VAR 2012 VA Housing Market Report

7/29/2019 VAR 2012 VA Housing Market Report

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iV I R G I N I A A S S O C I A T I O N O F R E A L T O R S

2012VirginiaHous ingM a r k e t

Report

HomePieces of

V I R G I N I A A S S O C I A T I O N O F R E A L T O R S


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p

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A L O O K A T THE YEAR IN HOUSING


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2V I R G I N I A A S S O C I A T I O N O F R E A L T O R S

residenialhome sales

morgage ineresraes 30 year

commercial real esaein virginia 2012

annualized 2009-2012quarer-o-quarer

governorsleter

regionalsnapshos

les keep a goodhing going

he banking andmorgage lendingenvironmens

housingvirginia

virginia vs.unied saes

3, 5, 7, 0: he advanagejus below pricing

changes inoreclosures

zipcars, suden loansand generaion ren

vhda

regional changesin oreclosures

ederal reserve bank orichmond speaks real esae

03

1920

07

13 21

0815 23

0924

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1725

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TABLE OF CONTENTS


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3

2012 Month-to-Month VA Home Sales // 2009 2012

I 2011 was a year o ransiion or Virginia homesales, 2012 was a year o s rengh in he residenialhousing marke. Nearly every monh during 2012 heresidenial home sales marke experienced highersales levels as compared o he same monh during

2011. Many o hese buyers commited o a homepurchase because o increasing job s abiliy and

cerainy, ohers purchased because o he hisoricallylow ineres raes, and sill ohers sensed ha he

botom o he housing marke had arrived, or evenpassed hem by. While each o Virginias home

buyers during 2012 may have purchased or heir ownindividual reasons, collecively hey helped surpass

2010 and 2011 home sales.

+8% Change of Home Sales // 2011 VS 2012Looking closer a 2011 and 2012 we noe ha only

March and December showed sronger sales gures

in 2011, wih all oher monhs in 2012 ouperorming

heir counerpars during 2011.

numberof

sales

12,000

10,000

8,000

6,000

4,000

10,000

2,000

5,000

0

0

VIRGINIA MONTH-TO-MONTH SALES TRENDS

CHANGE IN HOME SALES 2011 VS 2012

S I N G L E F A M I L Y H O M E S , T O W N H O M E S , C O N D O S

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2009 2010 2011

2011 TOTAL SALES = 84,108

2012

2012 TOTAL SALES = 90,443

+


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4

SOUTHWEST VIRGINIA

ROANOKE/LYNCHBURG/BLACKSBURG

SOUTHSIDE VIRGINIA

CENTRAL VALLEY

CENTRAL VIRGINIA

NORTHERN VIRGINIA

HAMPTON ROADS/

CHESAPEAKE BAY

C E N T R A LV A L L E Y +7.55%

2011 2012

HAMPTON ROADSCHESAPEAKE BAY+5.09%

2011 2012

NORTHERNV I R G I N I A +8.57%

2011 2012

SOUTHWESTV I R G I N I A -.89%

2011 2012

SOUTHSIDEV I R G I N I A -2.96%

2011 2012

C E N T R A LV I R G I N I A +11.05%

2011 2012

R O A O N O K EL Y N C H B U R GB L A C K S B U R G +6.70%

2011 2012

R E G I O N A L C H A N G E S I N H O M E S A L E S / / 2 0 1 1 V S 2 0 1 2

R E G I O N A L C H A N G E S IN HOME SALES // 2011 VS 2012

As is ypical, each region o he Commonwealh experienced slighly dieren rends in buyer aciviy over he pas year. The

Cenral Virginia and Norhern Virginia regions led he way wih 11% and 9% growh respecively, hough he Cenral Valley (+8%)

and Roanoke / Lynchburg / Blacksburg (+7%) weren ar behind. Two o he smaller regions o he Commonwealh (Souhside

Virginia and Souhwes Virginia) experienced modes declines (-3%, -1%) in buyer aciviy during 2012.


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5

$240,0002012

C E N T R A LV A L L E Y +.50%

2011 2012

+2.56%

2011 2012

NORTHERNV I R G I N I A +7.94%

2011 2012

SOUTHWEST

V I R G I N I A0.00%

2011 2012

SOUTHSIDEV I R G I N I A +0.06%

2011 2012

C E N T R A LV I R G I N I A +1.12%

2011 2012

R O A O N O K EL Y N C H B U R GB L A C K S B U R G

+0.67%

2011 2012

R E G I O N A L C H A N G E S I N M E D I A N S A L E P R I C E S / / 2 0 1 1 V S 2 0 1 2

H O M E P R I C E S IN VIRGINIA

Srong buyer urnou during 2012 helped buoy he median sales prices seen in he

Commonwealh over he pas 12 monhs. As supply and demand goes, i is no surprise hahigher buyer demand helped sellers obain higher median prices during 2012, hough i

is imporan o noe ha some regions (i.e.Norhern Virginia) experienced much more o

an increase in median sales prices (+8%) han some o he smaller, souhern regions o he

Commonwealh. Overall, he median sales price increased 7% beween 2011 and 2012, rom

$225,000 o $240,000. In 2011, several regions experienced a decline in median sales prices,

bu in 2012 every region held seady, or experienced increases in median sales prices.

M E D I A N SALE PRICE2012 MONTH-TO-MONTH

$

$ $ $ $ $ $ $ $ $ $ $

HAMPTON ROADSCHESAPEAKE BAY


7/286V I R G I N I A A S S O C I A T I O N O F R E A L T O R S

As urher proo o improving housing

markes across Virginia, nearly every price

range experienced an increase in buyer

aciviy during 2012. The only excepion

o his is he lowes price range (0 -$ 100K)

which declined 3%, hough his ype o rend

is common in he lowes price range as a

marke recovers. The sronges increases in

buyer ac iviy were exper ienced in he $1 M+

price ranges, as well as in he $300K-$750K

price ranges. There was very lile change in

he $100K-$200K price range, again likely

a resul o some such properies moving

upwards ino he nex price bracke as local

markes improved.

V I R G I N I A PRICE DISTRIBUTION IN HOME SALES // 2011 VS 2012CHANGE %PRICE RANGES

$200K - 300K

$300K - 400K$400K-$500K

$ 0 - $ 1 0 0 K

$ 2 M +

$500K-$750K

$ 7 5 0 K - $ 1 M

$ 1 M - $ 1 . 5 M$ 1 . 5 M - $ 2 M

$100K - $200K


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Annualized 2009-2012 // Quarter-to-Quarter

Long-erm rends provide he bes and mos reliable

indicaors o overall marke p erormance, especially

when analyzing daa rom he pas our+ years in

Virginias overall housing marke. Aer an overall

marke decline hrough 2009, he housing marke

showed some moderae improvemen during 2009/2010,

largely due o he ederal home buyer ax credi. Then,

aer ha ax credi opporuniy expired, buyer aciviy

cooled ye again hrough mid-o-lae 2011. Over he

pas 18+ monhs, however, Virginia has experienced

consisen growh in buyer aciviy as shown in he

accompanying annualized sales rend daa. This

susained, long-erm growh in buyer aciviy is a clear

indicaor o an ever-improving housing marke in he

Commonwealh.

50

60

70

80

90

100

V I R G I N A D A Y S O N M A R K E T / / 2 0 1 2 M O N T H - T O - M O N T H

100,000

90,000

50,000

60,000

70,000

80,000

V I R G I N I A A N N U A L I Z E D 2 0 0 9 - 2 0 1 2 / / Q U A R T E R - T O - Q U A R T E R

2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4

89,640 88,127 87,843 91,051 90,703 93,279 87,921 83,630 84,194 81,363 83,560 84,108 85,078 86,694 88,403 90,443


106 104 102 91 83 79 80 82 87 88 86 89


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T O D A Y S H O U S I N G LET S KEEP A GOOD THING GOING

No doub abou i, no need o whisper he good news wih ngers crossed: The

Virginia housing marke is in recovery. Ocially, he recovery began in 2011; in2012, i acually el like a recovery.

For insance, or he rs ime in seven years, he Richmond meropolian regionexperienced posiive price appreciaion. The average sale price or a single amily

home in 2012 was 2.5% beter han he previous year.

Now, an increase o 2.5 % may no seem like much. Is no close o he year over

year price appreciaion we winessed rom 2003 o 2007. Bu given he pain o heeconomic hangover ha comes wih a crash rom such heady highs, do any o us

really wan o reurn o hose days? A seady, susainable upick in housing aciviy

is wha we experienced in 2012 and i is wha we can expec in 2013, as long as weare able o bea back he hreas o his nascen, ragile recovery.

While local and sae regulaory policies can dramaically aec housing cossand hus access o aordable housing opporuniies, ongoing policy discussions

a he ederal level have he poenial o aec dramaically no only he housingindusry bu he naions overall economic healh. Any alk o a Qualied

Residenial Morgage or drasic reorms a Fannie Mae and Freddie Mac ha

would eecively eliminae middle-class access o hiry-year, xed-rae morgagesis compleely irresponsible. Bu he policy decision ha could cas a damaging

chill over a gradually warming housing marke is he modicaion or eliminaion

o he Morgage Ineres Deducion (MID).

The MID has been a vial par o he ederal ax code or 100 years. I is one ohe givens ha home buyers coun on when making a purchase decision. The

primary beneciaries o his ax break are middle-class Americans.

Sixy-ve percen o amilies who claim he MID earn less han $100,000; 91% oall hose who claim he bene earn less han $200,000 a year. No one can argue

ha he morgage ineres deducion is a ax break or he wealhy. In realiy, he

MID is a bene or hard-working amilies who pay heir morgages every monh.

Preserving aordable home ownership opporuniies should be reason enough

o ake his deducion o he MID o he able during ax reorm discussions. Bui ha isn a sucien raionale, consider he dire consequences or he naional

economy i housing slows once again. Wih he excepion o he las recession, asrong housing marke miigaed he severiy o previous economic downurns.

In he Grea Recession rom which we are now slowly recovering, an anemic

housing marke exacerbaed boh he deph and duraion o he downurn. Ahriving housing marke is he essenial caalys upon which our local, sae, and

naional economies res. From real esae ax revenue o all o he jobs creaed

in he home consrucion, buying, and selling processes so goes housing, sogoes our collecive economic healh. Preserving he MID isn abou proecing

special ineress; is abou proecing all o our ineress.

I he MID is preserved and i ederal regulaory reorm is balanced and no

burdensome, hen he oulook or 2013 is srong. Ineres raes will remain lowor he oreseeable uure. Virginias high employmen numbers are giving

rise o increasing consumer condence. Young aduls and growing amilies

who have delayed home purchases in recen years are conribuing o pen-updemand ha can be saised in he coming year. Add o his mix he ac ha

Virginia is blessed wih excellen geography, a diverse economy, op-nochschools, and a alened workorce we in Virginia should coninue o enjoy

susained economic recovery. Les make sure housing serves as he oundaion

or our orward momenum.


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9

* Virginia coninues o experience very similar rends in sales pace as compared o

he overall U.S. home sales racjecory. As shown, he overall U.S. housing markeshowed somewha sronger perormance in several key monhs (April, Augus,

Ocober) bu overall, Virginias housing marke sayed in line wih naional rends.

** Jus as wih he pace o home sales, Virginias median sales price has rackedclosely wih he overall median sales price rends or he Unied Saes during

2012. Boh rends show moderae declines during he winer, and peak in he

summer monhs.

5K

6K

7K

8K

9K

10K

JAN MAR MAY JUL SEP NOVFEB APR JUN AUG OCT DEC

$200K

$210K

$220K

$230K

$240K

$250K

JAN MAR MAY JUL SEP NOVFEB APR JUN AUG OCT DEC

200K $150K

250K $160K

300K $170K

350K $180K

400K $190K

450K $200K

JAN JANMAR MARMAY MAYJUL JULSEP SEPNOV NOVFEB FEBAPR APRJUN JUNAUG AUGOCT OCTDEC DEC


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V I R G I N I A V S U N I T E D S T A T E S / / U N E M P L O Y M E N T 2 0 0 9 2 0 1 2 / / Y E A R - T O - Y E A R

JAN APR JUL OCTFEB MAY AUG NOVMAR JUN SEP DEC

2012

2011

2010

2009

In he hird quarer o 2012, GDP grew an annualized 3.1%

he ases pace o growh since he ourh quarer o 2011 aer increasing 1.3% in he second quarer o 2012. Alhough

businesses coninue o expand payrolls cauiously, non-arm

privae payroll growh or he hird quarer acceleraed aerlackluser job growh in he second quarer. The naional

unemploymen rae has declined considerably since peaking

a 10% in Oc ober 2009, bu remains uncomorably high andis likely o remain above 7% hrough 2013. Through he end o

he hird quarer o 2012, home sales sared o rise hough

were sill depressed by hisorical sandards. Mouning evidence

shows home prices have botomed ou and are nally saringo recover. Aer being a signican drag on he economic

recovery, he housing secor was a posiive conribuor o GDP

growh in each o he rs hree quarers o 2012. The U.S. sockmarke rose over he hird quarer as cenral bankers, boh a

home and abroad, ook aggressive acions o simulae growh.

Our mos likely orecas assumpions refec a moderaely

improving economy wih coninued epid job marke

improvemen as sequesraion cus are avoided by Congress.

The resuls are modes GDP and employmen growh.

Alhough he labor marke coninues o heal, job growh willlikely remain somewha slow in 2013. The unemploymen rae

is likely o average 7.6% in 2013 according o his scenario. The

Federal Open Marke Commitee (FOMC) keeps he ederalunds rae arge near zero hrough he second quarer o 2015

under his mos likely scenario.

V I R G I N I A E C O N O M I C S


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11

R E G I O N A L C H A N G E S I N F O R E C L O S U R E S / / 2 0 1 2 Q U A R T E R - T O - Q U A R T E R *

*Daa provided by RealyTrac

99 21

107

94 30

172

73 35

94

92 32

157

53

63

45

55

2,456

2,269

2,110

1,896

435

412

357

408

1159

818

776

974

582

521

516

551


13/28


R E G I O N A L CHANGES IN FORECLOSURES 2012

For Virginias housing marke, disress indicaors are down and recovery

indicaors are up again his pas year. The muli-amily marke hasboomed ; rens have increas ed; h e sock marke h as boo med; in eres

raes remain low; and oreclosures wen down. Unemploymen has

remained subbornly highbu Norhern Virginia is in he bes

meropolian employmen marke in he counry and he sae as a whole

is doing beer han mos oher saes. Vacancy raes based on unis or

sale or or ren are relaively low, paricularly or he owner-occupancy

marke where prospecive buyers aren likely o ind a lo o houses

among which o choose. So aer a prolonged rough, why hasn he

owner-occupancy marke rebounded more sharply? Are we looking a

a new normal, wih a epid recovery o only anemic growh, or should

we expec a recovery someime soon o be m ade sronger by he long

ime waiing?

And how much o his long ime waiing is due o excess invenory?

Even hough oreclosures are down, his only means ha he low o

unis ino he excess invenory has slowed. Based on my esimae o

he normal number o vacan unis held o he marke, here were an

addiional 60,000 excess vacan unis saewide in 2011 held o he

marke. Plus here were 30,000 single-amily deached or aached unis

ha could shi rom emporary renal o he or-sale marke. This excess

invenory coninues o creae a drag on he recovery in he sales marke,

as improved sales volumes and prices draw more u nis ono he m arke,

salling or even reversing improvemens in prices. Beore he markesars o approach a normal recovery, he sales volume has o increase

signiicanly above he 2012 level o 90,000 unis in order o absorb excess

invenory. Unorunaely, ederal policy makers coninue o ignore or

misjudge he housing marke, paricularly he need o esablish a pos-

Grea Recession morgage marke wih adequae underwriing crieria

and capial low o suppor demand. I we inally ge o a real housing

recovery wih adequae capial low, pen-up demand and low ineres

raes could creae a housing boom. Oherwise, he long ime coming

migh jus become he new normal.


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13

Every Virginian should be pleased wih wha we haveaccomplished ogeher in he pas ew years. We have

weahered he nancial sorm and led he naions recovery.

We have worked ogeher o creae a solid, prosperous, and

muliaceed economy a rising ide ha, as he counry

slowly emerges rom he wors nancial crisis mos o us have

known, has raised Virginia well above much o he counry.

We have se he example or he res o he naion and we

are ouperorming our neighboring saes in many ways.

Today, our unemploymen rae is 5.5 percen he lowes in

he Souheas, he second lowes eas o he Mississippi, and

more han wo poins below he counry as a whole. And we

coninue o creae housands o new, privae-secor jobs in

deense, healh care, echnology, and manuacuring.

Virginia has worked hard o expand our economy o

creae a business climae or uure growh, creae good

jobs, and build a Commonwealh o Opporuniy. Our

hard work has paid o.

Virginia is consisenly recognized or our business riendlyclimae and is oen raed a he op o naional rankings.

In addiion, Virginia communiies consisenly rank

among he op 10 bes places o live, work and raise a amily.

Virginians have access o some o he bes educaional

insiuions and medical care in he counry.

Our hard work has paid of.


15/28


In shor, Virginia works.So when he housing crisis came, we responded.

We se prioriies and cu spending or he sae and or

ourselves. We worked hard o improve our household

nances and live in a more scally responsible manner. We

passed laws ha helped individuals succeed while making i

easier or businesses o prosper.

Our scal responsibiliy on a personal and a sae level

has borne resuls. While we aren ou o he woods

compleely, in 2012 he housing recovery could be seen

across he Commonwealh.

Virginians ook advanage o our srong job marke and low

ineres raes and el secure enough o buy homes. Homesales in Virginia jumped eigh percen overall in 2012,

wih almos every monh showing more sales han in he

previous year.

And as demand or homes grew, so did heir values. In

2012, no a single region o he sae saw sales prices drop

and mos saw prices rise. Bes o all, hese are economic

improvemens ha have shown hemselves o be boh seady

and long lasing.

While here are sill challenges ahead, we will work

ogeher o ace hose challenges and develop common

sense soluions or a sound economic uure or our

Commonwealh. No mater wha our ideology or our

background, our educaion or our poliics, we share a

common commimen o excellence, o prosperiy, and o

our ellow Virginians.

Bob McDonnellGovernor of Virginia


16/28

15

THE BANKING AND MORTGAGE LENDING ENVIRONMENTS

When we look a he regulaions ha have emerged as a resul o he housing-

marke crash and he Grea Recession noably he inroducion o he Dodd-FrankWall Sree Reorm and Consumer Proecion Ac we ear ha heyre creaing

major obsacles or he banking and morgage inance indusries.

As he lending communiy prepares or his emerging new lending world, all o us

have quesions surrounding exacly wha o expec and when. While we don have

all he answers, he picure is becoming clearer. Dodd-Frank imposes wha we see

as an unprecedened level o new requiremens regarding he business aciviies

o lending insiuions. Tha means he cos, process, and availabiliy o morgage

soluions will change signiicanly.

Recenly, he Consumer Financial Proecion Bureau released is abiliy-o-

repay rule as well as is deiniion o a qualiied morgage (QM). In an eor o

preven predaory lending, he new rules se sandards such as minimum deb-o

income raios or mos borrowers, a limi o poins and ees ha can be charged o

borrowers, a nd i b ars cer ain ea ures o non- radiion al morgages such as negaive

amorizaion or ineres-only paymens.

One o he bigges issues hroughou he ru le-making process was wha proecions

lenders would have or loans ha me hese QM requiremens. The good news or

lenders is ha he rule includes a legal sae harbor or hose who make prime QM

loans. On he oher hand, i also allows or sub-prime QM loans ha carry less legal

proecion or lenders i b orrowers deaul.

The resuling risk o lenders o hese sub-p rime loans will make hem less desirable

or lenders o make, somehing we see as impacing bo h he cos and availabiliyo credi.

Oher new regulaions should be announced by he end o 2013: rules or so-called

higher-cos morgages, new loan servicing guidelines, loan oicer compensaionrules, and a inal risk-reenion proposal or Qualiied Residenial Morgages.

Also coming in 2013 will be a new combined RE SPA/Truh in Lending Ac rule.

A 1,099 pages, he proposed rule could cause signiican change o he morgage

lending process and impac all paries involved in a real esae ransacion. I is

designed o simpliy he p aperwork borrowers complee when applying or a loan,

while hopeully clariying he process; hese new orms will be seen and used by

every person in he counry who borrows money o buy a new home.

These represen jus a ew examples o a muliude o emerging regulaions ha will

impac morgage lending in 2013 and beyond.

While boh he Virginia Morgage Lenders Associaion and he Virginia Bankers

Associaion suppor eecive regulaion and ransparency in he lending process,

hese rules carry some uninended consequences ha w ill likely lead o adverse

impacs on he cos and availabiliy o credi.

I is imporan ha legislaors and regulaors ake ino accoun he cumulaive

impac o hese changes on he banking and morgage lending indusries

and by exension, on consumers especially during his ime o an already

ragile economy.

No one is dispuing ha b anks and lenders need o be properly regulaed, bu

going oo ar can signiicanly harm communiies and consumers.


17/28


Wihou quesion, he pas ew years have been diicul or morgage lending and

bankin g, bu here ar e some very enc ouraging signs. Naio nally, were seei ng ewerailed insiuions, and 90% o banks are proiable. Pas-due loans (as a percenage

o oal loans) coninued o decrease we expec year-end numbers o show hem o

be a he lowes level since 2008. Mul iple s udies s how ha he ore closure problem

is apering o and he housing m arke is healing boh naionally and especially here

in Virginia.

Despie he changing regulaory environmen, banks and morgage companies

have money o lend during a ime when raes and home values remain relaively

low and we believe ha 2013 will sill represen a grea ime o buy a home or

many consumers.

While no new or he banking indusry, inancial educaion has clearly become

more imporan han ever in hese recen challenging years. Lenders are

increasingly ocused on promoing inancial lieracy in a proacive manner. In

addiion o supporing recen legislaion ha led o inancial lieracy educaion

requiremens in high schools, banks in Virginia paricipae in hundreds o

communiy and naional evens o urher his imporan cause. No only is i

he righ hing o do, i is also good business as lenders benei when uure

borrowers are educ aed abo u he ir in ancial s iuaions and ollow- hrough o

make good choices.

While he challenges oulined above will cerainly make lending more complex and

diicul, we are coniden ha as all indusries conneced o housing work ogeher

on behal o prospecive home buyers and borrowers, we will be able o accomplish a

more balanced regulaory landscape ha will benei everyone.

Re PurchaseNATIONAL MORTGAGE FINANCE FORECAST ORIGINATIONS* 0 20 40 60 80 120100 140

2010 Q3 1

4

9

26

25

16

42

1

2

116

119

37

2010 Q4

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

2013 Q4

NOT SPECIFIED

ANNUAL

DODD-FRANK RULE-MAKING PROGRESS BY DUE DATE AS OF 12/3/12**

* Source: Morgage Bankers Associaion, 12/18/2012

** Source: Davis, Polk, & Wardwell, LLPRulemaking couns are based on esimaes and require judgemen.

Number o Required Rulemakings (Join rules are couned or each applicable agency.)


18/28

17

Z I P C A R S , S T U D E N T L O A N S AND GENERATION RENT

James Madison Universiy is geting Zipcars cars you can ren by he day or by he

hour. Need o ge someplace? Pull ou your phone, nd he neares Zipcar, and ren i.

So wha does i have o do wih real esae? More han you migh realize. Search on he

phrase Generaion Ren. Young people aren rushing o buy he hings heir parens

did cars, houses, even bicycles. Theyre choosing he fexibiliy and mobiliy o rening

insead, and he arrival o Zipcars a JMU is jus anoher example. This rend is mosly

by necessiy, somewha by choice. And is enirely worh keeping an eye on.

The Necessiy

Try o picure a rillion bucks worh o suden deb. Thas wha American sudens

are acing. Abou 59% o Virginia college graduaes ener he workorce signicanly in

deb an average o $24,717. (Conras mos European counries where pos-secondary

educaion is ree hey consider i an invesmen.)

Is called crushing deb or a reason; is hard o ge your sea legs when you s ar ou

20 or 30 grand in he hole. Considering he dearh o good-paying jobs or recen grads,

heyre looking a puting a signican porion o heir incomes oward paying or school.

Buying a house? Ha! Resul: Renal vacancies are a heir lowes level in a decade.

As Kirsen Salyer wroe or Bloomberg, Commimen phobia isn a ad. For mos,

is an economic realiy. Rening isn a choice when you can aord o buy, or qualiy

or a loan, or coun on being in he s ame job or more han a ew monhs.

Is a huge issue, and is only geting larger as college coss rise. As people borrow more

and more or school, years worh o house paymens are displaced. And you can ou he

economic value o home ownership all you wan; i doesn mean much when you can

ge a loan.

The ripple eecs are enormous. Those grads used o be he nex in line o buy sarer

homes, allowing he previous cohor o owners o move up. These days, no so much.

And is no jus abou he social issues o a more-mobile generaion. Is abou he

economic realiy. Rening is easier, especially when your credi has a big, red suden

loan on i. Sociologis Kaherine Newman old NPR, or example: Im hoping ha

he Millennial Generaion doesn se is sighs on homeownership as a benchmark o

economic sabiliy, because is going o be ou o reach or so many o hem ha i will

jus be a recipe or rusraion.

The Menaliy o Change

This is also a generaion accusomed o hings changing every year. These are he

people willing o wai in line or hours or a new gadge has a iny upgrade o he one

hey already own. Forge planned obsolescence. This is volunary obsolescence. And

orge abou working a he same acory or 50 years and reiring wih a p ension; a new

job every wo or hree years is becoming he norm. No more setling down in one spo

or he res o heir lives; he house I grew up in is an anachronism. And wih ha

expecaion o change comes less o a desire o pu down roos. The less you carry

guraively and lierally he easier i is o change. Car ownership isn abou making

a saemen anymore. Young olks end o hink o a car as a uiliy. Sure heyd love

somehing newer/aser/slicker, bu is no ha imporan. I hey dene hemselves by

any propery, is heir consumer elecronics wha phone/able/noebook hey own.

Hence, Zipcars.

Can we predic how hings will change? Will he renal rend coninue or will

Generaion Ren evenually become Generaion Finally Setled Down? Can say.

Bu wha we can say is ha righ now home ownership is ou o he quesion ormany o he people who used o uel he marke. And has going o change he way

he marke works how severe and or how long is anyones guess.


19/28


Aer years o bad news on Virginia housing markes,

i was nice o ge some good news in 2012. Accordingo daa rom he Morgage Bankers Associaion, he

number o Virginia homes enering oreclosure in he

hird quarer o 2012 was he lowes i has been since

he hird quarer o 2007. Meanwhile, he CoreLogic

house price index or Virginia grew on a year-over-

year basis or mos o he year, home sales picked up,

and shadow invenories coninued o decline, hanks

o alling delinquency and oreclosure raes.

Furhermore, residenial consrucion s ared o

show signs o lie in 2012, wih a modes increase in

housing sars along wih more sories rom builders

and developers abou growing consrucion aciviy

and lo developmen in residenial real esae across

he Fih Federal Reserve Disric. (The Fih Disric

includes he Disric o Columbia, Maryland, Norh

Carolina, Souh Carolina, Virginia, and mos o

Wes Virginia.)

In addiion, he labor marke, which is so inexricably

ied o oucomes in housing, coninued o improve

albei a a modes pace in Virginia and in

he naion.

Despie he improvemen, condiions sill canno be

characerized as srong. We have a ways o go unil wehave a ull recovery in housing and labor markes.

According o CoreLogic Inormaion Soluions, house

prices are a leas 20% below where hey were in 2006,

and more han 20% o Virginia homeowners owe

more on heir morgages han heir houses are worh.

We have more han hree imes as many homes in

oreclosure han we had in he beginning o 2000,

and more han seven imes as many as in he rs

quarer o 2006. In addiion, a 5.6% (in November

2012) he Virginia unemploymen rae is well below

is peak in 2010 bu is sill 2.3 percenage poins

higher han where i was prior o he recession.

O course, all housing is local. Thereore, in April

2012, he Federal Reserve Bank o Richmond eamed

up wih he Virginia Associaion o Realors o

survey Virginia Realors. Alogeher, 1,449 Realors

rom across he sae answered 11 quesions abou he

sae o he housing marke in heir areas and how

condiions had changed in he rs quarer o 2012.

Wha did hey ell us? Mos respondens indicaed

slighly or signicanly improved condiions, wih hesronges resuls in Norhern Virginia (63% repored

improvemen) and he weakes resuls in Easern

Virginia (norh o Hampon Roads) and Souhwes

Virginia where 49% and 44%, respecively, repored

improvemen. Disressed home sales weighed on

house prices o varying degrees, wih more han hal

o respondens in he Easern, Hampon Roads, and

Cenral regions indicaing ha disressed homes

were a big acor, bu less han 25% in Souhwes

or Norhern Virginia indicaing ha hey were a

big acor. Tigher underwriing sandards and

challenges obaining morgage nancing also

weighed on many markes. Imporanly, many o he

more posiive repors came rom Norhern Virginia,

which was once he epicener o he housing crisis

in Virginia.

Residenial real esae has been slow o rebound aer

he Grea Recession. Insead o conribuing o he

recovery, as i has in previous recoveries, housing has

been a drag on he economy. However, he botom

o he housing marke appears o have been reached

and as long as labor markes coninue o improve, we

can saely expec urher improvemen in residenial

real esae in 2013. Jus do no expec i o come ooquickly. The s ory o his housing rebound in Virginia

is slow and seady wins he race.

F E D E R A L R E S E R V E B A N K O F R I C H M O N D SPEAKS RE AL ESTATE

VIRGINIA REALTORS REPORTING ON IMPROVING MARKETCONDITIONS IN THEIR REGIONS. (SLIGHTLY TO SIGNIFICANTLY)


20/28

19

M O R T G A G E I N T E R E S T R A T E S / / 2 0 0 9 - 2 0 1 2 ( 3 0 Y E A R )

4%

3%

3%

3%

4%

3%

5%

6%

5.05% 5.13% 5.00% 4.81% 4.86% 5.42% 5.22% 5.19% 5.06% 4.95% 4.88% 4.93%

4%

5%

6%

5.03% 4.99% 4.97% 5.10% 4.89% 4.74% 4.56% 4.43% 4.35% 4.23% 4.30% 4.71%

4%

5%

6%

5%

6%


3.98%

4.76%

3.95%

4.95%

3.99%

4.86%

3.88%

4.78%

3.75%

4.60%

3.66%

4.51%

3.49%

4.55%

3.59%

4.22%

3.40%

4.01%

3.41%

4.10%

3.32%

4.00%

3.35%

3.95%

20

09

2010

2011

2012


21/28


COMMERCIAL REAL ESTATE ACROSS VIRGINIA

Valued around $11 rillion (give or ake a ew b illion), commercial real

esae is a signiican par o he naions economy, and he commercialnumbers give you a dieren kind o inormaion han residenial

numbers do.

A srong residenial marke can help push he economy by creaing jobs

(rom Realors o movers o landscapers); in a way, residenial real esae

is a leading indicaor. On he oher hand, he commercial marke is a

trailing indicaor. When is srong, i indicaes a recovered or a leas

recovering economy.

When a commercial marke improves, i indicaes ha businesses are

expecing o expand, possibly (and hopeully) as a resul o wha hey

view as a growing economy. I also ells us ha credi is beginning o

loosen hanks o lenders who also see improvemens.

An addiional posiive: An improving commercial marke can also creae

a posiive eedback loop. Wih new or expanded aciliies comes a need

or urniure, oice equipmen, and o course, employees. Commercial

expansion can push economic exp ansion, which can hen increase he

need or more oices, acories, and sores.

Tha is, in ac, wha were seeing. Mos o he counrys major

commercial real esae secors show improving undamenals slowlyimproving, o be sure, bu improving noneheless.

Some secors, such as muliamily housing, are already close o ully

recovered, according o he Naional Associaion o Realors . Ohers are,

no surprisingly, recovering more slowly, bu he boom line is ha he

expeced 2.5% economic growh in 2013 will help improve commercial

markes across he board.

Look or Quarerly Commercial Real Esae Repors rom VARcoming his year in parnership wih CoSar Group.


22/28

21

REGIONAL S N A P S H O T S

NORTHERN VIRGINIA CENTRAL VALLEY

CENTRAL VIRGINIA HAMPTON ROADS/CHESAPEAKE BAY


23/28

*The healh o Commercial Real Esae Saisic is based on he percenage o oice vacancies or 2012.

SOUTHSIDE VIRGINIA SOUTHWEST VIRGINIA



24/28

23

THERES MORE TO AFFORDABLEHOUSING THAN YOU MAY THINK

Wih help rom VAR, ive local Virginia Realor associaions, and

he Naional Associaion o Realors, we recenly released our laes

Web-based ool, Playbook: Find What Works o enhusiasic reviews

rom users.

This groundbreaking resource is available now or Norhern Virginia,

and on March 1, 2013, will p rovide a comprehensive saewide

invenory o aordable housing policies and programs. WihPlaybook,

users can locae programs where hey live, and model new p rograms

aer successul ones ha are already a work in Virginia.

Playbook answers quesions like:

+ Are here any Aordable Dwelling Uni programs near me hahelp irs-ime home buyers?

+ Who oers pre-purchase counseling or down-paymen assisance

programs in my area?

+ How can I ind ou more abou oreclosure prevenion and inancial

lieracy classes?

Visi he Housing Virginia websie a housingvirginia.org or more

inormaion abou Playbook, and o access he laes news and

inormaion abou housing opics, including Housing 2020, a muli-

media inormaion ki ha shows rends aecing housing over he

nex decade, and Sourcebook, he mos-recognized online resource

measuring housing aordabiliy in Virginia.

Housing Virginia provides echnical assisance and inancial

suppor o coaliions commied o expanding aordable housing

hrough Virginia. We also provide educaional opporuniies hrough

symposiums and local raining programs. Conac us oday a

housingvirginia.org o learn more or schedule a speaking,

educaion, or raining session in your area.

Housing Virginia wishes o hank he Virginia Associaion o

Realors or is generous suppor since 2004.

*Housing Virginia tha nks the D ulles Area Associatio n o Realtors ,Fredericksburg Area Association o Realtors, Greater P iedmont Area

Association o Realtors, Realtor Association o Prince William and the

Richmond Associa tion o Realtors or their support o Playbook through

ive NAR Housing O pportunity grants that were endorsed by VAR.


25/28


I has been argued ha due o limied human processing

capaciy, poenial home buyers oen use he asking price

on a home as a shorcu o esimae is value. So esablishing

a lising price ha is expeced o yield he highes setlemen

price (wihou prolonging he properys ime on he marke)

is vially imporan.

While deermining he value o a home involves many subjeciveacors, here is no reason o expec ha he number o homes

wih a rue underlying value o $180,000 would be dieren rom

he number o homes wih a rue value o $181,000 or $180,347.

Neverheless, asking prices end o be highly clusered.

For example, an examinaion o asking prices quickly reveals

ha many more houses are lised or $180,000 compared wih

$181,000 and prac ically no houses are lised or $180,347.

I is no surprising ha mos sellers will choose no o boher

wih an asking price ha is oo precise, such as $180,347.

The las hree digis (347 in his example) are ypically seen

as less imporan.

However, even when he hird le-mos digi is considered (he

housands digi in a ypical six-digi price), many more sellers

selec an asking price ha is associaed wih he gures 0 and

9 compared wih 3 or 7; here are more homes priced a 189,000

han a $187,000.

Wha eec does ha have?

We invesigaed how he housands digi o he asking price is

relaed o boh he degree o which sellers overprice heir homes,

and he discoun buyers negoiae on homes.

Paricularly, we associae he 3rd le-mos digi wih hree

dieren pricing sraegies and compare hem o deermine

which is he mos likely o yield he highes setlemen price

aer conrolling or he rue underlying value o he home.

Pricing sraegy one: Round pricing where he hird digi is

0 or 5 (e.g., $200,000);

Pricing sraegy wo: Jus below round pricing, where he hird

digi is 9 or 4 (e.g., $199,000)

Pricing sraegy hree: Precise pricing, where he hird digi is

1, 2, 3, 6, 7 or 8 (e.g., $196,743).

Wha did we fnd?

Sellers who employ he jus below pricing sraegy overprice

heir home by more han sellers who use a round or precise

sraegy o an economically (and saisically) signican

exen. Bu buyers, we ound, in ac end o negoiae more

on ha jus below pricing sraegy. The ne eec is ha,despie he endency o overprice a home, jus below pricing

yields he seller he highes price relaive o he rue underlying

home value.

Pu anoher way, alhough buyers (using he jus below

sraegy) end o negoiae a greaer discoun on he price, ha

reducion is more han ose by he ypically higher iniial

asking price associaed wih he jus below pricing sraegy.

Thereore, our resuls are consisen wih sudies rom oher

elds ha advocae jus below as he superior pricing sraegy.

3 , 5 , 7 , o r 0 THE A DVANTAGE JUST BE LOW PRICING


26/28

25

VIRGINIA HOUSING DEVELOPMENT AUTHORITY

877-VHDA-123 // VHDA.COM

V I R G I N I A H O U S I N G D E V E L O P M E N T A U T H O R I T Y

Aordable housing is he cornersone o a s rong

economy. More han a qualiy-o-lie issue, housing

impacs everyhing rom local school sysems o our

saes business climae.

A VHDA, we reach ou o hose who need qualiy,

aordable housing: low-o-moderae-incomeVirginians, seniors, people wih disabiliies, residens

o high growh / high cos areas and a diversiy o

populaions. We also help inance revializaion o

older urban areas and preservaion o small owns

and communiies.

To dae, VHDA has inanced more han 177,500 homes,

more han 139,500 renal unis, and helped more

han 132,000 Virginians prepare or homeownership

hrough our ree irs-ime home buyer classes.

These accomplishmens would no be possiblewihou he parnership wih ohers who share in

our mission. Thank you, VAR, or all ha you do o

help us make qualiy, aordable housing a realiy or

so many Virginians.

THANK YOUVHDA hanks

he VAR or beingpar o our missionhelping Virginiansatain qualiy,afordable housing.


27/28


2012 Monh-o-Monh Virginia Home Sales // 2009-2012

Scot Rogers,Analyst/Consultant, Virginia Association o Realtors

+8% Change o Home Sales // 2011 VS 2012


Regional Changes Home Sales // 2011 VS 2012


Home Prices in Virginia


Virginia Price Disribuion in Home Sales // 2011 VS 2012


Annualized 2009-2012 // Quarer-o-Quarer


Todays Housing. Les Keep a Good Thing Going

Laura Laayete,CEO, Richmond Association o Realtors

Virginia Economics

Chris ChmuraPresident and Chie Economist,Chmura Economics and Analytics

Regional Changes in Foreclosures // 2012 Quarer-o Quarer

C. Theodore Koebel, Ph.D.,Proessor, Urban Aairs and Planningand Senior Associate, Center or Housing Research, Virginia Tech

Governors Leter

Rober F. McDonnell, 71st Governor o Virginia

The Banking and Morgage Lending Environmens

Richard Owen,Executive Director, Virginia MortgageLenders Association

Bruce Whiehurs,President and Chie Executive Ofcer,

Virginia Bankers Association

Zipcars, Suden Loans and Generaion Ren

Andrew Kanor, Editor and Inormation Manager,

Virginia Association o Realtors

Federal Reserve Bank o Richmond Speaks Real Esae

Sonya Ravindranah Waddell,Regional Economist,Federal Reserve Bank o Richmond

R. Andrew Bauer,Regional Economist, Federal ReserveBank o Richmond

The Advanage Jus Below Pricing

Eli Beracha, Ph.D., Assistant Proessor, Finance and Real Estate,University o Wyoming College o Business

Dr. Michael J. Seiler,Director, Institute or Behavioraland Experimental Real Estate, Old Dominion University

S O U R C E S

V I R G I N I A A S S O C I A T I O N O F R E A L T O R S L EA DE RS HI P T EA M P UB LI SH ED B Y T HE V IR GI NI A A SS OC IA T IO N O F R EA LT O RS

PresidenMary Dyksra, ABR, CRSMKB, REALTORS, Roa noke, VA

Presiden-ElecBrad BolandKeller Williams Realy, Reson, VA

Vice-PresidenDeborah Baisden, GRIPrudenial Towne Realy, Virginia Beach, VA

TreasurerBill WhieJoyner Fine Properies, Richmond, VA

Immediae Pas PresidenTrish Szego, CRB, CRSERA-Elie Group, REALTORS, Fairax, VA

Chie Execuive OcerR. Scot Brunner, CAEVirginia Associaion o REALTORS, Glen Allen, VA

The Virginia Associaion o Realors (VAR) is

he business advocae or real esae proessionals

in Virginia. VAR represens more han 29,000

Realors acive in all phases o real esae brokerage,

managemen, developmen and appraisal. Our mission

is o enhance our memberships abiliy o achieve

business success.

All inquiries regarding this report should be directed to:

Sacey Ricks, Direcor o Public Relaions

Virginia Associaion o Realors

10231 Telegraph Road, Glen Allen, VA 23059

(804) 249-5716 [email protected]

VARealor.com/HomeSales

Economic Regions

Inormation sourced rom multiple listing services across the state with

data compiled by R E Stats Inc. All inormation is deemed reliable but

is not guaranteed. Figures might not match those reported elsewhere.

VAR thanks our Association Partners.

Cenral Valley:Albemarle, Augusa, Bah, Buena Visa Ciy, Charlotesville Ciy,Fluvanna, Greene, Harrisonburg Ciy,Highland, Lexingon Ciy,Nelson, Rockbridge, Rockingham, Saunon Ciy, Waynesboro Ciy

Cenral Virginia:Amelia, Buckingham, Charles Ciy, Chesereld, Colonial HeighsCiy, Cumberland, Dinwiddie, Goochland, Hanover, Henrico,Hopewell Ciy, King and Queen, King William, Louisa, New Ken,Notoway, Peersburg Ciy, Powhaan,Prince Edward, PrinceGeorge, Richmond Ciy, Sussex

Hampon Roads/Chesapeake Bay:Accomack, Chesapeake Ciy, Franklin Ciy, Glouceser, Hampon

Ciy, Isle o Wigh, James Ciy, Lancaser, Mahews, Middlesex,Newpor News Ciy, Norolk Ciy, Norhampon, Norhumberland,Poquoson Ciy, Porsmouh Ciy, Souhampon, Suolk Ciy, Surry,Virginia Beach Ciy, Williamsburg Ciy, York

Norhern Virginia:Alexandria Ciy, Arlingon, Caroline, Clarke, Culpeper, Essex,Fairax, Fairax Ciy, Falls Church Ciy, Fauquier, Frederick,Fredericksburg Ciy, King George, Loudoun, Madison, ManassasCiy, Manassas Park Ciy, Orange, Page, Prince William,Rappahannock, Richmond, Shenandoah, Sposylvania, Saord,Warren, Wesmoreland, Wincheser Ciy

Roanoke/Lynchburg/Blacksburg:Alleghany, Amhers, Appomatox, Bedord, Bedord Ciy,Boeour, Campbell, Covingon Ciy, Craig, Floyd, Franklin,Giles, Lynchburg Ciy, Mongomery, Pulaski, Radord, Roanoke,Roanoke Ciy, Salem Ciy

Souhside Virginia:Brunswick, Charlote, Danville Ciy, Emporia Ciy, Galax Ciy,Greensville, Haliax, Henry, Lunenberg, Marinsville Ciy,Mecklenburg, Noron Ciy, Parick, Pitsylvania

Souhwes Virginia:Bland, Brisol Ciy, Buchanan, Carroll, Dickenson, Grayson,Lee, Russell, Scot, Smyh, Tazewell, Washingon, Wise, Wyhe

CENTRAL VALLEY

CENTRAL VIRGINIA

HAMPTON ROADS/CHESAPEAKE BAY

NORTHERN VIRGINIA


SOUTHSIDE VIRGINIA

SOUTHWEST VIRGINIA


28/28

i

Thank you o our parners acrossVirginia who conribued o he Pieces

o Home 2012 Virginia Housing Repor:

V I R G I N I A A S S O C I A T I O N O F R E A L T O R S

1 0 23 1 T E L E G R A P H R O A D G L E N A L L E N , V A 23 0 5 9T E L ( 8 0 4) 26 4- 5 0 3 3 / / V A R E A L T O R . C O M

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VAR 2012 VA Housing Market Report

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