Foreclosures hurt housing marketPublished 10:57pm Friday, January 21, 2011
Sales of homes in Hampton Roads rose slightly in December, but the real estate industry was still reeling from the lingering effects of a recession that officially ended more than 18 months ago.
The Virginia Association of Realtors released its fourth-quarter “Trends in Virginia’s Housing Markets” report on Thursday with a qualified prediction that the state’s housing market should improve in 2011.
“Housing is trailing the recovery,” said John McClain, a Senior Fellow with George Mason’s Center for Regional Analysis.
But retail sales are up over 2009, “which shows that people are feeling better, even if they don’t say it,” he said. And job prospects are improving, as well, with the announcement of more than 12,000 jobs in the state’s two largest metropolitan areas alone during the past 12 months.
“As the economy recovers, you’re going to see consumer confidence go up again,” he said, adding, “2011 is going to be a good year.”
The indicators seem somewhat less positive in the Hampton Roads region, however. The area lagged behind almost all areas of the state in the number of homes sold during the fourth quarter of 2010, as compared to 2009. That total fell 23.4 percent, putting Hampton Roads just ahead of the Southside Virginia MSA.
Perhaps even more indicative of the problems in the local housing market, the median price of a home in Hampton Roads fell by 0.9 percent from December 2009 to December 2010. Richmond was the only other part of the state where the median cost of a home fell during the year.
The drop in values is the thing that worries Suffolk Realtor Billy Chorey the most.
“The foreclosures and short sales in Suffolk are killing the market,” he said. “And you don’t know where the bottom is until you’re out of it.”
Chorey explained that foreclosure sales devalue all the properties around the foreclosed homes, causing owners to get less for their properties than they might have expected or needed to pay off their own mortgages.
And Chorey said he doesn’t see an improvement in local market conditions soon, either. Many homes today are selling for 20 to 40 percent less than they would have fetched two years ago, he said. And values keep falling.
“A house today — on Jan. 21 — is going to be worth more than it will on Dec. 31,” he said. “As far as good news for sellers, there probably is none from a valuation standpoint. The good news is for buyers.”
The Realtors’ report showed that foreclosures were up 23 percent in Hampton Roads since 2009. In fact, all areas of Virginia, with the exception of Northern Virginia, posted year-to-year gains in the foreclosure rates.
“Everybody is scared” to get into the market, Chorey said. “As good as it was in ’05, the pendulum has swung back even further. I’ve just never seen anything like it.”