lower by 10 %, 20 %, and more, it is simply called a CORRECTION. Guess what? The housing marketing is experiencing a correction. Gasp, horror, say it ain’t so, Joe.

     For the vast majority of Richmond homeowners who have owned their homes for a few years, your appreciation has been incredible, so what would be the big deal about giving back  2 % of that gain? Okay, Brick, we might be able to accept that. Good, I am glad to hear that, but remember I told you earlier this month that the average price in Richmond for 2007 was up 5.1 %. Averages are comprised of lots of numbers and ours just happens to be good. All real estate like politics is local.  

Now go out and enjoy your day.  

     Every morning, my work day starts by logging into the Central Virginia Regional Multiple Listing Service. I look at what’s new to the market (i.e., new listings) and what’s off the market (i.e., pending listings and expired listings). The new listings alert me to what I might need to show one of my current buyers or something I need to call a past client on for a possible move up/down. The pending listings alert me to what folks are buying. Again, I might use a pending listing to educate a current buyer as to market direction, especially if I have shown the buyer that particular property. Finally, the expired listings might present opportunities for me to pick up a listing due to a prior agent’s mistakes (usually overpricing and not understanding market direction) or to validate market direction. Nowhere better is market direction shown than in expired listings, since they tell you what and where buyers aren’t buying.  

     Now I want you to envision this….. I am jumping up and down, I am honking my car horn, I am setting off fireworks…..well, do you get the picture? I want your attention. Let me give you just 3 examples of what I found this a.m., which I consider unbelievable opportunities or where I need to gather more information. Like the old Dragnet show (you, youngsters, better Google that), the names have been changed to protect the innocent.

     Opportunity 1 – from the new listings. Very exclusive West End Community. Listing has almost no information with the notation listing information will be added today. Boy, talk about a rush to the market. Price is slightly under $1,000,000. Property has a waterview and was purchased – now get this – in May 2006 for $1,150,000. There’s a story here and like Bernard Baruch (kids, you might want to google him, too) I smell "blood in the water."

    Opportunity 2 – from the pending listings. Golf course community in Hanover where this specific submarket is just glutted. Last time, I counted the active listings in there, there were about 15 for a community of about 250 homes. That is several years of inventory for this community. This property pended at under $500,000. I know the builder who built this property and he does quality work. I also know which hole on the golf course this home is located on and it has a spectacular view. I checked what the current owner paid "new" in April ’02. This was a very very very good purchase for someone.

     Hey, Brick, that’s all wonderful, but you know we’re all not looking for a million dollar or even a half million dollar home. What have you got for us common folk? That will be opportunity 3, but I wanted you to see that these opportunities exist across the price spectrum and across the area. The difference between these opportunities and less expensive ones will be in the how many zeroes are in the savings. It is all proportional.

    Opportunity 3 – from the new listings and the expired listings. I saw this one 2 days ago when it expired (no, the property didn’t not die, the agreement between the seller and his agent lapsed or "expired") and thought - something is wrong here, this community always sells and sells quickly. This is a West End townhouse community in super location. It was relisted today with a 5 % discount after 180 days – give me a break. I checked what the owner bought this for and I am calling people about this one today. This property should be BID hard - the agent comments in the listing just reeked of defeat. I bet this can be bought at a minimum 10 % discount from its current price, which is in the $160,000’s. And I would bid it even lower to start.

    So now that you know how I start my day, why don’t you get in the habit of e-mailing me or calling me to see what is the DEAL OF THE DAY.  Look, I’d love to post these opportunities, but I do not have the time. It only took 10 minutes to discover these opportunities this a.m, but over a 1/2 hour to compose this post. I’m a salesman, not a journalist.  

     Just to prove how resilient the Richmond Real Estate Market is, I thought you might find the following comparison interesting. I have been compiling similar monthly statistics now for over 2 years. Below is a comparison of December 2006 with December 2007.

What one can glean from the above is: 1.) Average sales price increased for the year. This was true throughout the year. Price increased each month. 2.) Days on market also increased. This was more a product of inventory. Inventory levels soared throughout 2007. Almost 40 % more properties were available at the end of the year as opposed to the end of the year. With that much choice, obviously marketing time increases. 3.) Since average price increased, so did dollar per square foot cost. (The decline in the Midlothian $ per s.f. was more a composite of the sales from December ‘06. In ‘06, a disproportional number of sales settled in new home upper end product found in Midlothian.) So next time someone bemoans the Real Estate market, you’ll be ready to dispute them when it comes to Richmond!

     As you should know by now, I report market conditions monthly for the Greater Richmond area to Realty Times. Here are my comments for December:

  

            Where you been, Brick? Didn’t think you’d ever get around to posting your market conditions. It really must be bad, if you, the supreme optimist, have been delaying giving us the bad news. No, it’s not that I have been avoiding this assignment. It’s just that my mind has been elsewhere lately, because as far as I am concern 2007 is now history and I want to move on. See, we knew it was bad. You’re not even going to tell us, are you? Sure I am, but I hate to disappoint you, because as The Supremes might say, “It’s the Same Old Song”. Let’s run through the highlights.

 

For 2007, single family sales for the Richmond area were down 10.9 %. Last month, I told you I thought we’d end year at 11 %. Sorry, I missed the number. For 2007, the average sales price was up 5.1%. Not exactly the double digit appreciation we’ve come to expect in Richmond, but not so shabby considering all the doom and gloom out there. Okay, happy now?

 

Well, Brick isn’t happy and here’s why. Pending sales for December were way down – over 30 % from both a year ago and from last month. While existing inventory levels dropped almost 7 % from November’s number, the frightening number is that inventory levels are up

38 % from the level where we started 2007. Over 8,300 units in January ’07 versus over 11,500 units now. Yikes. So if we continue to have a dropping sales number, there is no way we’ll chip away at all the excess inventory unless we have a marvelous Spring market, which has been absent in Richmond for the last 2 years. The good news is I have been seeing many buyers in the market as have many of my agent friends. Interest rates are simply incredible. So you know I am still singing the “same song” of the great opportunities out there for buyers.

 

For buyers, either entering the market for the first time or who have their existing home under contract, welcome to a true BUYERS’ MARKET. The selection of properties is simply UNBELIEVABLE. “MUST SELL” situations are everywhere and some of the best deals in years will be had while these inventory levels are elevated. So call me, let’s go find one of those incredible bargains while we can.

 

In the next few days, I’ll be posting a comparison of December ’06 and December ’07. It will be quite enlightening and great proof of just how resilient the Richmond Real Estate market is.

  

       An interesting change occurred in the Richmond Market in December. Buyers went Christmas shopping and purchased more expensive homes. For much of the 3rd and 4th quarters, approximately 70 % of the market activity has been under the $300,000 price point. In December, the activity level under $300,000 was less than 65%. For the year, 2 of every 3 sales has been at a price below $300,000. My Market Condition report will follow in the next few days. Here are the numbers for December along with the year to date ones, too.

     He’s baaack. My apologies for the lack of posts over the last 30 days. Besides celebrating Christmas and taking a little time off, it is also the "season" for my business planning and my annual "check ups" with my past clients. Anyway, here’s my monthly post on sales activity for various areas in the metro area. If you’d like to see a particular area covered in the future, please comment on the area. If there is enough sales activity for that area monthly, it will be added. Please remember that these sales are compiled from Central Virginia Regional Multiple Listing Service, and therefore, only include sales involving a Realtor. My market condition comments will follow in the next few days. IT AIN’T AS BAD OUT THERE AS YOU’RE BEING TOLD…..tune in for proof over the next few days.