Local Residents Voice Opinion on Comprehensive Plan
June 23, 2006 | Leave a Comment
The residents of an area of Albemarle known as the Village of Rivanna have submitted an amendment to Albemarle’s Comprehensive Plan. You can read a Dialy Progress article on the issue.
The chief issue at hand is the proposed development that would be next to the current location of Glenmore. The proposed Rivanna Village development would be 88-acres. Of course, there are many in the area that feel such development, especially any substantial commercial development, would create a regional attraction to the area, rather than a local one. If there must be development, many feel that such development should serve local residents, not attract others from around the region.
While I sympathize with their sentiments, the fact of the matter is that Rivanna Village is surrounded by very rural countryside. Any type of commercial development is going to attract not only local residents, but people from nearby Fluvanna and Louisa. The only issue would be how many people would it attract.
This issue is far from over, and I will continue to keep you updated on any developments.
Mortage Rates Highest since 2002
June 23, 2006 | Leave a Comment
Interest rates have been steadily rising for some time now. The issue has been how much the increase has affected the real estate market. My opinion has always been that rising interest rates are not the chief cause of the real estate slowdown. The fact that rates were historically low not too long ago did lead to more first-time buyers entering the market. Now that pool of buyers is drying up, and as interest rates move back to normal, so will the market.
One thing that rising rates have affected is the number of refinance applications. Check out the follwing article about the recent rise in interest rates:
Mortgage Rates Hit 4-Year High
(June 22, 2006) — An increase in mortgage costs last week discouraged home owners from refinancing.
Refinancing’s share of all loan applications slipped to 35.5 percent last week from 35.7 percent the previous week, and was down 43 percent from the same time last year, according to the Mortgage Bankers Association.
The MBA says its Market Composite Index, a measure of mortgage loan application volume, last week declined 0.8 percent to 567.6.
The average rate on a 30-year, fixed-rate mortgage jumped to 6.73 percent, the highest it’s since May 2002. The average rate for a 15-year, fixed-rate mortgage increased to 6.37 percent and a one-year ARM increased to 6.22 percent.
— REALTOR® Magazine Online
Advice for Choosing a Lender
June 22, 2006 | Leave a Comment
Read the following response to a very popular question, "How do I choose a mortgage lender?" It is probably the #1 question people ask with regard to financing. While the person with the question is from Georgia, the advice applies no matter where you may be, even the Charlottesville area. I thought the response from the columnist was very good. Her name is Ilyce R. Glink. This is reprinted in its entirety from Inman.
Q: I would like to know what company is best to refinance our home loan with in Georgia. Also I’ve been told not to pay points or an origination fee but I can’t find a company that complies with both without a huge closing cost. Help!
A: Unfortunately, this column’s policy is to not make individual recommendations when it comes to finding lenders, lawyers or title companies. But I do have a few suggestions on how you can find a great mortgage lender in your own neighborhood.
First, there are plenty of legitimate companies that do not charge closing costs or points; however, you will pay a higher interest rate to compensate for not paying these costs. That’s because there is an inverse trade-off between points paid and the interest rate. The higher the rate, the lower the fees, or the higher the fees the lower the rate.
How much will you pay to trade off some closing costs for the interest rate? Sometimes it’s a quarter point or sometimes an eighth of a point or a half point. It depends on your credit score and other factors.
Next, legitimate lenders typically charge about 1 percent of the loan amount in fees and costs. This is an average cost and it’s a fair one to pay. So if your loan is for $150,000, you can expect to pay $1,500 in some sort of fee (or combination of fees) to the lender (or, expect the interest rate to rise). You should be able to add up all the fees and costs (like origination fee, document preparation fee, etc.) and the total should be about 1 percent of the loan amount.
But the larger the loan, the lower the percentage fee. If your loan is for $500,000, the loan fees may still be around $1,500 or less unless the lender is charging you an origination fee or discount point.
As for other closing costs, they can vary. And you have some control over some of them. For example, you’ll pay prepaid interest on the loan as part of your closing costs. If you close at the beginning of the month, the prepaid interest will be higher than if you close on the last day of the month. Many people don’t understand this, but it’s a fee separate from whatever you would pay the lender.
If your prior lender held money to pay your real estate taxes and insurance, your new lender may require you to do it again. So at your refinancing, you will need to come up with this money to pay the lender. At a later date, you should get back all of the money that is held by your old lender for taxes and insurance.
How do you find a great lender? I’d start at Bankrate.com, and then call a few national lenders for comparison purposes. (Check out JD Power.com for the top lenders in the U.S. as well as how they rank on customer service.). You might also want to check out a well-regarded, good-size mortgage brokerage firm. If you belong to a credit union, check out their rates: they typically have very good deals when it comes to mortgage, home equity and auto loans.
When you narrow your search to two or three lenders, you’ll need to do your background checks on them. Look them up at the Better Business Bureau’s Web site to make sure they haven’t had any problems. You can check their status at the Georgia Department of Banking and Finance.
Once you narrow in on your lenders, you should also pay a visit to their offices to make sure they look as good in person as they sound on the phone.
I know this sounds like a lot of work, but you want to make sure you find a great lender who will deal with you fairly.
Growth is Good
June 21, 2006 | Leave a Comment
In the 1987 Oliver Stone film, Wall Street, character Gordon Gekko proclaims, "Greed is good." A recent report by the National Association of Homebuilders found that perhaps growth is good as well. You can read about the report here.
The report is merely a compilation of already existing census and economic data gathered from around the country. The NAHB merely interpreted the data to show that growth can bring many benefits to localities including upgrades to infrastructure, increased business growth, and an expanded tax base.
Growth is a issue that is always at the forefront here in the Charlottesville area. Many of the counties in our area actively seek to restrict housing growth. While no one can deny that building more houses certainly will lead to more people and development in general, the idea that this increase in people and development may actually have certain benefits is a point that is always up for debate.
Some Good News for the Housing Market
June 20, 2006 | Leave a Comment
May showed a 5% increase in new housing starts according to a recent report. Read about the news from MSN Money.
Wall-Street didn’t exactly go crazy over the news, but that’s okay. It is a good sign that builders are willing to build homes, considering that they only do so if they feel buyers are out there to buy them. Of course, if you ask me, housing starts aren’t quite as important as sales. We shall see what happens when those numbers come out later this month.
Is Government Regulation to Blame for High Home Prices?
June 20, 2006 | Leave a Comment
Read this article that tackles the issue of how government regulation affects home prices.
The issue was raised by the following quote from the National Association of Home Builders:
"rising interest rates and high land and production costs will continue to push the cost of housing beyond the means of many American families, and a disproportionate share of the blame for today’s sky-high prices goes to misguided local government policies." emphasis added
Of course, the NAHB doesn’t specify which government policies it feels are misguided, but I would imagine that they are referring mostly to planning and zoning ordinances. Whether or not you agree with the NAHB, it is a point worth exploring.
So, do zoning ordinances have an effect on home prices? Of course they do. That is why planning commissions make sure that certain zoning areas do not abut each other (i.e. you don’t want industrial areas next to residential areas). Now the more important question is whether or not local government policies can actually cause home prices to rise too high. This is a trickier proposition. One could argue that in trying to make certain areas of a county or city more desirable by restricting residential development to those areas creates a scarcity that might not otherwise exist. Scarcity increases demand, and increased demand leads to higher prices. Of course, the reason why those areas are created is so that localities don’t experience unrestricted housing growth and end up looking like Northern Virginia.
Is there a simple answer to the problem? Of course not. I am almost never a fan of increasing government regulation for the sake of consumers. The reality is that the government’s time is usually best spent keeping consumers safe, not keeping things affordable. In the end, real estate prices will always be determined largely by market forces. Anyone who knows anything about markets knows that government regulation often has unintended consequences when used to control market forces. Perhaps the unintended consequence of local government regulation has, in this case, lead to higher home prices.
How to Avoid “Losing” on Price
June 19, 2006 | Leave a Comment
I found an excellent article regarding what some sellers perceive as "losing" on price. The point that the article makes, which is a very valid one in today’s market, is that "losing" is relative. If your ultimate goal is to sell your home for the most amount possible, that is exactly what you must do.
Just because the market will not support the price that you feel is appropriate is no reason to fault the buyer. It is VERY important in this market to price the home to sell. THE DAYS OF DOUBLE-DIGIT APPRECIATION IN OUR AREA ARE DEAD, for the foreseeable future anyway. Previously, many homes were priced according to the other active homes on the market. This was a viable strategy when prices were climbing every month. Unfortunately, this is not sound real estate practice. Now, more than ever, it is critical to look at your home in terms of similar homes that have SOLD in your area. If you price your home according to other homes that have not sold, then your home will not sell either. The only good comps today are the homes that have sold.
Remember, just because you aren’t making as much as you may have hoped for doesn’t mean you are losing. In fact, the only way you lose is if the home languishes on the market and prohibits you from achieving your goals.
Charlottesville Area Homes Overpriced by 29%
June 15, 2006 | Leave a Comment
Read this very interesting article about the valuation of homes in the country’s largest markets. The study mentioned in the article listed all the MSAs around the country and how over or under-valued homes in each market are. Not surprisingly, most of the top over-valued markets are in Florida and California. According to the list, Charlottesville is 29% over-valued.
Harvard Releases Housing Report
June 15, 2006 | Leave a Comment
The smarty pants at the Harvard (or if you prefer, "Haaahvahd) Joint Center for Housing Studies recently released their "State of the Nation’s Housing" 2006 report. Their are some differing views on its interpretation, some find it fairly positive (see Realty Times Article). Others find it not so positive (see MSN Money/Financial Times article). If you ask me, it merely confirms what we have already experienced this year. That is, the market is good, compared to most normal years, but definitely slow compared to the last few years.
For me, the most insightful statement from either article is the following:
"We should start to see a stand-off as buyers offer lower prices and homeowners refuse," said Paul Ashworth, US analyst at consultants Capital Economics."After a period of frustration, sellers should become more realistic about what their homes are worth."
I would argue that we are smack in the middle of the aforementioned standoff, and reality had better come mighty quickly, if people are serious about selling their homes. The hardest thing for sellers to swallow is that this IS A BUYER’S MARKET. That fact cannot be stressed enough. Buyer’s seem more than willing to let homes sit out there if sellers are not willing to negotiate. With the amount of inventory on the market, the Charlottesville area included, sellers can ill afford to let potential serious buyers slip away.
Downtown Charlottesville to Get “Green” Building
June 14, 2006 | Leave a Comment
A mixed-use "green" building is being proposed for Downtown Charlottesville. As the article points out, this type of construction is gaining popularity, and condos such as these would probably sell very well in Charlottesville.
If you want to learn more about what it means to build "green," check out The U.S. Green Building Council.
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
