Brick’s Blog

     Are you sure you’ve stocked up on enough candy for tonight? Ready to stay up late into the evening? Maybe all night? Prepared to run out of candy and have to turn folks away? (Please, don’t let there be any rioting.) If the economy is truly as bad as we are being told, then this is the scenario that should play out tonight.

     Think about it. It’s the great giveaway tonight. Something free and all you have to do is walk around in a sheet with all your friends and rake it in. No excuses tonight.  Weather looks good. It’s not a school night, so you can sleep in tomorrow. Gas is cheap just in case you have to drive somewhere to collect your swag. And since gas is cheap, you can hit multiple locations with the kids. Hallelujah, my kids won’t have to ration their snacks anymore. The designated snacks shelves in my fridge will runneth over. Hallelujah.

     Actually, I think it will be a fairly timid night. Yeah, we ought to see a few more little children due to the non school night and mild weather. That will be GREAT! Maybe we will see less teens due to Friday night high school football. That would be FANTASTIC. I’ve always felt Halloween had an age restriction and that age restriction was about 12.

     Yet, I am still expecting a big night. On Sunday, my fifteen year old daughter wanted a costume to wear to the Odd Ball dance at her school on Saturday. We went to Party City on Broad Street to see what we could find. Despite trying on countless costumes which didn’t meet her expectations and leaving empty handed, we were at Party City for over an hour. The place was packed with tons and tons of little pecks, which is who I am looking forward to seeing tonight. Treat or Trick. Smell my feet. Give me something good to eat.

     Tuesday, I attended Realtorfest at the Convention Center downtown. Realtorfest is a biennial event, which offers a daylong tradeshow, industry recognized speakers, and a host of educational forums. I typically go for the education, since it is an easy and inexpensive way to fulfill some of my continuing ed requirements for licensure. 

     As an old hand at Realtorfest, the state of the market was best seen in the 150 plus vendors. Fewer lenders were there than in past year and the show was absolutely glutted with “stagers.” Homebuilders were fewer, too, and had been replaced with various home repair specialists. There was even a paint contractor who must be affiliated with Haynes Furniture, since he was offering 0 % financing with no payments for a year.

     Besides the main speaker who spoke on creating the “exceptional real estate experience” which seems to be the playbook for all real estate coaches these days, I attended 2 seminars. One was on the changing landscape of Southside (yes, I do venture to Southside and I do not believe there are trolls under the bridges), while the second one was marketing to multi generations. The Southside seminar addressed changes at Cloverleaf Mall (nothing happening there – still seeking a developer) and the “new urbanism” that will eventually be Roseland (think West Broad Village on steroids).  

     The multi generational seminar was the most interesting talk I heard, since it dealt with the buying/marketing to habits of baby boomers, Gen X’s and Gen Y’s. The speaker for this seminar had actually been Chief Economist for the NAR (National Association of Realtors) in the late nineties who began his lecture with a quick snapshot on the economy and current financial mess. Good news, the good old USA is in great shape compared to the rest of the world. Many of his points are found in this article, America Compared to What, that I read this morning on RealClearPolitics. If you’re not familiar with RealClearPolitics, it a great site since it offers opinion from both sides of the aisle. Truly fair and balanced.

     So now that you’ve read the great article on the economy, let’s go buy a house!

     I was out running an errand this morning and trying to race home in time to watch Meet the Press. As I reached the stoplight at River and Gaskins Road, there was a car in front of me with one of those SWOs (Silly White Ovals) with NNK (Northern Neck) on its rear window. Whenever I see one of these NNK SWOs for a fleeting moment I wonder if I might know the occupant of the car. This usually passes when I reflect long enough to remember it has been almost 40 years since I actually resided in the Neck; and then it was only for the summer months.

     Then my eye caught a glimpse of a bumper sticker on the car, which read “in a Northern Neck minute.” Com’on you, Neckers, you know what this means. Suddenly, getting home to watch Meet the Press  wasn’t that important. Anyway, my mantra for the day is “in a Northern Neck minute”, which all Neckers know means I’ll get to it, when I get to it. What a great way to spend a Sunday.

  Yesterday’s report on area home sales in the RTD , while written with an encouraging voice, didn’t portray a true picture of the area’s market. Frankly, I think reporter, Carol Hazard, has been instructed to report the local market more favorably. My guess would be real estate ad revenues are down substantially and why continually bite the hand that feds you. After all, the RTD  just benefited from the Parade of Homes, which is their largest real estate buy of the year. 

     In past reports, she typically leads with the depressing national situation, transitions to the less dire state news, and finally gets around the stronger local situation in the last few paragraphs. Although Carol reversed her style yesterday, I found her report disingenuous. By segmenting the broader market, the  report by George Mason University is able to create certain “talking points” to spin a more favorable condition. One such point would be that total sales in certain areas were up 2 % for the quarter. Readers of this blog know that this “statistical” increase was anticipated since the true decline in total sales for ’07 began in the final 4 months of ’07. When you compare current bad numbers with even worst past bad numbers, it is possible to get a “statistical” (2 %) increase. The truth is total sales are down for the “core area” by 29.81 for ’08 when compared to ’07. That is almost 3,000 less homes sold for ’08 than in ’07 through September. And this current decline follows a 10.9 % drop for total sales in ’07 versus ’06.

      As you all know, I am not a doom and gloomer. The market here is amazingly resilient, especially when compared with other parts of the country. Horror stories from Florida tell of buyers walking away from $150,000 deposits where the “to be delivered” product is worth $ 250,000 less. Here the area’s average sales price has remained constant. The homes that are selling are the ones priced competitively and in superior condition. The key words here are “they are selling.” It’s just not as many as before. This, too, shall pass.

     I pride myself on being well informed. Unfortunately, I need to lapse into ignorance for the next 2 weeks. Maybe I need to make that lapse permanent. Who do you believe these days? Possibly, Lou Dobbs, but he’s on CNN I don’t typically watch CNN. I use to enjoy watching Chris Matthews on MSNBC. Didn’t necessarily agree with Chris, but I at least  thought he presented his point of view fairly. I might still tune into to MSNBC to watch Keith Olbermann over the next 2 weeks, since I think his head might explode one night during one of his rants. That would be worth watching. And oh, Governor Kaine, I am not so sure appearing regularly on Countdown is the wisest decision, especially if you have further aspirations in ole Virginny.

     You know I use to read the NYT, WAPO, LA Times, Boston Globe, etc. each morning. I had links to their Op-Ed pages in My Favorites, but why should I continue to read their editorials when my beliefs are constantly belittled as being provincial and uninformed? And these talking heads on TV. Do they really believe they are that brillant, insightful and justified to stand in judgment over everyone else. How ’bout Mika?

     And those windbags in Washington. I am sure we’ll get the truth on this financial mess through partisan congressional hearings. Has it really been 34 years since Watergate? Are there any true investigative reporters anymore? 

    Let me know when you ready to march on Washington. I’ve already got my pitchfork sharpened and my torches made.

      Last Sunday marked the end of the 57th Parade of Homes sponsored by the Home Builders Association of Richmond. This year I saw most of the entries in the Parade. The biggest influence I saw were “arts and crafts” elements in many of the entries. Hallsley in western Chesterfield had the most “craftsman” entries, but with pricing at about $ 200 a square foot I was truly underwhelmed. And with a location in the “middle of nowhere”, Hallsley was a huge disappointment.

     Probably, the best “craftsman” example I saw was in Harper’s Mill built by Lifestyle Builders. Harper’s Mill is at the back of Hampton Park in western Chesterfield. As usual, I saw many things that made me go “what was the builder thinking?” I don’t care where you’re building, but if you’re approaching $400,000 or are north of that figure, you better give me 3 full baths. I can’t tell you how many 2 stories I saw with 4-5 bedrooms with only 2 full baths and pricing above $400,000. Another of my pet peeves….. 2 car garages on homes with big prices. I saw several homes with million dollar prices and only a 2 car garage.

     Affordability is always an issue with the Parade of Homes; and this year’s Parade was no exception, particularly considering the soft economy. Of the 130 entries, only 3 entries had pricing under $200,000 and all 3 of these entries were townhomes. The best value I saw was for a 55 + townhome neighborhood, Liberty Trace, in Mechanicsville off Route 360. This community has numerous options under $ 250,000.

     So, what’s my feeling about the Parade this year? Sure are lots of new homes for sale! Especially in neighborhoods which weren’t necessarily in the Parade this year. Both the Robious corridor and the Spring Run area in Chesterfield is just loaded with finished new homes. There are countless deals to be had, so call me. Many builders are beyond anxious. I’m Monty Hall and “let’s make a deal.” 

     It’s not like I don’t have better things to do, but I thought I’d add another statistic to my monthly reporting on the Richmond Real Estate market. This is actually a very easy statistic to report monthly, since I am already compiling most of this information in other formats.  Please remember that these statisitics are based on the sale of single family homes in Richmond’s urban and suburban areas and compiled from activity in the Real Estate Zones of 10, 20, 22, 24, 30, 32, 34, 36, 40, 42, 44, 50, 52, 54, 60, 62, 64, and 66. These particular Real Estate Zones make up over seventy percent of the overall market activity.  

     The following information shows the number of active listings in each price range and the number of sales in those specific price ranges during September. Going forward this monthly report will provide a feel for the absorption rate each month. Currently, 1 in 11 single family homes presently listed is selling each month. September figures indicate an 8 – 11 month supply of housing at prices under $ 400,000. At levels above $ 400,000, the over supply is telling.  

    Over the last 10 days or so, I have been previewing properties which are part of the Parade of Homes. Later this week, I will share some of my thoughts on this year’s Parade of Homes, but for now I’ll only say that “whew, there sure are a lot of expensives homes for sale out there.” As the data below shows the real imbalance in the market is in the upper end. Every day, I see a property which is priced such that I am stunned why it hasn’t sold. The best bargains in the market are currently in the upper end. If you can sell your existing home, what a great time to move up. Yeah, you might have to sell your existing home for 10 % less than what you had once thought, but you could well buy something in upper end at 15 % – 20 % discount. Do the math, your hoped for $300,000 home sells for $270,000. Uh oh, you’re down $30,000, but that $500,000 property is picked up at 15 % discount. That’s $75,000, so you’re up $45,000. And when this market turns, and they always do, your higher valued asset appreciates with more value. Anyway, food for thought. Here’s the sales data through September.

     Yesterday, I mentioned that the decline in YTD sales for ’08 versus YTD for ’07  had finally dipped below the 30 % barrier (but just barely). For most of the year, the decline between ’08 and ’07 has hovered around 33%.  I have been predicting for several months that I believe this decline between ’08 and ’07 for the year will come in at about 25%, since the final 4 months of ’07 marked the beginning of the significant slowdown we’re currently experiencing. Here’s the data.

         Starting in September 2007, the real estate market for the Richmond area began to significantly soften. For several months now, I have been extorting that our 30 % plus decline in sales year to date for ’08 versus ’07 would moderate once we got to the final 4 months of 2008. In October ’07, I bemoaned the almost 20 % drop in sales for September ’07 versus September ’06. Guess what? In October ’08, I get to bemoan the almost 17 % decline between September ’08 and September ’07. Here’s the comparison between September ’07 and September ’08. Oh by the way, we did dip below 30 % for the decline in sales year to date. We’re now at 29 %!!!!!!