Housing slump felt in Richmond: Still, speaker says area remains healthier than U.S. on average

Nov 22, 2008 (Richmond Times-Dispatch - McClatchy-Tribune Information Services via COMTEX) -- RYCEY | Quote | Chart | News | PowerRating -- Homes in the Richmond area continue to sell as the housing slump lingers nationwide. But the market here has slowed as well and prices are falling, although not as sharply as in other areas.

"We say we're insulated -- and we are a bit -- but don't let me lull you into thinking we have not been affected," said Bill White, president of Joyner Fine Properties. "Our insulation has been broken."

White spoke at a presentation Thursday evening at the Country Club of Virginia by the Richmond real estate company and SunTrust Mortgage Inc. About 100 agents, clients, developers and builders attended.

Agents are dealing with something they have not dealt with for years, White said: excessive pessimism.

Housing has been hurt by the falling stock market, bad loans and a rise in job losses, he said. But those aren't the only factors.

"Some is economic," he said, "but a lot is fear."

Has the housing market hit bottom? "We are not sure," White said.

A couple of bright spots indicate a possible turn. Mortgage delinquency rates on subprime loans nationwide may have peaked, he said. Also, the number of U.S. home sales is beginning to trend upward.

Nationally, the gap between home prices and income began to widen in 2000-2001, White said. "The gap was bridged by unusual loan products that in retrospect shouldn't have been on the market."

Some houses were 100 percent financed. Loans were made with no money down. When house values began to fall, some borrowers owed more than their houses were worth.

In all, 18.3 percent of all U.S. mortgages are underwater, meaning the house is worth less than the loan amount. "That is concerning to us," White said.

The Richmond area fares better, with 15.9 percent of all mortgage loans underwater, he said.

Price declines here have been modest compared with other areas, such as Florida and Arizona, White said. Foreclosures have hit here as well, but again not as severely as in California and Nevada.

The average price per square foot of houses sold in the Richmond area was $140.12 in May, according to the Central Virginia Multiple Listing Service. Now, six months later, it is $123.66.

"That's a major dip in not a whole lot of time," White said.

This region also does better with its inventory of homes for sale. A six-month supply is considered healthy, meaning it would take that long to sell all the houses on the market.

Nationally, through September, the inventory was 9.9 months. Here, the average is 8.5 months, White said, but even that varies within the area.

In Richmond's West End, it takes 5.5 months, compared with nearly 15 months in Goochland County, according to MLS data.

A forgotten jewel is the Petersburg-Colonial Heights-Hopewell area, White said. The area will benefit from an expansion at Fort Lee and the pending arrival of a Rolls-Royce jet engine testing and assembly plant in Prince George County.

Sales in the Tri-Cities took a hit in 2007. That will turn soon, he said.

Contact Carol Hazard at (804) 775-8023 or chazard@timesdispatch.com.

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