HARDING REPORT – SEPTEMBER 2005
*** News from Jefferson County WV Property Market ***
Each month the Harding Report includes the latest news and information from the Jefferson County, West Virginia property market. This is a free service compiled by Thomas Harding, a licensed real estate agent with Greg Didden Associates in Shepherdstown, West Virginia.
For additional local information or any other property enquiry contact:
Thomas Harding
www.tharding.com
304 671 7292 (cell-phone)
304 876 6400 (office)
CONTENTS
HARDING REPORT –SEPTEMBER 2005
1. The Here and Now
Soccer season has started again and what a great family experience it is. Over a thousand kids running madly around finely cut West Virginian playing fields. Parents shouting “Go Green Dragons!” and “Well done the Pink Panthers” and “nice throw-in Blue Dolphins!”. It is truly a wonder to behold.
And it reminds me why I am here. The strong community feeling, the great outdoors and the bon homie.
This year my kids are playing positions. No longer do they chase like bees around the proverbial honey pot. Each player is assigned a position, either goal keeper, back, mid-field or forward.
And it strikes me, that this is what is taking place in Eastern Panhandle. As the population increases, and the local agencies are playing ‘chase the ball’, I am noticing a solidification of their positions. The players are running around a mite less madly. Strategies are forming – from business development initiatives to sewer and water plant reorganization. The team is coming together. This is great news for the area.
GO BLUE MOUNTAIN LIONS!
2. Jefferson County Market News – The score for August 2005 is 7 out of 10
Are we now coming to the end of this amazing period of growth?
It is hard to say. On the one hand, average house sales in July and August 2005 were BELOW average house price sales for the same period in 2004. But on the other hand, the market continues to be in strong form with houses are selling in quicker time than for the same period last year (down from 58 days to 43 days), and sales prices remain extremely close to list price (around 98%).
|
|
|
|
|
|
|
2005 |
2004 |
% Change |
|
Total Sold Dollar Volume: |
$ 31,790,571 |
$ 33,423,804 |
- 4.89 % |
|
Average Sold Price: |
$ 305,679 |
$ 318,322 |
- 3.97 % |
|
Median Sold Price: |
$ 292,799 |
$ 255,000 |
14.82 % |
|
Total Units Sold: |
104 |
105 |
- 0.95 % |
|
Average Days on Market: |
43 |
58 |
- 25.86 % |
|
Average List Price for Solds: |
$ 312,542 |
$ 322,160 |
- 2.99 % |
|
Avg Sale Price as a percentage of Avg List Price: |
97.80 % |
98.81 % |
|
[ssource MRIS]
Of course, as with all things in the future, only a fool would offer firm predictions as to what will happen to the area’s housing market. You can say that job growth continues to be strong for the area and property prices (both old and new construction) remain considerably lower than the values of neighboring Washington (MD) and Loudon (VA) Counties. On the negative side, those young families tempted to move out from the Washington DC suburbs in search for cheaper housing, will be reconsidering their move given the recent hikes in gas prices.
Many people have attributed low interest rates to the rise in house prices. But curiously, as the federal interest rates have risen, the long-term mortgage rates have not significantly increased. As long as the bank’s residential mortgage rates remain at historical lows, the housing market may well continue to see a slower but continued upward trend. Of course time will tell.
Now look at Berkeley County. And it’s going to be a SHOCKER! Look at the difference between the two counties. All the indicators are skyrocketing in Berkeley County – Total Sold Dollar Volume, Average Sold Price, Average Sale price as percentage of list price and on and on.
|
|
2005 |
2004 |
% Change |
|
Total Sold Dollar Volume: |
$ 44,030,550 |
$ 30,807,676 |
42.92 % |
|
Average Sold Price: |
$ 222,377 |
$ 184,477 |
20.54 % |
|
Median Sold Price: |
$ 217,450 |
$ 169,660 |
28.17 % |
|
Total Units Sold: |
198 |
167 |
18.56 % |
|
Average Days on Market: |
37 |
58 |
- 36.21 % |
|
Average List Price for Solds: |
$ 225,172 |
$ 188,372 |
19.54 % |
|
Avg Sale Price as a percentage of Avg List Price: |
98.76 % |
97.93 % |
|
Clearly the markets in the two counties are different and the factors impacting each market go beyond national trends.
Let’s put it simply. In August 2005, the Berkeley County market was WAY stronger than the Jefferson County market.
[ssource MRIS]
3. Know Thy Roof
What plague infects homes in nearly 80 percent of the United States? The answer is Gloeocapsa Magma.
Gloeocapsa Magma is a species of algae that causes black streaking and discoloration on asphalt/fiberglass shingles. The black staining you see on many roofs is caused by the growth of algae and fungus spoors that land on houses.
Trees do not have to be present for this air-born menace to set up camp on your roof. This alga produces its own energy source and feeds on inorganic materials, such as the materials in shingles. All they need to grow is the nutrients from both the dirt on your roof and the limestone granules on the shingles. Heat and moisture help them turn your whole roof black.
An alga is an organic material and feeds only on inorganic material. Fungus and mildew need organic material to survive. So if you can reduce the algae on your roof, you will also reduce the growth of fungus and mildew. Keeping your roof free of twigs, leaves, and other debris will also help reduce the growth of fungus and mildew. Cleaning and controlling algae and fungus growth can add to the life of your roof.
Roof shingles come in a wide variety of quality levels, as indicated by the prices. The higher quality shingles have been treated to prevent algae and fungus growth. This treatment consists of adding varying amounts of copper and zinc granules and petroleum distillates to the shingles.
If you choose to clean the roof yourself, be careful of products that are just bleach or chlorine. Using this type of product can leave your roof streaked. It also can dry out the shingles and cause premature cracking, leading to a shorter shingle life. Some of these products will also kill grass and shrubbery. Read product labels carefully and follow the application directions. But most of all, be careful when working on the roof because you can cause damage to yourself and the roof.
Another alternative is to call a qualified roof cleaning company. But you still need to ask if the products they use will cause streaking or grass and shrub damage. Roof cleaning companies can also provide preventative maintenance services that can prevent future algae and fungus growth.
[The HomeBiz Inspection Team]
4. Do Homebuyers Stay In Their Price Range? - New Study Suggests Risk-taking Is Growing More Popular
The increased availability of low-barrier entry loans which are readily purchased by Fannie Mae and Freddie Mac may be impacting the number of people who are buying homes beyond their suggested price range.
A new Wall Street Journal Online/Harris Interactive Personal Finance Poll finds that nearly one in five (19 percent) U.S. adults who purchased a home within the last three years for their primary residence say they spent above their suggested price range, while two-thirds (67 percent) stayed within their price range, and 12 percent were below their price range.
When obtaining a mortgage for their new home, recent homebuyers who used a mortgage broker, direct lender or another source were nearly three times more likely to obtain a fixed-rate mortgage (72 percent) than an adjustable-rate mortgage (26 percent), and an astounding one-third (34 percent) opted for a creative or option mortgage.
The study surveyed 2,300 adults between Aug. 19 and Aug. 23, 2005.
Regional differences were obvious. With less than 17 percent of homebuyers able to buy the median-priced home in California in 2005, it's not surprising to find that homebuyers on the west coast (29 percent) were much more likely to have bought beyond their suggested price range. The more conservative Northeast (8 percent) and Midwest (12 percent) homebuyers were less likely to incur such risk, but Southern homebuyers, driven by gains in Florida and the Gulf Coasts of Mississippi and Alabama were slightly less risk-averse (22 percent.)
Four out of five homebuyers in the Northeast and Midwest chose to stay in their comfort zone, while a little over half of Southern and Western homebuyers stayed in their suggested purchase ranges.
A little more than one-third (34 percent) of recent homebuyers who obtained their mortgage through a broker, direct lender or someone else chose one of the following four creative or option mortgages:
As long as lenders don't require higher barriers to entry, borrowers are likely to continue to buy their homes using other people's money, in anticipation of capital gains when they sell.
[Realty Times]
5. Is there a Housing Bubble?
Most U.S. cities show little evidence of a housing bubble as of the end of 2004, according to a study by two prestigious universities released today.
Recent house-price jumps are largely explained by economic fundamentals such as low interest rates, strong income growth and unusually low housing prices in the mid-1990s, said a study of 46 single-family housing markets from 1980 to 2004 by researchers from Columbia Business School, the Federal Reserve Bank and the Wharton School of the University of Pennsylvania.
The study, "Assessing High Housing Prices: Bubbles, Fundamentals and Misperceptions," found no evidence that buyers are bidding up the price of houses based on unrealistic expectations of future price increases.
According to the study, conventional metrics for assessing the housing market such as price-to-rent ratios or price-to-income ratios ignore the effects of lower real, long-term interest rates, and thus fail to accurately reflect the state of housing costs.
The study sought to dispel what it called common misperceptions, such as:
Misperception #1: The rising price of housing necessarily means that ownership is becoming more expensive.
According to the study, the price of a house is not the same as the annual cost of owning a house. The study calculated the actual cost of owning a house relative to rents and incomes, and found that these ratios were well within historical norms at the end of 2004.
According to the study, during the mid-1990s, housing prices were somewhat undervalued, and at least part of the increase in house prices over the past 10 years reflects a return of these valuation ratios to long-run historical norms.
Misperception #2: High house price growth implies a bubble.
The study said that when the real cost of long-term borrowing is low, as it is today, changes in long-term interest rates have a disproportionately large effect on house prices. Thus, given the decline in real, long-term interest rates since 2000, it is not surprising that house prices have risen as much as they have, according to the study.
However, the other side of the coin is that the housing market may be especially vulnerable to unexpected future rises in real, long-term interest rates or negative shocks to local economies, the study said.
Misperception #3: The cities with the highest price increases (or the highest price-to-rent ratios) are the most overvalued.
In some local housing markets such as San Francisco, Los Angeles, San Diego, New York and Boston, house-price growth has exceeded the national average rate of appreciation for at least 60 years, the study said.
But, according to the study, in cities with higher long-term rates of price appreciation, the annual cost of owning is lower; hence house prices should be higher (relative to rents or incomes). At the same time, house prices in high-priced cities are more sensitive to real, long-term interest rates because interest expense is a higher fraction of annual ownership costs, the study said.
The study concluded that the current U.S. housing values are consistent with strong economic fundamentals. The reduction in ownership costs caused by lower real, long-term interest rates, in particular, has largely offset the rise in housing prices, the study said.
However, the study also cautions that when real, long-term interest rates are already low, further changes in rates can have a disproportionately large impact on the housing market. An unexpected rise in real interest rates or a negative shock to household incomes could cause house prices to decline, according to the study. But this fact does not mean that today houses are systematically mis-priced, according to the study.
[Inman News]
6. Upcoming Events
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