HARDING REPORT – MARCH 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

thomas@tharding.com

304 671 7292 (cell-phone)

304 876 6400 (office)

 

 

CONTENTS

 

  1. The Here and Now
  2. Jefferson and Berkley County Year End Market News
  3. Shepherdstown, Shepherdstown, Shepherdstown
  4. Why the Appraisal Contingency is a Good Thing
  5. Underground Oil Tanks
  6. Upcoming Events

 

 

HARDING REPORT – MARCH 2005

 

1.      The Here and Now

 

There’s an old joke that goes like this. What goes up but doesn’t come down? Answer, an umbrella in a chimney.

 

It reminds me of the property market around here. It seems to me that the Eastern Panhandle real estate umbrella has become stuck up the chimney of the Washington DC Metropolitan Area. House prices continue to rise.  The time it takes to sell a house continues to fall. There are more buyers than sellers. There is no other way to describe it. We are living in a real estate boom time.

 

This week I’ve been looking at the year-end real estate numbers for Jefferson and Berkley County for 2004 compared to 2003 (see next section). I found myself asking “How long can this last?”. In fact, I’m asked this question a hundred times a week by my buyers and sellers, in one form or another. “ Is the market going to keep going up?”,  “Will prices stay steady ? ” and “Should I sell now while the market is high, or wait and see if it goes higher?”.  And now I know what to say. The market will remain strong as long as the chimney doesn’t fall down.

 

 

2.      Jefferson County Market News

 

The Harding Report provides market stats as soon as they become available. Here are the stats for year-end stats as just released by MRIS for Jefferson County. Of particular interest to me was the large increase in average sold price (16.37%) and total sold volume (35.81%).

 

 

 

2004

2003

 % Change

Total Sold Dollar Volume:

$ 230,777,922

$ 169,922,733

35.81 %

Average Sold Price:

$ 248,415

$ 213,471

16.37 %

Median Sold Price:

$ 228,500

$ 190,000

20.26 %

Total Units Sold:

929

796

16.71 %

Average Days on Market:

61

67

-8.96 %

Average List Price:

$ 256,201

$ 221,254

15.79 %

Avg Sale Price as a
percentage of Avg List Price:

96.96 %

96.48 %

 


 

 

And just for comparison, take a look at Berkley County… Note that the average sales price is considerably lower in Berkley County than Jefferson County, while the rate of increase in sales volume is higher in Berkley County. Also, worth noting is that houses are selling quicker (average days on market) in Berkley County than Jefferson County.

 

 

2004

2003

% Change

Total Sold Dollar Volume:

$ 289,278,734

$ 201,361,423

43.66 %

Average Sold Price:

$ 172,807

$ 148,606

16.29 %

Median Sold Price:

$ 160,000

$ 135,000

18.52 %

Total Units Sold:

1,674

1,355

23.54 %

Average Days on Market:

53

61

-13.11 %

Average List Price:

$ 176,749

$ 152,540

15.87 %

Avg Sale Price as a
percentage of Avg List Price:

97.77 %

97.42 %

 

 

(mris.com)

 

 

3.      Shepherdstown, Shepherdstown, Shepherdstown.

 

There’s an old adage, that  a real estate price is about three things, location, location, location. Well that is certainly true for the nascent University  Town, Shepherdstown.  And at the risk of boring you to tears with figures, check out these unbelievable figures for the Corporation of Shepherdstown over the past few years. CARUMBA!

                       

Year

Number of sales

Av sale price

Volume

2000

13

$176,500

$2,294,500

2001

19

$167,842

$3,189,000

2002

14

$211,386

$2,959,400

2003

10

$240,050

$2,400,500

2004

19

$407,542

$7,743,300

 

Now before we all get over-excited, note a couple of things. First, many of the houses sold in Shepherdstown over the last year have been heavily renovated, which explains some of the price increase. Also note that these figures are based on stats from the MRIS, and therefore do not take account of ‘private’ or non-realtor sales. Having said that, one of these private sales last year was for $900,000 on German  Street, so that only raises the stakes higher. Hang on to your hats ladies and gentlemen, and savor these graphs ….  NASA  would be proud . 

 

 

4.      The Appraisal Contingency – It's a Good Thing (reatlytimes.com)

The appraisal of a property's value has become a regularly used residual service by homebuyers in the real estate process. However, it can become a tool that is tossed by the wayside in a hot market -- and that's not very wise when it comes to the largest investment most consumers will ever make.

The appraisal serves various purposes in a transaction for several people. It acts as a financial compass, as it were, for everyone that has a monetary stake in the property value -- the seller, the buyer, the lender, and the insurance company.

If you're looking to use mortgage financing, it's hard to overlook an appraisal. Now, many buyers, trying to compete with other purchasers, may waive the appraisal contingency, but they will still have to have an appraisal to get financing. It just means that once the appraisal is completed, regardless of the final number, they will still walk toward the closing table. In my humble opinion, this is like handing over a blank check to the seller and telling him to just write whatever he wants for the house and empty your bank account.

Why would you write a contract on a house for $440,000 when a professional appraiser warrants that it's only worth $425,000? I've never met anyone who would buy a car or invest in stock in such a manner, but they'll throw all caution to the wind in the field of real estate. It's become so prevalent in some markets that Realtors even have a disclaimer form that they provide for buyers saying they have been informed of the dangers of waiving the appraisal -- and yet, buyers will sign it and move along.

The scenario usually works something like this -- a house is placed on the market at $400,000 and several offers come in immediately. Two require an appraisal, the third, offering $420,000, does not, so the seller goes with it. In addition, the contract has a $40,000 earnest money deposit. The lender requires an appraisal before they will lend $380,000 to purchase the house, and it comes in at only $400,000 -- revealing a $20,000 gap between the contract price and the value (and $20,000 more than what the lender is willing to provide to purchase the property).

That's why waiving the appraisal is a dangerous way to buy a house. If all goes well, then nothing bad happens. The buyer gets the house and thinks all this disclaimer stuff and warnings are from a bunch of nervous real estate agents who don't like to take risks.

If you wouldn't buy a business or invest in stock without determining the true value of the object of your purchase -- why would you purchase a house in such a manner? It doesn't make sense and it can cost you tens of thousands of dollars if your strategy fails. The road to homeownership is strewn with the carnage of unwise strategies -- throwing away the appraisal is one of them.

5. IMPORTANT INFORMATION CONCERNING UNDERGROUND HEATING OIL TANKS (by Joe Nichols, Homebiz)

 

The existence of an underground heating oil tank can cause confusion or delay during the course of a real estate transaction.  Until recently, the old adage "out of sight, out of mind" aptly described how many property owners viewed these underground receptacles.   This has certainly changed.  Today, the buying and lending public has become keenly aware of the potential environmental risks associated with underground storage tanks.  Leaking underground oil tanks can impact surrounding soil, ground water, on site drinking water wells, and neighboring wells.  Contamination costs are not covered by a standard homeowners insurance policy, and clean up costs can be thousands of dollars.  Owners, buyers, real estate agents, home inspectors, insurance companies, and mortgage companies that are involved in transactions of properties that contain underground storage tanks are growing increasingly aware of the risks associated with these tanks. 

 

 

At this point, it is common practice that such tanks be evaluated in some manner during the course of a real estate transaction.  

 

There are two general ways in which to evaluate the integrity of an underground storage tank – Precision Testing or Soil Sampling.  Each method  has its own advantages and disadvantages, but we recommend tank testing due to some of the issues mentioned below:

 

Precision Testing – Precision testing can come in various forms.  There are many different manufacturers of tank testing technology.  The important thing is to be sure that the method utilized has been 3rd party certified to meet EPA mandated test criteria. 

 

This is the preferred test method as it is cost effective. It does not require drilling and potential hazards associated with drilling.  Immediate results and you do not need to wait for laboratory soil analysis. EPA certified test methods are same technology utilized on larger regulated tanks.  This method evaluates the entire tank system and you can often find a problem before it has allowed a product release. 

 

Soil Sampling – Soil sampling involves drilling or hand augering a hole to the depth of 1 foot below tank bottom.  Samples are taken on different locations next to the tank, and samples are sent off to a laboratory for analysis to see if any contamination has occurred.

 

One of the problems with this approach is higher costs associated with laboratory fees.  Sample results may vary depending on area of drilling – often two to three samples are necessary.  There is also a potential hazard of drilling into buried electrical, gas, water, or sprinkler lines. Finally, you may have the potential for “false positives” or small amounts of contamination not related to a leaking tank but to occasional spilling of product during years of filling accidents. 

  

                                                  

 

6. Upcoming Events

 

 

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