Numbers showing how overpriced Hampton Roads real estate is (Virginia Beach: short sale, 2013)

[tvpirate05]

Numbers are much lower than they were 4 or 5 years ago. I'm seeing more and more condos go for about $60-80K in pretty decent neighborhoods (Greenbrier, Salem/Indian Lakes), that were close to double that in 2008-09. Also seeing townhouses in the low-to-mid-100s nowadays.

Still a little overpriced and above the rate of inflation compared to 10-15 years ago, but it's at least doable.

[gregir]

Not sure how anyone can say any real estate is overpriced unless they are speaking about their situation. the prices are what people are willing to pay and when I am selling I want them to be as high as possible and when I buy I want them to be as low as possible. My ability to participate in a market is not only dictated by the prices in the market but by my available resources. They balance out when looked at as a whole. If real estate is selling for x and there are buyers then it is correctly priced. If it is not selling and the sellers are motivated they will drop the price. If the sellers are forcibly removed (foreclosure) then the new owners will make decisions within the framework of the market.
HR inventories seem high to me so I am holding onto my properties and collecting rent. I make less on the money invested in these properties than I would if I had the capital to invest in other assets but not so much less that I will sell at the prices currently available. It balances out. Pricing in the current market is less influenced by leveraging than I have seen since I purchased my first home in 1986.

[UHgrad]

Originally Posted by tvpirate05

Numbers are much lower than they were 4 or 5 years ago. I'm seeing more and more condos go for about $60-80K in pretty decent neighborhoods (Greenbrier, Salem/Indian Lakes), that were close to double that in 2008-09. Also seeing townhouses in the low-to-mid-100s nowadays.

Still a little overpriced and above the rate of inflation compared to 10-15 years ago, but it's at least doable.

I agree for the most part but look at the mortgage rates 10-15 years ago, the probably averaged 7% - 8% on a 30yr fixed.



Now plug $125,000 (typical Kempsville house in 1999) at 7.5% on a 30yr fixed mortgage... you get a P&I of about $850/month.

Plug current $200,000 in on the same house for a 4% 30yr fixed mortgage... you get a P&I of about $950/month.

So cost to own is has really only gone up $100 a month plus whatever increase there was in property taxes. That is reasonable considering 13years have passed from 1999 until now.

Sure, you are leveraged more which is bad. There is also less hope of appreciation in the short term which is bad. But if you are either purchasing a home to rent out or purchasing a home to live in for the long term it is comparable to pre-bubble prices in most ways because of the extremely low interest rates.

[UHgrad]

Originally Posted by gregir

Not sure how anyone can say any real estate is overpriced unless they are speaking about their situation. the prices are what people are willing to pay and when I am selling I want them to be as high as possible and when I buy I want them to be as low as possible. My ability to participate in a market is not only dictated by the prices in the market but by my available resources. They balance out when looked at as a whole. If real estate is selling for x and there are buyers then it is correctly priced. If it is not selling and the sellers are motivated they will drop the price. If the sellers are forcibly removed (foreclosure) then the new owners will make decisions within the framework of the market.
HR inventories seem high to me so I am holding onto my properties and collecting rent. I make less on the money invested in these properties than I would if I had the capital to invest in other assets but not so much less that I will sell at the prices currently available. It balances out. Pricing in the current market is less influenced by leveraging than I have seen since I purchased my first home in 1986.

I think the criticism of the HR market has been that private sector wages are not in line with home prices, and this is heavily influenced by the military impact on the market (tax free BAH).

http://mrwilliamsburg.files.wordpres...inia-20121.pdf

I agree with your general assessment, but it does not negate the fact that folks in HR have been forced to spend a larger portion of their disposable income on rent/mortgage than most in recent years. You gotta live somewhere, rents won't drop until BAH drops in a lot of places, and a lot of folks can't get loans so they are forced to rent. Supply and demand works well in a pure form, but when government subsidies are involved it can get skewed a bit.

[tvpirate05]

Originally Posted by UHgrad

I agree for the most part but look at the mortgage rates 10-15 years ago, the probably averaged 7% - 8% on a 30yr fixed.

I forgot to take the interest into account. Thanks for the chart...really puts a lot in perspective!

[Dangousity]

Originally Posted by TNKY

I'd love to return to VABeach, but it's so unlikely based on the home prices. We need to escape MI soon, if possible, but since Hampton Roads is now so expensive, we are looking at areas in SC and TN where prices are affordable.

I hate to disagree, but being a resident of TN for 11 years now, I really don't think the 150k home, and the lack of anything nice to do, makes TN nice. The river sucks, the lakes are nasty, soil is horrible, I don't see what you all see in TN.

[ks100]

Regarding Gregir "Not sure how anyone can say any real estate is overpriced"

The housing market is being dramatically affected by the millions of non performing mortgages being held from the marketplace by FNMA etc. and by government programs to reduce the loan values. The whole mess is not being run as you imply as a free market. If it were, these properties would all be dumped on the market at once lowering the valuations to what they should be. In Virginia Beach this would be to 2000 levels with some reasonable level of appreciation, from 2 to 6% per year. In that case, the $280,000 colonial needing some TLC would bring perhaps $150,000 today. The same effect would be seen if the mortgage interest rate deduction were phased out. We are not in a free-market. We are in a manipulated one and one that favors churning real estate. Thanks to the Democrats who brought on this housing bubble mess with their social agenda of making everybody a homeowner. Once they opened that door then everybody jumped in to see how they could best gouge the system for a big profit. By the way, this bubble is the first time in history that one's house has been seen as an investment or an ATM machine instead of a place to hang your hat and raise your kids.

[TN Lily]

Some of us think it was the deregulation of the mortgage industry & the greed of Wall Street that led to the real estate market crash. Loans were given out to people who did not qualify under prudent underwriting standards. Then when the debtors couldn't make their payments, things went to hell in a hand basket pretty quickly since many of these loans - residential & commercial - wound up in securities. The reach was pretty far.

The Republicans are just as much, if not more so, at fault that then democrats. There is plenty of blame to go around.

This is a fairly funny explantion that hits home. There were too many "liar's loans" made.


SubPrime Mortgage Mess Explained (with voice) - YouTube

[tvpirate05]

I definitely feel the giving out loans to anyone is one huge factor. There was a documentary about a guy in L.A. (I think) who made $25,000 a year as a barista, yet he got approved for a home ($250K or so), and naturally defaulted on the loan. So yeah, the leniency definitely did no favors.

Unfortunately, the leniency has shifted from one extreme (very liberal*) to the other (extremely conservative*), and every applicant is being watched under a microscope. Me personally, I could technically afford to live in one of the $60-80K condos I referred to above; the mortgage would be in the mid 400s. However, a mortgage broker will say otherwise because of my credit and debt-to-income, which came from me getting student loans (huge mistake in hindsight). 5-7 years ago, this wouldn't have been as much of a problem, but then again that same condo was going for twice that back then.

Weird thing is, if I were applying for an apartment and credit/debt-to-income ever came into play, they'd just ask for a larger deposit. Strange little conundrum. Of course, there's way more layers to it, so I'm only scratching the surface. But I'd be lying if I didn't think there's some irony to it all...

*Not liberal/conservative as in Dem/Rep of course

[gregir]

"The housing market is being dramatically affected by the millions of non performing mortgages being held from the marketplace by FNMA etc. and by government programs to reduce the loan values. The whole mess is not being run as you imply as a free market. If it were, these properties would all be dumped on the market at once lowering the valuations to what they should be. In Virginia Beach this would be to 2000 levels with some reasonable level of appreciation, from 2 to 6% per year. In that case, the $280,000 colonial needing some TLC would bring perhaps $150,000 today. The same effect would be seen if the mortgage interest rate deduction were phased out. We are not in a free-market. We are in a manipulated one and one that favors churning real estate. Thanks to the Democrats who brought on this housing bubble mess with their social agenda of making everybody a homeowner. Once they opened that door then everybody jumped in to see how they could best gouge the system for a big profit. By the way, this bubble is the first time in history that one's house has been seen as an investment or an ATM machine instead of a place to hang your hat and raise your kids."

I agree that it is not a free market (and with almost all you stated) and that there are many factors outside of what would be a free market affecting price and demand. However it is still a market and whether it is a free market or not the pricing is dictated by the forces of the market, with all the influence of policy and manipulation in play. Any individual may state that real estate is over priced but the market price is still what the market (including all the non free market influences) will bear. You may not be able to participate in the market but that does not signal overpricing it signals lower demand through lack of available consumers. These influences are fundamental to all markets where there is pricing and from my experience and understanding of history where the pricing has been controlled a market of some type always springs up. (Black market cigarettes, alcohol during prohibition, gas coupons in WW2, much of the entire soviet bloc goods and services, etc.) What I find interesting is that we could liken moving back home, sharing housing, etc as some form of gray market.