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UVA Study Sheds Light on Foreclosures - Important to READ!
05 March 09 08:15 PM | Elena & Kirill Gorbounov(a) | 0 Comments   
Here is a press release from a recent UVA study! Please read it! Spoiler: 87 percent of the national declines have been in Arizona, Nevada, Florida and California!!! ————– February 25, 2009 — National housing price declines and foreclosures have not been as severe as some analyses have indicated, and they are not as important as financial manipulations in bringing on the global recession, according to a new analysis of foreclosures in 50 states, 35 metropolitan areas and 236 counties by University of Virginia professor William Lucy and graduate student Jeff Herlitz. Their analysis shows that most foreclosures have been concentrated in California, Florida, Nevada, Arizona and a modest number of metropolitan counties in other states. In fact, they claim that “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines.” “California had only 10 percent of the nation’s housing units, but it had 34 percent of foreclosures in 2008,” Lucy and Herlitz reported. California was vulnerable to foreclosures because the median value of owner-occupied housing in 2007 was 8.3 times the median family income, while the 2007 national average was only 3.2 times higher than median family income (and in 2000, it was lower still at 2.4). Another vulnerability to foreclosures was seen in the Los Angeles metropolitan area, where more than 20 percent of mortgage-holders in each county were paying at least 50 percent of their income in housing-related costs. “But even in California, enormous variations existed among jurisdictions, such as in the San Francisco area, where Solano County had 3.69 percent of housing units in foreclosure in November 2008, while only 0.24 percent of housing units were in foreclosure in the City of San Francisco — a 15 to 1 difference,” according to Lucy and Herlitz. Across the country, the run-up in housing prices from 2000 to the national peak in 2006 has contributed to a 10-months’ supply of houses for sale, nearly six months more than the norm from 1998 through 2005, they concluded. But most of the excess supply is either foreclosed properties for sale in declining areas — which constituted 45 percent of total sales in some months of 2008 — or “opportunity” sale offerings by owners seeking to take profits on the price escalation of previous years, which often happens when the price of existing homes rise appreciably. Only a small portion of the excess supply is from current construction of new houses, they said. Potential losses in housing values from 2008 foreclosures in all 50 states — if values decline to 2000 levels — were less than one-third of the $350 billion provided to banks and insurance companies to cope with losses in mortgage-backed securities, Lucy and Herlitz estimated. “Damage to the balance sheets of large banks and AIG occurred not mainly from losses on foreclosed residential mortgages, but because of borrowing short-range to buy long-range derivatives and from selling credit default swaps insuring derivatives backed by mortgage payments,” Lucy and Herlitz said. “These financial manipulations had high-speed forward gears, but when the housing bubble burst, the banks and AIG discovered they had neglected to create a reverse gear with which they could separate foreclosed properties from some forms of mortgage-backed securities.” Although there are pockets of substantial declines, claims that overall housing values have tanked nationwide are exaggerated, they said. “In the Washington, D.C. metropolitan area, for example, prices have barely changed in the District of Columbia, Alexandria and Arlington County, and parts of Fairfax County in Virginia. The largest price declines (more than 30 percent in 2008) have been in Prince William County, Va., but even there, the range of price declines in its six zip codes ranged from 49 percent to only 6 percent.” The number of foreclosures usually were lower in central cities than in some suburban counties, probably due to less demand in those suburbs, according to Lucy and Herlitz. Part of this loss of demand can be accounted for by shifts in the age distribution in the population. The population segment from age 30 to 44, when the biggest increase in home ownership occurs, has been declining in recent years. Those are prime child-rearing years for families, so demand for houses with four or more bedrooms has declined and led to an excess of large houses in some counties. The Obama administration’s proposed foreclosure prevention program sets a target of households spending between 31 percent and 38 percent of their income on housing-related expenses. The program will try to prevent foreclosures in residences where Fannie Mae and Freddie Mac have purchased the mortgages by permitting downward adjustments to mortgage rates, to where the value of mortgages is not more than 105 percent of the houses’ value, they said. “This policy will help homeowners where price declines have been modest, as they have been in most states, most metropolitan areas and most counties,” Lucy and Herlitz said. This study includes foreclosure, house value and income data for 2007 or 2008 for 50 states, the 35 largest metropolitan areas and 236 counties in the 35 metropolitan areas. Lucy is Lawrence Lewis Jr. Professor of Urban and Environmental Planning in U.Va.’s School of Architecture. Herlitz is a graduate student in the Department of Urban and Environmental Planning. For information, contact William Lucy at 434-295-4453 or whl@virginia.edu. Read More...
Time to buy?
07 February 09 03:58 PM | Elena & Kirill Gorbounov(a) | 0 Comments   
Real Estate is not Stock Trading and either way speculators never outperform the market in the long run even in stock trading. Even if you get one market turn correctly it doesn't mean that you will see the next one. Know that Slow and Steady Wins the Race!!! Read More...
Northern Virginia Home Sales Report - from December 2008
28 January 09 12:21 PM | Elena & Kirill Gorbounov(a) | 0 Comments   
January 28th, 2009 The number of Greater Northern Virginia region homes sold in December was 3,032, a 48.63 percent increase from December 2007’s total of 2,040 sales. This marks the ninth consecutive month of increased year-over-year sales totals for Greater Northern Virginia. The average sales price of $334,239 in December 2008 continues to lag behind the 2007 average by about 31 percent. The December 2007 average sales price was $484,310. Across Greater Northern Virginia, the number of listings showed a decrease from 2007 numbers, with 15,890 listings active, which is 22.28 percent less than this time last year, when 20,445 homes were available. The average DOM for a home sold in December 2008 was 100 compared with last year’s 114 DOM, a decrease of 12.43 percent. Source: NVAR Read More...
Northern Virginia Housing Market Statistics - Things that you don't hear
15 December 08 12:08 PM | Elena & Kirill Gorbounov(a) | 0 Comments   
December 15th, 2008 Interesting Points: 1) The DC metro area has the lowest unemployment rate out of the fifteen largest metro areas and about two percentage points less than the national average. 2) According to a national survey conducted in 2004: the average renter's net worth: $4,800. The average homeowner's net worth: $171,000 3) In a recent survey, 8 out of 10 economists stated they believed housing prices would be higher five years from now. 4) An overwhelming majority of economists surveyed - by a better than 5-to-1 ratio - agreed with the statement, "A person can increase their long-term wealth by purchasing a house rather than renting." 5) Over the past 40 years, home values have risen more than 7 percent annually in NoVA. 6) People who purchased homes six years ago have, on average, seen the value of their homes rise over 24 percent, despite recent price declines. 7) Homeowners benefit from the power of leverage. At an annual appreciation rate of 5 percent, a 10 percent down payment on a home will return 94 percent after three years. After five years, it increases to 225 percent. After ten, 623 percent. 8) The median selling price of a single family FSBO in Virginia was $249,500 compared with $313,400 for REALTOR assisted home sales. Is 26% more for a seller's home worth paying a commission for? I'd like to think so. 9) Virginia's population is expected to grow by 500,000 by 2010. 10) RE/MAX Associates averaged 39 percent more transactions than our nearest national competitor. Read More...

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