prince william county real estate market...
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Prince William County GovernmentPrince William County Government
Prince William County Real Estate Market Update
Senate Finance Committee Hearing
September 18, 2008
1Date: 9/18/2008
History of Real Estate Appreciation in Prince William County
-3.83%
17.44%
7.60%
17.47%
27.20%
18.30%
22.98%
-14.82%
-25.00%-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
CY8
0, F
Y82
CY8
2, F
Y84
CY8
4, F
Y86
CY8
6, F
Y88
CY8
8, F
Y90
CY9
0, F
Y92
CY9
2, F
Y94
CY9
4, F
Y96
CY9
6, F
Y98
CY9
8, F
Y00
CY0
0, F
Y02
CY0
2, F
Y04
CY0
4, F
Y06
CY0
6, F
Y08
CY0
8, F
Y10
CY of Value, FY of Revenue
Actual Residential Appreciation: Actual Ave.5.8%, with Forecast, 4.7%Inflation Rate, Annual Ave. 3.6%
FY10 Forecast
CY80-07 Average
2Date: 9/18/2008
History of Prince William County Real Estate Tax Rate
$1.300
$0.758
$0.910
$1.070
$1.160$1.230
$1.340$1.360
$0.970
$0.787
$0.68
$0.76
$0.84
$0.92
$1.00
$1.08
$1.16
$1.24
$1.32
$1.40
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09
4Date: 9/18/2008
Foreclosures in PWC
0 5 8 6
237 223
316
717
134
537 512
584
4744343717171618
255
20520117214311612298
446
771
661
0
100
200
300
400
500
600
700
800
900JA
N.
FEB.
MA
RC
H
AP
RIL
MA
Y
JUN
E
JULY
AUG
.
SE
PT.
OC
T.
NO
V.
DE
C.
2006 2007 2008
2006 Total: 2492007 Total: 2,8052008 (Through July): 3,645
6Date: 9/18/2008
Single Family Home Sales and Active Listings - July 2007 to July 2008
487
231
3,111
3,481
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jul-0
7
Aug
-07
Sep
-07
Oct
-07
Nov
-07
Dec
-07
Jan-
08
Feb-
08
Mar
-08
Apr
-08
May
-08
Jun-
08
Jul-0
8
Sales Active ListingsSource: MRIS
7Date: 9/18/2008
Balance of Foreclosuresas of Date Indicated
14 17 19 36 57217
612
949
2,6302,921
2,589
2,0992,115
1,483
1,242
487
1390
500
1,000
1,500
2,000
2,500
3,000
3,500M
ar-0
6
Apr
-06
May
-06
Jun-
06
Jul-0
6
Aug
-06
Sep
-06
Oct
-06
Nov
-06
Dec
-06
Jan-
07
Feb-
07
Mar
-07
Apr
-07
May
-07
Jun-
07
Jul-0
7
Aug
-07
Sep
-07
Oct
-07
Nov
-07
Dec
-07
Jan-
08
Feb-
08
Mar
-08
Apr
-08
May
-08
Jun-
08
Jul-0
8
Aug
-08
8Date: 9/18/2008
Prince William County Average Sales Price – Single Family and Townhomes
$304,095
$485,977
$190,149
$321,937
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
Jul-07 Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Single Family Avg. Sold Price Townhome Avg. Sold PriceSource: MRIS
9Date: 9/18/2008
Prince William County Average Sales Price – Single Family and Townhomes
July 07 July 08 % Change
Single Family Average Sold Price $485,977 $304,095 -37.4%
Townhome Average Sold Price $321,937 $190,149 -40.9%
10Date: 9/18/2008
Volatility Between Neighborhoods Within Residential Real Estate Markets
Always had disparity between residential and non-residential properties
Now volatility within the residential market – neighborhoods are experiencing dramatic differences in the extent of market value declines
Fairness and equity issues
Transparency in assessments process
Loss of credibility in annual re-assessment
Loss of trust and confidence in government
11Date: 9/18/2008
Other Major Revenue Sources And Impact on County Operating Budget
Personal Property TaxNew auto sales declining nearly 20% during the past yearNew trucks selling for as much as a 20% discountExisting trucks depreciating at an accelerated rate
Sales Tax revenue declined nearly four percent (3.7%) from prior fiscal year
Business license (BPOL) revenue declined over seven percent (7.2%) from prior fiscal year
County agencies preparing scenarios where budgets are reduced 33% due to local and additional state budget reductions
13Date: 9/18/2008
Why the Foreclosures are inPrince William County
The Perfect Storm of IngredientsConstruction Boom – PWC was the leading edge as Ffx became built-upLarge pool of lower income and first-time buyersExisting stock of lower priced homesSub-Prime Loans – the Turbo FuelThe Invisible Speculator – Playing the market w/New Homes
PWC was a speculator’s dream
14Date: 9/18/2008
Foreclosures and Vacant Property Are Toxic
Foreclosures drive down prices.Foreclosures discourage buyers.Foreclosures and Vacancies require costly County oversight to maintain properties not being kept up.Multiple vacant and foreclosed properties present a danger of neighborhood decay and can foster crime and graffiti.
15Date: 9/18/2008
What Can Be Done?Since Fall of 2007, PWC Finance Staff studying ways to aid housing market.Limitations
No budgeted funds to support the effortCounty would not underwrite the effort via a subsidyCounty could not utilize any debt issuance that would count against its ceiling on debt.
CXO Foreclosure Task ForceMembers drawn from OEM, Finance, Public Works, Planning, Housing, Coop. Extension, and CAO
16Date: 9/18/2008
Overview of “Home Help” Initiative
Longstanding desire to have PWC Police, Fire, and Educators live in the CountyHigh housing costs have resulted in many of these workers being forced to live in outlying areas Current housing market downtrend has resulted in hundreds of homes in the County being placed in foreclosure and depressing home prices generally“Home Help” is designed to offer incentives for qualifying County employees to relocate inside the county borders and simultaneously reduce the inventory of homes for sale inside the county
17Date: 9/18/2008
Possible Funding Mechanism Pass Thru CD Financing
County makes market rate investment in 10-yr CD with participating local bank in the amount required to fund an employee’s mortgage.Employee purchases home in the County (foreclosure may be bought at below-market prices).The bank provides a mortgage loan to the employee at a below market rate, but with a positive spread to the rate it is paying on the CD. i.e. CD rate = 3.9%; mortgage rate = 4.9%, amortized asa 30-year loan.Downpayment assistance options may be developed.