Housing Crash Hits Hampton Roads

I have been saying for at least a year and a half that unless and until something is done to revive the residential housing market, there can be no real improvement in the larger economy. Despite receiving billions of dollars in bail out funds, mortgage lenders are not making mortgages easy to secure. The result is a severe nose dive in all businesses that work within the housing/real estate industries: title insurance companies, real estate agents, attorneys, and builders just for starters even though some folks are blind to that reality - e.g., the ex-wife. While this region is generally somewhat cushioned by the large military personnel presence, the free fall has begum here as evidenced by two recent Virginian Pilot stories. The first looks at the drop on the new construction front:

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New home construction and sales in Hampton Roads last year fell to their lowest point in more than two decades, according to a report released Wednesday by Residential Data Bank, a Suffolk-based housing market research firm. . . . figures are the lowest on record since Residential Data Bank began tracking new home construction in 1984.

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"The No. 1 reason the building permits were down in 2008 and will continue to be down in 2009 was the lack of funding from our banks," said J. Van Rose, president of the new homes division of Rose & Womble Realty Co. "As the economic meltdown has happened in this country, the first to respond were the lending institutions."

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Average prices for new homes in Hampton Roads continued to decline throughout the year, according to the local report. The average price for all new homes was $361,720, down 6.7 percent from 2007. The decline became steeper as the year wore on. The average price during the last three months of 2008 was down nearly 16 percent from the same three-month period a year earlier.

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Besides home builders, many others are being savaged as well, such as real estate agents. The second story looks at the exodus of people from that segment of the real estate industry:

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Two years ago Maurice Watkins' budding career as a real estate agent seemed off to a good start. Listings sold quickly, and buyers were aplenty. Now, the 28-year-old Norfolk resident spends hours each day in his Granby Street apartment trolling career Web sites in search of a job. "At the end of 2007, you saw a real drastic change," he said. "The market transformed. My client base was dwindling; I wasn't making any money."

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Watkins is among nearly 900 Hampton Roads real estate agents who called it quits last year amid the most sluggish housing market in more than a decade. Home sales in South Hampton Roads dropped 22.2 percent in 2008 compared with 2007, according to the local multiple listing service.

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Norfolk resident Sissy Deaton spent four years as a real estate agent before returning in November to work 40 hours a week as a bartender at the Colley Cantina in Ghent. Deaton, 38, now works part time as an agent for Prudential Towne Realty. "I actually rode the wave a little longer than I should have," she said. "I probably should have gone back to bartending six months earlier." . . . "There's a lot of people who have just stepped away, maybe not given their license up, but are doing other things," Deaton said.

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Deaton said that as her sales volume began to fall, she was faced with finding a way to make ends meet. "There was no choice in the matter," she said. "I'm not going to lose my house working in real estate."

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Many others such as myself who have firms heavily involved in the real estate industry continue to try to hang on, but unless and until a stimulus package gets mortgage funds flowing again, I do not see the economy coming back any time soon and the downward spiral will go on.