Housing: It’s a buyer’s market

By Allison Brophy Champion

Published: July 19, 2008

When it comes to the local housing market, there’s darkness and there’s light.

Looking to buy a house in Culpeper? There are plenty to choose from, and they’re going cheap.

Looking to sell a house in Culpeper? Lots of other homeowners are as well, values have plummeted and foreclosures are at an all-time high.

More houses sold in Culpeper this June compared to last year, market statistics show, though a large majority of the home sales were foreclosures.

It’s part good news because the housing inventory has decreased, Amissville Realtor Julie Emery said. At the same time, the homes that did sell went for far less than the original asking price.

“So, while there’s some reason for optimism here, there’s also plenty of reason to be cautious,” said Emery, who writes on the local real estate market at realtown.com/jemery/blog.

According to Metropolitan Regional Information Systems, 57 homes sold last month in Culpeper compared to 31 in June 2007. The median selling price last month was $235,000 compared to $329,000 last year.

New contracts were written for 61 houses in Culpeper last month compared to 47 in June of 2007. The housing inventory, likewise, decreased from 784 units to 732.

“Sales are up — finally,” Emery said. “But here’s my hunch: A pretty good percentage of those were foreclosures, so they sold really cheap.”

Her hunch was right.

Further analysis showed that 38 of the 57 homes sold in Culpeper in June were, in fact, from bank-owned foreclosures.

And like Emery expected, the houses sold at a bargain.

For example, a two-level rambler with three bedrooms and three bathrooms in Pelham’s Reach along Sperryville Pike sold last month for $149,000. That same house, built in 2005, went for $345,000, Emery said.

Just down the road in Redwood Lakes, a larger Colonial-style house with four bedrooms and 3 1/2 baths sold for $230,100 last month. But the original homeowner purchased it new in November 2006 for $448,000.

“My question is still, how many homeowners can or will come down that far to sell their home?” asked Emery. “My hunch is, not many. So I’m not sure this means things are truly turning around, other than for foreclosures.”

County records show there were more than 207 foreclosures in Culpeper through the end of June, compared to 182 foreclosures all of last year.

Local mortgage banker Win Carithers, chairman of the Culpeper Chamber of Commerce, expected more hard times ahead in that regard. So far, the market has only absorbed about one-third of the risky subprime mortgages granted during the building explosion of a few years ago, he said.

Homeowners holding these high-interest loans, in most cases, are paying only interest when they make their monthly mortgage payment, Carithers said. And in some cases, their mortgage doesn’t even cover the interest, meaning the principal amount borrowed keeps going up.

When these type loans “recast” after five years, a family’s mortgage payment balloons, leading to the high level of foreclosures.

Subprime loans in the U.S. totaled about $1 trillion, Carithers said, but only about a third of those loans, about $300 billion worth, have surfaced, many as foreclosures. That leaves another $700 billion still out there.

Potentially, these loans could “all produce and perform beautifully,” Carithers said, or, “the payments could skyrocket,” leading to a continued foreclosure crisis, as many analysts expect.

“If this was a baseball game,” he added, “we’re in the third inning and it’s about to get a lot worse before it gets better.”

In the meantime, now is a good time to buy a house in Culpeper if you’re planning to stay awhile.

“You won’t see prices going up anytime soon,” Emery said.

“Right now, if you have to sell, be prepared to price your home very, very aggressively. The competition is based on price and it’s vicious!”

Allison Brophy Champion can be reached at 825-0771 ext. 101 or .

Local home sales:
By the numbers
Houses sold in Culpeper
in June 2008: 57

Number of those that
were foreclosures: 38

Houses sold in Culpeper
in June 2007: 31

Median selling price,
June 2008: $235,000

Median selling price,
June 2007: $329,000

SOURCE: METROPOLITAN REGIONAL
INFORMATION SYSTEMS INC.