CONTENTS

1.      The Here and Now

2.      Jefferson and Berkeley County Market News

3.      New York Times Hails Market Slow-down

4.      Gas Prices Burn Down Car Sales… are McMansions Next?

5.      Alan Greenspan Worries About Housing Prices

6.      Developer’s Corner

7.      Upcoming Events

HARDING REPORT – OCTOBER 2005

1. The Here and Now

My kids and I got up early last week to watch the old James Rumsey bridge in Shepherdstown being blown up. I have always wanted to see something blown up live, having grown up watching old concrete factories and chimneys being blown up on television. There were about four hundred people waiting when we arrived at the Rumsey Monument, the place of choice to witness the explosion. The engineers had it well planned out, the siren sounded and then at 8.15 am KABOOM! And then a fraction of a second later – the time it takes for sound to catch up with light – we saw five or six enormous grey clouds puffing out of the old bridge. And then we cheered.

Why were there so many people there? Partly of course because everyone likes a good ‘historic moment’. Twenty years later they can tell their friends while crossing the bridge “I was there when they blew the old bridge up.” But I think there is something else. There really were a lot of people who made time in their busy weekdays to watch the event. I think it is more about the bridge itself. This is the symbol of Shepherdstown’s connection to the outside world. The bridge links Jefferson County to Washington County Maryland, Frederick, Washington DC and beyond. This is the site where the armies of the Civil War got hung up trying to cross the Potomac. The bridge is a geographical symbol of change. And change is what this area is going through aplenty.

And in a fifty, a hundred, a hundred and fifty years, or whenever they replace this bridge, I wonder what condition this region will be in? Will we have become a suburb of Washington DC? Will there be another way to cross the Potomac from Maryland? Maybe we won’t be using roads to travel by anymore. Time will tell.

2. Jefferson County Market New – The score for September 2005 is 8 out of 10, GO Jefferson!

So the third quarter results are in around the country, and how is the property market doing…?

The New York Times is telling us (see article below) that third quarter results are low across the country. Not in Jefferson County, West Virginia. Check out the following Graphs 1 & Graphs 2 (I do love my graphs!). They show that average sales prices are still on the rise and days on the market continue to fall. Signs of a slowing down market, I don’t think so.

Graph 1 Average Sales, Jefferson County, 2005

 

 

Graph 2 Average days on Market, Jefferson County 2005

It is true that total sales volume is down, which is an indication that the number of houses being sold is falling, but their price continues to rise (see Graph 3) …

Graph 3 Sales Volume, Jefferson County 2005

Now let’s look at last months results in the Eastern Panhandle…

Okay, so the market is continuing to grow, don’t believe all those Washington and New York real estate experts. Average sold price roared ahead by 30% compared to same month last year. In fact there was a massive jump for average sale price from August 2005 to September 2005 from $292,689 to $337,791. There ain’t no bottom dropping out of this market, no sir! Local realtors are all reporting the market is slowing down, but the numbers tell a different story…

Table 1 Jefferson County market data, comparing September 2005 to September 2004

	2005	2004	% Change
Total Sold Dollar Volume:	$ 26,009,888	$ 23,460,274	10.87 %
Average Sold Price:	$ 337,791	$ 260,670	29.59 %
Median Sold Price:	$ 318,000	$ 238,900	33.11 %
Total Units Sold:	77	90	- 14.44 %
Average Days on Market:	49	50	- 2.00 %
Average List Price for Solds:	$ 343,605	$ 264,096	30.11 %
Avg Sale Price as a percentage of Avg List Price:	98.31 %	98.70 %

And how about Berkeley County? Once again, Berkeley is outstripping Jefferson in terms of property sales growth. Not only is Berkeley growing compared to same period last year, it is continuing to rise compared to August 2005 when average sale price was $225,422.

Table 1 Berkeley County market data, comparing September 2005 to September 2004

 

	2005	2004	% Change
Total Sold Dollar Volume:	$ 39,127,961	$ 25,366,335	54.25 %
Average Sold Price:	$ 231,526	$ 167,989	37.82 %
Median Sold Price:	$ 217,900	$ 164,900	32.14 %
Total Units Sold:	169	151	11.92 %
Average Days on Market:	51	44	15.91 %
Average List Price for Solds:	$ 236,068	$ 173,026	36.43 %
Avg Sale Price as a percentage of Avg List Price:	98.08 %	97.09 %

[source data, MRIS]

 

3. New York Times Hails Housing Market Slow-down

A real estate slowdown that began in a handful of cities this summer has spread to almost every hot housing market in the country, including New York.

More sellers are putting their homes on the market, houses are selling less quickly and prices are no longer increasing as rapidly as they were in the spring, according to local data and interviews with brokers.

In Manhattan, the average sales price fell almost 13 percent in the third quarter from the second quarter, according to a widely followed report to be released today by Miller Samuel, an appraisal firm, and Prudential Douglas Elliman, a real estate firm. The amount of time it took to sell a home was also up 30.4 percent over the same period.

In another sign that the housing market might have reached a peak, executives at big home builders have sold almost $1 billion worth of company stock this year.

Outside Washington, in Fairfax County, Va., the number of homes on the market in August rose nearly 50 percent from August 2004. In the Boston suburb of Brookline, Mass., where many three-bedroom houses cost $1 million or more, the inventory of homes for sale has increased in just the last few weeks, said Chobee Hoy, a broker there.

The question remains whether all of this represents a momentary cooling off of some overheated housing markets, or it presages a more pronounced downturn that would end a decade-long boom.

Some economists and commentators have for years predicted the bursting of a real estate bubble, and previous slowdowns have turned out to be relatively brief pauses before prices started accelerating again.

But with mortgage rates now rising, the cost of gasoline hovering at or near $3 a gallon and house prices in some areas out of reach for many families, brokers and analysts said they thought that this slowdown could be the real thing.

For now, the change remains a far cry from the bursting bubble that some have predicted.

 [New York Times Oct 4 2005]

 

4 Gas Prices Burn Down Car Sales -- Are McMansions Next?

Recent reports suggest that high gas prices coupled with the end of summertime clearances are putting the brakes on auto sales, particularly larger vehicles such as SUVs and pickups. Could there be a message here for the housing industry?

With back-to-back hurricanes hitting the oil and gas industries in the gulf, recovery efforts are intense. This week, nearly 93 percent of oil production and 75 percent of gas production was still offline. That's nearly a quarter of the nation's domestic oil production. Recovery is taking place very slowly, and with the hurricane season not over until the end of November and with strong storms predicted for at least the next ten years, more disruption to oil and gas supplies could occur.

Winter weather is on the way, and the nation is bracing for record high energy costs. Homeowners and renters will be watching their energy costs more closely than ever as we all share the shortage in supplies. The government has already warned the public to expect as much as a 70 percent increase in their heating bills this winter.

It's well known that tastes in homes change over the years, and current conditions could signal a trend toward downsizing. Just as SUV's were the rage in automobiles for the expansive '90s, the oughts may prove to be the era of eco-friendly hybrids and other smaller vehicles.

That could be a harbinger of things to come in housing. What's popular today may be a selling liability tomorrow. Think orange shag carpet and psychedelic wallpaper. Over the last few decades, homes have supersized. In 1970, the average home was 1,500 square feet, but by mid-2004, detached homes had reached 2,400 square feet.

The building industry is intensely interested to know if it's building the right products to sell. The National Association of Home Builders conducted a survey to find out whether size or amenities matter more. In just three short years, it was found that attitudes have changed substantially.

In 2000, the association surveyed thousands of homeowners and asked them if they would prefer more space with fewer amenities, or less space with more bells and whistles. Fifty-one percent said they would take size over substance. When the survey was repeated in 2004, sixty-three percent of 2,900 homeowners said they would prefer less space and better accoutrements. The association believes that in 2006, the number of homeowners wanting style over size will be even greater. They believe energy and other maintenance costs will increasingly play a role in housing design.

That's excellent news for homeowners selling older modestly sized-homes such as the easy-to-remodel mid-century Ranch-style home, or the small-yard garden-style, zero-lot-line or patio homes of the '80s. Just make sure your listing is attractively updated for today's luxury-loving homebuyer. And if you've got a McMansion to sell? There's still plenty of market left -- make sure the seller has the latest energy-efficient features to boast about to buyers.

[Realty Times]

5. Greenspan worries over housing market Federal Reserve Chairman Alan Greenspan said asset prices often fall after long periods of stability and ``euphoria,'' echoing warnings he's issued over the past year that investors may be too complacent about risk. ``A decline in perceived risk is often self-reinforcing in that it encourages presumptions of prolonged stability,'' Greenspan told the National Association for Business Economics in Chicago today. ``Extended periods of low concern about credit risk have invariably been followed by reversal'' in asset prices. While the Fed chairman didn't say which asset prices concern him, the speech came just one day after he said speculators may be driving up housing prices and creating a risk because so many Americans rely on home appreciation to support spending. Earlier this year he called the rally in bond prices a ``conundrum,'' given that the Fed is raising interest rates. The Fed chairman said yesterday that ``signs of froth have clearly emerged in some local markets where home prices seem to have risen to unsustainable levels.'' The median price of an existing home rose 15.8 percent for the 12 months ending August to a record $220,000, the National Association of Realtors said yesterday. Yields on U.S. 10-year notes have fallen to 4.28 percent from 4.58 percent on June 30, 2004 when the Fed began raising rates, an event Greenspan has called ``unprecedented.'' ``Greenspan in particular has been trying to nudge those rates up,'' economist Stanley said. The Fed is ``probably going to have to tighten a little bit more to get the job done.'' Greenspan made similar warnings about excessive exuberance in August to central bankers at the Jackson Hole, Wyoming, conference sponsored by the Kansas City Fed. ``History has not dealt kindly with the aftermath of protracted periods of low risk premiums,'' he said then.

[Bloomberg Sept 27 2005]   6. Developer’s Corner An attorney representing a local developer is requesting that Charles Town City Council reconsider the way it issues building permits. Attorney Michael Cassell spoke on behalf of his client, developer Lou Athey, and asked that city begin issuing permits for houses in approved subdivisions before a sewer connection for the house is available. Currently building permits are only issued when a home has an approved sewer connection. Cassell said homes located in subdivisions that have already been approved could be constructed while the owners wait for a sewer permit. The owners would not occupy the dwelling until a sewer connection is made. “The longer we wait the higher the building prices will go” Cassell said. “This sounds mundane but its important to a lot of people.” “City Manager Jane Arnett said she was against any change to the existing policy, citing sewage capacity requirements imposed by Charles Town by the West Virginia Department of Environmental Protection. “The repercussions of this (proposal) are far greater than the request being made” Arnett said. The DEP has ruled that the Charles Town wastewater treatment plant cannot exceed 1.2million gallons of flow per day until the plant completes an expansion project. That project, which is expected to be completed in January, will raise capacity of the plant to 1.7 million gallons per day. Arnett said the remaining capacity of the plant must go to buildings on the present waiting list for sewer connections.  “We are very close to capacity” Arnett said. She believed allowing homes to be constructed without an approved sewer connection could lead to a greater backlog of sewer requests once the plant expansion comes online. [Martinsburg Journal Oct 8 2005]

7. Upcoming Events

OCTOBER

·        October 15, Murder Mystery Party, Hilltop House Hotel, Harpers Ferry. For more information call (304) 535-2132.

·        October 20, 21, 22, 23, 27, 28, 29 & 30 “Do Black Patent Leather Shoes Really Reflect Up?” Old Opera House, Charles Town. For information or tickets call (304) 725-4420 or (888) 900-SHOW.

·        October 21-23, Irish Festival Concert, Harpers Ferry. For information call (304) 263-2531.

·        October 26-29, American Conservation Film Festival, Shepherdstown WV www.conservationfilm.org

·        October 22, 23, 24, 29, 30 & 31 “Wait Until Dark” Old Opera House, Charles Town. For tickets call (304) 725-4420 or (888) 900-SHOW.

·        October 22 "Bow Wow Boogie" to benefit Spay Today and the Briggs Adoption Center, at Citizens Fire Department, Charles Town, 6:30-11:00. Dinner, live music and silent auction. Tickets available from Anne Small 876-6607 or Christine Parfitt 876-0976. They are $50.00 each with $40.00 of that tax deductible.

·        October 31, Halloween in Shepherdstown.

NOVEMBER

·        November 12-13, Over the Mountain Studio Tour. For more information call 800-624-0577 and 304-267-5468.

·        November 25-27, Dec 3-4, Christmas in Shepherdstown For information call (304) 876-0910.

[www.jeffersoncounty.com/calendar.html]

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