A nation riding on bubbles - Virginia housing market (Richmond: sales, real estate)
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A nation riding on bubbles - Virginia housing market
Hello....
I'm kinda wondering how the housing market is doing in Virginia, and more specifically, Central south west, Lynchburg /Roanoke areas?
Out here, on the west coast, we are definitely seeing folks equity deflate and prices are dropping. It sure doesn't look like we'll see a correction any time in 2007. Matter of fact...kinda reminds of a steady decline over the next few years.
I know there will always be good high paying jobs in the capitol, so the prices as seen up there seem more justified. But with the deflated equity and not having that equity propel our consumer-driven economy, I'm seriously wondering how those record prices we saw in late 2005 will ever re-inflate -- especially in these areas that lack many of your higher paying tech / white-collar jobs?
Anyways.... I write this based upon my perception of the west coast....so how are things in Virginia, and what is your outlook for the next 12 -24 months?
The home value increases for this area vary by locality but overall they have increased by about 50% (guesstimate) in the past 10 years, with the largest increase being in the past 5. Lake properties have increased by 500% in the same time though. I just bought my first house a year ago and I found an excellent priced home just north of Lynchburg in Amherst Co - 10 acres, 1300 sq. ft. home, 2 acre pond, mountain views, $130G's. However, I was interested in land and looking through the MLS listings it's easy to find 10 year old doublewides of 3 acres of land for $190,000 which in my opinion is absurd. A co-worker of mine purchased 40 acres of nice mountain property for $140G's which is an outstanding deal in my opinion. A friend of mine bought a Lake home 4 years ago for 100,000, kept it for 2 years and sold it for $300,000 so it's easy for make an uninformed or seat of your pants purchase in the area (same as anywhere else though).
People come from New England and buy homes worth $250G's for $500G's all the time and think they got a great deal so it's a matter of perspective.
I live in the topmost county in Virginia, Frederick County. I've lived here in the same home for 20 years. Needless to say the custom built home and acreage have increased big-time in value. A year before buying this home, I bought a 5 acre undeveloped lot for $5,000. I held it for 3 years and sold it in 3 weeks by myself -- and it sold for $20,000. Those days of truly affordable land purchases are long over in this region, and why is that?
There is an economic phenomenon that has been taking place here and in other parts of America, and it involves the cities and suburbs, and the outlying regions beyond those 'burbs.
Where there is plentiful work (read: growth), a HUB is created, usually the hub becomes a large town or city. Around that hub, there is the innermost ring. In many metro areas, there are concentric-style rings where suburban areas develop, all based on the growth of the hub. Hub and ring behavior is such that the outer rings can 'do business' with the inner rings and the inner rings connect directly with the hub. That's what the interdependency is all about with urban and suburban life.
Here, where there is the Washington capital, there is an enormous hub with smaller (but large) hubs touching the enormous hub. From each of those smaller hubs, there are concentric-style rings where suburban areas exist for each of the smaller hubs. Some of these concentric rings overlap and this is where so much of our "congestion" and overgrowth problems occur. We have DC, where other cities attach to, then smaller cities attach, then towns, etc. Since this area has so many cities attached directly to Washington DC, and then so many smaller cities attached, the population and business clustering is very very large. There is much diversity here and the interdependency is large enough that there is no monopoly or strong-hold by any one corporation.
I know the national numbers but haven't checked real estate numbers in the region to see if there is any decrease in sales at this time in our area. Certainly from what I've been watching, new homes are not being sold as quickly as the used homes -- I see the ads with "REDUCED" all over the real estate sections here. I guess I have no pity on these developers -- they're greedy and not realistic. No developer I know of is building REAL HOUSES for REAL PEOPLE. They're all being built very quickly, on postage sized lots, no variety, with more square footage and amenities than a typical family really needs. And since there are sooooo many people who simply cannot afford that McMansion, the developers are going to probably be eating dust by summer. Their mindset is to build for the higher price for the greater percentage profit, and proffer as little as possible to the community that ultimately has to foot-the-bill for the population demands that move in.
There will be people who will literally lose out in real estate purchases. A home is a huge investment and not everyone is saavy enough to be buying this without having some financial counseling. So many people do not understand money or economics and they rely on their own egos or perception to lead them (astray, oftentimes). "Keeping Up With The Jones" will ruin people who live by that motto. About the best thing that will come of deflation/losses will be that the real estate loss can be a tax deduction off the ole 1040. That, a full beer, and a life-lesson learned will have to suffice for those who plugged into that mindset of 'buy now or lose out'.
We are looking to move in about 2 years and it's great to know that what our home and property offer will far exceed one of those cookie-cutter McMansion monsters. We are doing a few upgrades so that our home offers a few of those amenities that the McMansions offer, just to keep the place on the upgrade-pace. But having a good 'location', plus wooded acreage with a stream and views of the Blue Ridge Mountains, this place will sell much faster than another-house-in-another-development. And I'll laugh all the way to the bank.....
Roanoke MSA values will continue current growth at least for the next 2 years. We've got a more diversified economy and demographic in the Roanoke area and they help support eachother. In my northern side of Franklin County, you're seeing land values increase > 10% annually but that's not overly hot. Lake values will continue to appreciate faster than the rest of the area but even so, they're not likely to deflate because it's a different market entirely; ie, it's not a bedroom community for a metro area. It's a retirement mecca w/ over 80 homes on the market for $1M or more. The entire economy would have to briefly nosedive to disrupt growth on the lake.
The entire Roanoke MSA is growing at 3% overall when you take all counties together (Franklin County has grown 8.5% since 2000 and is the fastest growing county in the MSA). That's not the sort of bubble inducing growth that would make speculators nervous and or salivatory; nor is it the sort of growth that would attract speculators because 10-15% appreciations aren't their target market.
'Bubble' has just become a popular word. These days, any well-performing market that cools gets labeled as a 'bubble'. The proper word for it is 'market'...
Roanoke MSA values will continue current growth at least for the next 2 years. We've got a more diversified economy and demographic in the Roanoke area and they help support eachother. In my northern side of Franklin County, you're seeing land values increase > 10% annually but that's not overly hot. Lake values will continue to appreciate faster than the rest of the area but even so, they're not likely to deflate because it's a different market entirely; ie, it's not a bedroom community for a metro area. It's a retirement mecca w/ over 80 homes on the market for $1M or more. The entire economy would have to briefly nosedive to disrupt growth on the lake.
The entire Roanoke MSA is growing at 3% overall when you take all counties together (Franklin County has grown 8.5% since 2000 and is the fastest growing county in the MSA). That's not the sort of bubble inducing growth that would make speculators nervous and or salivatory; nor is it the sort of growth that would attract speculators because 10-15% appreciations aren't their target market.
Just my loosely gathered thoughts.
Sean
I have seen a number of your posts regarding Roanoke and Franklin County. Your posts have raised questions in my mind, as I am aware of this region. Quite frankly, the information you are posting seemed inaccurate so I researched some of the data you continue to provide on this Forum.
One minor point: Smith Mountain Lake is not a 'retirement mecca' although some people retire there. The region is for full-time permanent residency for families of all ages, second homes for vacationers, and/or for retirees. One of the attractors is that much of the activity is recreation based. Many of the SML residents commute into Lynchburg or Roanoke. Those jobs would definately be dependent upon local economy. BTW, lake values typically appreciate more rapidly than land values everywhere, unless there are deterring factors such as pollution.
I'm unsure where you are obtaining your Franklin County data from and I could not substantiate what you claim. Your data is shown to be incorrect. I fail to understand why Roanoke and Franklin County are being lauded. From my data, Roanoke County has a 6.9 % below poverty rate. The County also has only grown 2.9% from 2000-2005.
Roanoke City has a NEGATIVE growth rate of -2.4%. No wonder people are leaving... their below poverty rate is almost twice that of the State of Virginia, at -16.9%.
The below poverty rate for Franklin County also exceeds the average rate for the State of Virginia and it is 11.5%. It might also be pointed out that the Census shows 0 Hispanic and 0 Women Owned Businesses in Franklin County. So much for "diversity".....
The Roanoke MSA regions' population change from 2000 - 2005:
Botetourt 5%
Craig 1.2%
Franklin 6.5%
Roanoke 2.9%
Salem city -0.4%
Roanoke city -2.4%
(Source: US Federal Census, above URL for each county or city region)
When calculating the mean growth percentage change for the 5 regions which comprise the Roanoke MSA, the correct number is 2.56% increase overall, not 3% increase.
On Roanoke, from Wikipedia: As of the 2000 census, the city had a total population of 94,911. By 2006, the city's population is estimated to be 92,328; if the population trends of the past six years continue, the city will have a smaller population than Roanoke County in the 2010 census.
If we are going to use facts, let's obtain the correct information to disseminate to others. Perhaps obtaining the correct information will give others pause, too. I fail to see why Franklin or Roanoke are being touted as ideal Virginia spots to relocate.
Your posts have raised questions in my mind, as I am aware of this region.
That's nice. I live in this region. I own $2.5M in real estate in this region, and I own and operate 3 separate companies in this region. I'm aware of other regions, but being aware doesn't mean I'm an expert. You're the first person on this web site to attack my integrity, compared to the dozens that have thanked me personally for my help. I'm not entirely sure what your motivation is, so I'll give you the benefit of the doubt. As for my motivation; I simply love Franklin County and Roanoke. I'm not a realtor, nor are any of my businesses tied to the local economy. I'll admit I'm excited that so many great folks are learning about the Roanoke area here, and visiting, and loving it, and finding good jobs and moving here. If I can help more folks discover the Roanoke Valley then all the better. That's basically my motivation. Truth be told I hate spending time defending my credibility but I'm certainly not going to let your accusations rest without some sort of response.
Quote:
Originally Posted by LynnS
One minor point: Smith Mountain Lake is not a 'retirement mecca' although some people retire there.
It is indeed a retirement mecca. It is also a semi-retirement mecca. I know close to 100 people who live on the lake, and none of them work in Roanoke or in Lynchburg. Most of them are retired or are semi-retired and do not work locally. They telecommute and travel extensively. Yes, I know people that aren't retired or semi-retired and own property on the lake but they have vacation homes on the lake, not full-time homes. But anyway, how does my description of SML as a retirement mecca imply that it is ONLY a place for retirees? There are certainly people living on the lake and commuting to Roanoke. Someday I hope to meet one! Do you know of any? Kindly introduce them to me!
Do you have statistics on the number of people that commute to Roanoke or Lynchburg from Smith Mountain Lake? Point them out to me. Otherwise your statement about commuters is just anecdotal. I only have anecdotal data myself, although I suspect that my anecdotal data is more extensive than yours given my interaction within my community. Again I'm assuming you don't live in this community and are just "aware" of it, whatever that may mean.
Quote:
Originally Posted by LynnS
I'm unsure where you are obtaining your Franklin County data from and I could not substantiate what you claim. Your data is shown to be incorrect. I fail to understand why Roanoke and Franklin County are being lauded. From my data, Roanoke County has a 6.9 % below poverty rate. The County also has only grown 2.9% from 2000-2005.
Roanoke City has a NEGATIVE growth rate of -2.4%. No wonder people are leaving... their below poverty rate is almost twice that of the State of Virginia, at -16.9%.
Am I reading you right? What data is shown to be incorrect? And since we're splitting hairs, you can't fail to substantiate a claim and simultaneously label a claim as incorrect. You have to pick one or the other. According to the US CENSUS, Roanoke County has 6.9% of it's population living below the poverty rate. The statewide average is 9.9%. Why you're characterizing it as worse than the statewide average is beyond me. Yes, Roanoke City has a negative growth rate and it has a higher than average poverty rate. So to does Richmond and several other cities in Virginia and countless others in the nation. Roanoke city residents are for the most part simply relocating to sub-urban counties within the same MSA.
Quote:
Originally Posted by LynnS
The below poverty rate for Franklin County also exceeds the average rate for the State of Virginia and it is 11.5%. It might also be pointed out that the Census shows 0 Hispanic and 0 Women Owned Businesses in Franklin County. So much for "diversity".....
An 11.5% poverty rate is not grossly higher than the statewide average of 9.9% so as to indicate economic trouble. In fact, the economic performance of Franklin County is strong. In 2005 Franklin County received over 70 million dollars in new investment from companies expanding or relocating to my county. In 2006, that amount increased to well beyond 100 million dollars. Franklin County job growth for the working class has been very good, and most new jobs (+/- 750 new jobs in '05 and '06) are above the median. Anyway, the point is that there is a definite and gradual reduction in the percentage of people living below the poverty line in Franklin County. I believe that updated statistics from the US Census will bear this out, given that their economic data is over three years old and there has been notable population growth in Franklin County since then, particularly among the higher income demographic.
(later edit to post) There is a very small hispanic population in Franklin County. However, there is a substantial African American population and plenty own businesses. Furthermore, I know MANY women in Franklin County who own businesses. Both of my closing attorneys are women who run separate partnerships in which they own a primary interest; my realtor, a principal of her OWN Realty company, is also the CEO of a development company. A woman owns Cannadays store in Boones Mill. And if you walk the main street of Rocky Mount, you'll see a Cafe owned by, you guessed it, a woman. Oh look, across the street, a florist, two gift shops and a full service spa, all owned by (gasp!) women. I suspect the actual web site that you obtained your data replaced "NA" values at the census with "0" values incorrectly. NA means it's not available, or in other words, the tracking data for some reason isn't available. And furthermore your tone with (So much for "diversity") is just nasty. You often take a very demeaning tone; I'm not sure if that's your intention.
Quote:
Originally Posted by LynnS
Stats for Franklin County from the US Federal Census indicate growth at a 6.5% increase, not 8.5%, as you claim.
I believe I said that since 2000 the growth rate is 8.5%. I did not say growth from 2000-2005 is 8.5%. So I believe you are mischaracterizing my statement. The 8.5% growth statistic applies to the years 2000-2006 and was provided by Roanoke College, and reported on by the Roanoke Times. I use that number because it indicates an upward curve to population growth far beyond the 2000-2005 growth of 6.5%. In fact, the additional estimated population increase of +/- 1,000 during calendar year 2006 indicates a 2% PER YEAR increase, indicating that the 2006-2010 Franklin County population growth at current rates will be 10%, which incidentally is much higher than the statewide average. I suspect it will be closer to 12%. Does this make Franklin County the fastest growing county in Virginia? Not by a long shot. But it still indicates that Franklin County is a highly desirable relocation spot in Virginia. I'd argue that anything much higher than a 12% growth rate is not an ideal spot to relocate in anyways, unless you're doing so for the short term. Otherwise you're subject to many negative pressures like class sizes, higher unemployment, crime and so on.
Building permits also establish the health and vitality of Franklin County from a relocation perspective. Since 1999, residential building permits have increased from 386 in 1999 all the way to 540 in 2005. A telling statistic is that for the 540 single family residential building permits issued in 2005, the AVERAGE cost for each home built in Franklin County was $290,000. Furthermore, during 2005, there were 701 (!) addition or alteration permits granted to existing homeowners, who in total invested 35 million dollars in improving their homes (average improvement project cost: $50,000). Typically these permits are issued to folks who buy an older home and invest in improvements straight away. It's worth noting that the 35 million dollars in home improvement permits nearly doubles the 2004 value.
Quote:
Originally Posted by LynnS
If we are going to use facts, let's obtain the correct information to disseminate to others. Perhaps obtaining the correct information will give others pause, too. I fail to see why Franklin or Roanoke are being touted as ideal Virginia spots to relocate.
You can continue to fail to see why Franklin and Roanoke Counties are being touted as ideal Virginia spots to relocate until you are blue in the face. The reality is that in Franklin County, in 2005, there were 1,721 building permits issued for a grand total of 231 million dollars in both residential and commercial investment in my county. That's about $5,000 per capita. The property tax revenue increased so dramatically that the county reduced it's property tax rate to $0.53. This performance coupled with being IN the blue ridge (as opposed to having a "view" of it), and being right next door to state and national parks, lakes, NASCAR racetracks, cultural venues and a regional airport, make the valley that I call home a very attractive place to live.
I'm originally from Vermont. As an owner of a higher end equestrian facility I am contacted continually by horse friendly families moving into Franklin and Roanoke Counties from all over the country. I'm not hung up on statistics alone as you (and too many others) seem to be. Yes, statistics are useful, but they too often misrepresent an area (either positively or negatively), so I hope that by volunteering my time here I can help educate people about the Roanoke Valley. After all, I live here, my children attend school here, and I breathe the clean mountain air, and I volunteer in my community and I donate heavily (!) to charitable organizations within my community. I don't look at my real estate as a means to "cash-in" in two years. Trust me, as a successful "dotcom" entrepreneur I could have picked anyplace in the country to move to and to grow roots in, and I picked Franklin County. To me, it certainly looks as though you've made your mind up and that the Roanoke Valley is NOT your ideal relocation destinatoin when you run screaming from Frederick County in two years.... but I'm here to say that for a great many others, the Roanoke Valley will soon become the place that they call home.
I fail to understand why it's OK to make slightly disparaging remarks (that you may feel are NOT point blank challenges), then feel insulted when rebutted in the exact same tone. (That's not directed at any one person).
Please people.... play nice in the sandbox. It's embarrassing.
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A nation riding on bubbles - Virginia housing market
