About Montgomery County, VA

Inman News posted information last week a new plan whose focus was to streamline the loan modification process.

I'm admittedly behind on this post, and it's been rehashed across the web. Essentially, if (1) you're at least 90 days delinquent on a home that is your primary residence and on which you owe at least 90% of the home's value AND (2) either Fannie, Freddie or one of their participating loan companies must own the loan, then under the loan modification program you can restructure your loan to as much as 38 percent of your gross income.

Forgoing the in-depth analysis and critique from economists and Harvard-types for a moment, I have a problem with this. I'm struggling with the issue of personal responsibility, and Government subsidy of these loans doesn't resolve the problem. The problem is poor decision-making on the part of consumers and lending institutions and the real estate industry. I'm not sure modification or "streamlining" resolves the issue of personal responsibility, and on the flip side I don't know that allowing millions of loans to default and further crippling the housing and financial sector makes a lot of sense either. I have no answer for this, but struggling with the issue.

Bloodhound writes (emphasis mine):

The streamlined process looks only at income, not assets. If you refinanced your home to buy a Mercedes or own another home, you won’t be expected to sell them to pay your mortgage.

Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again.

“This is a once-in-a-lifetime opportunity,” Schiff says. “People are going to feel like complete morons if they don’t participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn’t afford.”

The government is offering loan servicers $800 for every homeowner they get into the plan.

Schiff predicts that loan agents “will be cold-calling people trying to get them into it. Just like they encouraged people to overstate their income to get a bigger loan in the first place, now they will encourage them to understate their income to qualify for a smaller loan.”

I can see Schiff's point. Desperate lenders will have an incentive to push people into what appears to be an even worse problem.

As I said, I'll leave the bulk of the analysis to economists and people who have a better grasp of the larger picture. I know that locally, Blacksburg and Christiansburg lenders haven't gone crazy with out of control loan terms. Rates are low, borrowers are bringing money to the closing table and deals are getting done. Mark Weddle says it's "Back To Basics" and he's right ... you can still buy and sell in today's market.

It was eery watching this video, reposted on Jim Duncan's blog, this morning. Take the 10 minutes to watch what Peter Schiff has to say, and then tell me you didn't raise your eyebrows in surprise at how history has played out these last several months.

No ... the photo has nothing to do with the post. I took the photo, and I liked it. That's all.

And this one won't be, either.

A few days ago, I needed a break. I had been in the office all day working on some things, and my craving for a Diet Pepsi Max (yea, I'm one of the 31 people across the nation that actually like the stuff) kicked in. One of the many reasons I like my office is that its an easy walk to a local gas station, so I hoofed it down to pick up that invigorating cola and then headed back.

On my way back I passed the site for The Colosseum, so I snapped some photos of the excavation. It had been a while since I had stopped in and so I thought I'd capture the moment. Just a lot of dirt right now ...

There's a lot of Blacksburg history in those layers of dirt:

Dozens of piles of dirt looking back towards South Main Street:

Someone's going to have a killer view:

Predicting The Future of Real Estate!

If the media says it is it right...? I heard it on the news....We don't have many homes in foreclosure in the New River Valley and sellers are not taking offers that 20% less than their sales prices, so what is up? Predicting the future of real estate in the New River Valley may not be difficult if we base our predictions on the history of our housing market.

What influence does the big picture have on the smaller picture? More importantly, if national sales of homes are down, our buyers think that sale prices are down in the New River Valley when statistics may often be the opposite. Of course, there are times when national issues greatly affect our local economy like the effects created by the events of 9/11. There are also times when local events affect the nation such as the events at Virginia Tech on April 16^th, 2007. Our local economy faired well during both events in the past.

As I look out my window which faces Main Street in Blacksburg, I see streets filled with loyal Virginia Tech fans arriving here to watch the Thursday night ballgame. This week the number of customers walking into our office to buy a home has increased. As I drive through Blacksburg neighborhoods, I have seen few foreclosures. In fact, the number of foreclosures in Blacksburg was 8 from July 15^th - October 15^th according to the VAR Trends in the Virginia Housing Market (3^rd Quarter Report) source Realty Trac GMC: Center for Regional Analysis.

Our market was thriving until August of 2008, but already I am seeing signs of more activity.

Housing Inventory in the New River Valley of Virginia

Months of Inventory

October/2008 24.26

September/2008 25.09

August/2008 14.15

July/2008 12.41

June/2008 10.02

May/2008 11.82

April/2008 15.31

March/2008 14.64

February/2008 14.76

January/2008 16.71

Given that there were no dramatic area invents that occurred in August of 2008, it is probably fair to say that the national economic disaster strongly influenced our local market which has been moderate and stable since 2005 when it was at its peak. In December of 2007 we had a 23. 11 month inventory of residential homes that was down to a 14.76 month inventory as show above. In October, the sales price to list price ratios showed a difference in prices of the following:

Blacksburg Residential Homes -$6,525

Christiansburg Residential Homes -$5,745

Giles Residential Homes -$9,540

Montgomery County Residential Homes -$2,591

Pulaski County Residential Homes -$7,692

Radford City Residential Homes -$9,290

Average -$6,897

Even though less people were buying homes in October, the average sales price was 4% less than the average list price for these areas. What would these local statistics indicate? I think that local statistics suggest that we have a strong and diverse economy that was thriving despite national economic news until August 2008. According to our local MLS sales statistics for October, Blacksburg homes sales are averaging $243,025 while Radford homes sales were averaging $132,550.

Not only do we have a good supply of properties but we have varied price ranges available. We have seen similar inventory changes last year before we experienced a healthy spring market. My prediction: The New River Valley housing market is a good market for homeowners and investors. Before making a decision about the real estate market, buyers and sellers should consider the national and local real estate trends.

* Statistic quoted from NRVAR "My Market" MLS report. These statistics are deemed to be reliable but now guaranteed.

Saw this article in the New River Valley Current this weekend regarding Progress Street Builders' new NAHB Gold Standard program. As the owner of a home built by Progress Street Builders, I can speak firsthand to their attention to detail - in this case, they're paying attention to things that have a greater purpose. And as you'll see in the article, Don is putting his money where his mouth is - Kudos to Don and the team at Progress Street
Builders ...

(Dear Roanoke Times - would you please publish these articles online so they don't have to be written out in their entirety?)

"EarthCraft, LEED (Leadership in Energy and Environmental Design) and NAHB (National Association of Home Builders) ... all are promoting sustainable building techniques, energy-efficient usage of space and materials, and long term, cost-effective approaches to design.

Progress Street Builders, whcih, since it started the eight-year old Village at Tom's Creek project, has been known for a sustainable building approach. It has incorporated aspects of energy efficiency into its homes for nearly a decade. Now its Roanoke development, Colonial Green, and a new spec house in the Village at Tom's Creek, will incorporate the NAHB Green Building standards, according to Don Hughes, operations manager.

The spec house, a four-square will not stand out architecturally from the rest of the houses in the Village, said Hughes. And neither will it be significantly more expensive. In pursuing the NAHB standard - it has chosen the Gold Standard, the ones Hughes said best fits their focus of sustainability.

'Green building is not a term I'm terribly fond of,' he said. 'It's so ambiguous, so we use the term sustainability, which indicates where you build and how you build. The majority of our construction work, in The Village at Tom's Creek and in Roanoke, has been green since the inception of The Village. It has a lot inherent characteristics, with the ability not just to look at the house but also the community. NAHB looks at the community at large, and we felt it was a really importatn component.'

Hughes explained that his company's green building approach uses smaller lots and larger continuous green spaces.

'One of the reasons we took on the Gold program was that we've been doing this throughout our company's history, and we wanted to utilize it to the greatest extent,' said Hughes.

According to NAHB, its building standard 'will maintain the flexibility of green building practices while providing a common national benchmak for builders, remodelers, and developers ... It is based on the three-year-old NAHB Model Green Home Building Guidelines, but enhanced to include residential remodeling, multifamily building, and lot and site development - also the first of their kinds in the country. It also reflects advancements in requirements in the International Residential Code and other changes that serve as indications of the dynamic nature of green building.'

Hughes said the program is more flexible and meets their needs as well as the characteristics of the New River Valley. For instance, he said, prior EarthCraft certifications (although they may have changed recently, he added) would not allow a program that used septic systems. While it is a very good program, said Hughes, in some areas of the New River Valley septic systems are necessary.

'This house [in The Village] will be certified under both programs,' he said.

The NAHB program requires a third-party, independent verification that involves both a blower-door test and a duct-blaster test to check air leaks.

'We go through a complex analysis of each house. The program gives you a broad range of meeting certain performance criteria, and we can address those objectives in a multitude of ways,' said Hughes.

Although Progress Street Builders chose the Gold Standard, when building subsequent homes it will offer homeowners a choice as to which level of home they want. The seven key green areas that the standard addresses are site, resource efficiency, energy efficiency, water efficiency, indoor environmental quality, homeowner education and global impact.

Hughes said Progress Street Builders' houses didn't have to go trhough any major changes, because the company's standard specifications already were in line with both EarthCraft and NAHB certifications and goals.

His company has concentrated on creativerly building air barriers, bringing HVAC systems inside the conditioned envelope, yet still turning out a house that is both energy efficient and cost effective.

'As long as you build carefully, not using exotic materials, you don't have to build a house that is compromised in livability or in its aesthetics. You'll drive by this particular home and it will not look out of place. It's going to be in complete architectural harmony with the community,' said Hughes.

Progress Street Builders is so confident of the NAHB Gold standard that Hughes is offering homeowners who live in NAHB Gold Standard houses an energy-usage program that guarantees a certain energy usage for two years - in units rather than in dollars - that will reimburse the homeowner for overages.

'When we build and test and have third-party verifications, we feel very comfortable in guaranteeing energy usage. it's something we have monitored in model homes and in our personal homes,' said Hughes.

For more information on Hughes and Progress Street Builders, check out their website. This article is just in time for the Roanoke Energy Expo.