When I was a kid, my Uncle Jack, my mother’s oldest brother, told me a story I’ve never forgotten. He was at a little county fair way out in corn country. Nothing special, just beauty contests for hogs, cheesy little rides and sticky, sugared confections.

Late in the day, the ice cream vendor decided to pack it in, announcing that he was giving away what was left of his inventory. People elbowed their way to the front of the crowd, so eager were they to get something for nothing. They walked away with the ice cream piled into their bare hands, rushing off to their cars, leaving a trail of melted drips behind them.

The lesson I took from my uncle’s story was that those folks didn’t really want ice cream. They were willing to get themselves dirty, and to get their vehicles dirty, just to have something for free. Most of them probably didn’t even eat the ice cream, and they certainly couldn’t have enjoyed it. Imagine trying to inhale a glutton’s quantity of chocolate-fudge-swirl before it melts all over your clothes.

Could that be what’s going on right now with the $8,000 first-time home-buyer’s tax credit? I happen to be carrying three listings that are undeniably “investor’s specials” — which means they’re a good buy, but they need a lot of work. Even so, my phone is ringing off the hook with agents trying to sell those houses to owner-occupants — folks with very little cash trying to get an FHA loan so they can buy a house, thus to get $8,000 in “free” money.

Do those buyers really want homes, or do they just want that free money? What will happen to the properties when the $8,000 is spent? Should we dial the clock back to 2006 to see if anything looks familiar?

Meanwhile, the National Association of Realtors is campaigning for even more “free” money to bribe even more otherwise-unmotivated buyers. The only thing that could make the deal sweeter would be a double hand-full of “free” ice cream.

Guest Author:  Greg Swann

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Huntsville Home Prices Flat

Our normal monthly market reports are a bit late this month due to a major statistic package upgrade within our local MLS. Of course the sales volume figures remained virtually unchanged but the method used to calculate the average prices, especially average square foot prices, appears to have been modified by removing an internal filter and now presenting the raw figures for member consuption. Thus we had to re-sync our local database and re-run the trend lines.

We think the change is a good one and more accurately reflects the fluctuations in the Huntsville Metro Market. While the raw data is now more dramatic month to month, the overall trend of the moving average we always display with the raw MLS data has also remained virtually unchanged despite the internal MLS algorithm change. For example, you will note in the 4 year chart below that the overall local market trend saw steady price appreciation from 2006 into the fall of 2008. Since that time we have experienced an ~3% decline in average prices and since April 2009 have experienced a flat and stable pricing model.

Average prices per-square-foot showed a 3% increase in August when compared to August 2008 levels, while August’s median selling price showed a -3% decrease from 2008 levels, a result that very much illustrates a flatly priced market neither appreciating or depreciating.

Average Price Per Square Foot

Taking a Closer Look at Price Ranges

When taking a closer look at differing price ranges the one trend continues to dominate is that upper end homes priced above $300k continue to be a much smaller market segment in our current market when comparing recent years. For example, in August of 2008 home sales in this price range accounted for 34% of the overall market while this past month they accounted for only 9.4% of the market. The larger market share in the Huntsville Real Estate market continues to be in the $150k - $300k range as indicated in the following table.

Average Price Per Square Foot

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If you are new to the Huntsville Alabama Real Estate market, hopefully you are already aware that Alabama is a “Buyer Beware” State. The legal term that describes this type of market is Caveat Emptor, which is a Latin phase meaning ‘let the buyer beware’. Thus to Alabama home buyers this phase serves as a warning and notifies them that legally they are purchasing their new home ‘as is’. When a home sale is subject to this warning the purchaser assumes the risk that the product might be either defective or unsuitable to his or her needs.

Since the advent of more recent legal precedents such as those involved with ‘Implied Warranty’ many states have legislated a move away from ‘Buyer Beware’ to Caveat Venditor (i.e. let the seller beware) and require home sellers make a legal disclosure, documenting all known defects of their home. However it is important to remember, this is not a legal requirement in the state of Alabama.

Disclosure of Property Defects

Since seller disclosures are not a legal requirement in our state, it is important that home buyers take a few basic steps to provide themselves this protection within their own purchase offer and make their contract contingent upon acceptable results:

• Request a seller disclosure statement that puts the seller on record of known defects
• Have the home inspected by a professional home inspector for an independent report
• When an HOA is involved formally request a copy of their Convents & Restrictions
• Use a qualified ‘Buyer’s Agent’ that has fiduciary duties to protect your interests

Disclosure of HOA Convents and Restrictions

While a few surrounding states (e.g. Florida & Virginia) do require that Home Owner Association (HOA) convents and restrictions be disclosed to buyers, there is no such law in the state of Alabama. Thus this is something you will want to accomplish through your contact contingencies, and this is even more applicable during economic downturns and when your subdivision of interest is a new neighborhood with new construction ongoing.

During the mortgage crisis over the last few years many horror stories have come to light across the various states that have been the hardest hit. While the Huntsville Real Estate market has performed better than many other local markets around the country, our market is not immune to distressful situations as recent news reports from the Huntsville Times and WHNT 19 bring to light. Discuss these articles here with other local consumers.

If you would like more information on protecting your interests during the home buying process, I can help, just drop me an email or give me a call at 256-325-1659.

Elizabeth

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One of the indicators we watch closely is pending contracts because this statistic is a leading indicator of market conditions. The following 3 year chart compares the number of contracts closed each month (top line) with the number of pending contracts (bottom line) not yet closed at the end of each month. Thus pending contracts are a metric that can measure pent-up demand as they indicate how many closing are in the queue for the next few months.

While the magnitude of these figures is important, the real indicator is the difference or distance from the number of closings vs the number of pendings. The smaller the difference the stronger the pent-up demand and thus the stronger the underpinnings of the local market.

For example looking at the chart during the 2006-2007 time-frame, at times the number of pendings at the end of the month were greater than the number of closings and note the difference between the two metrics. This behavior is indicative a market that is growing strongly with price appreciation.

Compare these results with the later part of 2007 and 2008, note the huge discrepancy and widening gap between the two statistics with pending contracts hitting their low point in November of 2008.

Nonetheless since Nov 2008 we have experienced a steady build up of pending contracts and increasing sales. While part of this move is surely seasonal, the gap or distance between the 2 sales statistics has narrowed significantly to 2007 levels, thus indicating an underlying strength within the market that will likely provide support to the current seasonal sales trends of 2009.

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According to Redstone Arsenal and UAH officials, the university is now waving the normal 1-year requirement to establish in-state residential status, thus all BRAC transferees whether military, civil service, contractor, and their dependent family members will be eligible for immediate in-state residential status at UAH. This is a huge savings in tuition costs especially in light of recent tuition increases across the state and the planned hike in out-of-state tuition upwards to 3 times the rate of in-state costs.

UAH President, David Williams, said this policy has been implemented to provide additional incentive to workers undecided about moving to Alabama once their jobs are transferred here. The University of Alabama Huntsville is an internationally recognized high-tech research university with strong programs in engineering, science, business, nursing and liberal arts.

For additional information, transferring workers can call 1-800-UAH-CALL (1-800-824-2255)

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While the answers to these questions may not yet be an affirmative YES, the idea and possibility of just such action by our Congressional Leaders is not at all far fetched, in fact it may very well happen and here is why:

The Home Ownership Moves the Economy (Home) Act of 2009 dubbed HR 2801. This act is a current bill within the House of Representatives and at present is within the powerful House Ways and Means Committee.

This committee is made up of 41 members: 25 Democrats, 7 Republicans from ‘declining housing market’ states like CA, NV, and MI, and 11 Republicans from other states. The bill may very well be a pre-primed move intended to be ready to execute if the economy does not improve along its current path and those facing re-election deem they must do something more in regards to economic stimulus.

The recent successful ‘Cash for Clunkers‘ legislation also may be pointed to as exemplary, since this type of direct consumer spending stimulus appears to be very successful in reaping immediate short term rewards, and besides there is nothing more short sided than a politician’s desire to be re-elected.

The original first time home buyer tax credit of 2008 was basically a fifteen year, interest free loan. Then in 2009 this was replaced by the current $8,000 credit with no payback rider that is set to to expire at the end of November.

HR 2801 however is a real doozy because the current income limitations would be removed (yep no phase out and no income restrictions), moreover it will cover not just First Time Home Buyers but ANY Home Buyer and get this; in its current state all home buyers could claim a $7,500/a year tax credit for two years, not one.

There is little doubt in my mind that this bill in its current state, if passed into law, could likely generate another housing bubble …think about it, with $15 grand coming your way over a 2 year period, Who could afford to rent? …It certainly reminds me of the Dire Straits song lyrics: ‘Get your Money For Nothing and your Chicks for Free’ …hard to beat that deal, wouldn’t say?

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Yes home sales have declined in Huntsville significantly over the last few years, however the local slow-down lagged what most of the nation experienced by a year or more in time. Moreover, average home prices in Huntsville have yet to even to come close to the national -20% average much less the -50% declines that have been measured in some of the hardest hit areas like portions of California, Nevada, Arizona, and Florida. Nevertheless the question remains: Will Huntsville lead or lag in the eventual national recovery?

Thus after months and months of consistent bad news, there is finally some good news to report on the national level. One of the major nationally reported indicators that has been the bearer of bad news has been the ‘Case Shiler‘ index report. For several years now this index of home prices and sales in the top metro area markets in the country has been the regular and repeated presenter of nothing but bad news on the housing front.

However, the current ‘Case Shiller‘ index and report has some really great news for us all. Outside of Detroit and Las Vegas, every one of the other 20 metro regions the study follows was up for the month of June in 2009, the first month of positive results in over 3 years. More importantly this seems to reflect the consumer sentiments that are being reported across the country.

For months we have speculated that the Huntsville Real Estate Market while lagging the country into the housing down-turn, may in fact lead the recover by being one of the first mid-sized markets to turn upward in housing sales and prices. Certainly recent months sales statistics would bare this out. However, looking at this past month where foreclosure prices dominated our local market and given that local banks ‘firmly held’ to an internal industry moratorium on foreclosure activities thus delaying taking action, we may actually continue to lag the nation, if and when the housing market takes root and begins to grow.

This is obviously a change in prognosis of our local markets that only regular readers will pick up on, nonetheless there still seems to be some portion of local foreclosure inventory that must be liquidated before we begin a steady growth path. Watch our monthly market updates closely because I assure you we won’t miss keeping you updated on the facts of what is happening locally.

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This particular college entrance exam is comprised of four curriculum-based tests assessing skills in English, mathematics, reading and science and the scores range from 1 to 36, 36 being a perfect score.

The number of students taking the test nationally rose to a record of 1.48 million students as some states have moved to make the test mandatory. Alabama while still a voluntary state nonetheless had 76 percent of students take the test making it one of the highest percentages in the nation.

Nevertheless the rest of the statewide rankings were not as positive, as Alabama averaged 20.3 almost a full point below the national average of 21.1 with Massachusetts scoring the highest with 24.0 and Mississippi scoring the lowest with 19.0.

While individual high school results have not yet been made public, the Huntsville Times did publish the results for local school districts. The Huntsville City School District averaged 21.9 above the national average and Madison City Schools (i.e. Bob Jones High School) scored 23.8 which is among some of the best schools in the nation. Madison County Schools also did better than the rest of the state with an average score matching the national average of 21.1.

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The first point to clarify is the festival’s name: Why isn’t the Big Spring Jam held in the spring of the year? This is a common question asked by many new comers because the name originates from the festival’s location, Big Spring Park in downtown Huntsville, and is not related to the seasonal time-frame of the event. The Jam has always been held on the last weekend of September, since 1993 and this year’s event will be the 17th annual occurrence and will be held on September 25-27.

Another thing to keep in mind is that The Big Spring Jam is a not-for-profit operation and a major project of the Huntsville Heritage Foundation. Thus since its debut, the Jam has donated hundreds of thousands of dollars to local charities. In addition to giving back to the local community via charities, this year’s Big Spring Jam will also award two $1000 scholarships to local students via an application process open to the public.

As always there are acts for virtually every musical taste and this year’s lineup is no different. From hubby’s favs for this year, Huey Lewis & The News, The Black Crowes, and The Fray to a wide assortment of country, hip hop, rock, R&B, and of course oldies but goodies including the Village People. We would also be amiss if we didn’t mention Trace Adkins by name, as we have always loved his music but actually fell in love with ‘the man’ during his charitable performance on the reality show, The Celebrity Apprentice.So be sure to check out the full lineup, stage schedules, and purchase tickets online at www.bigspringjam.org or at the Von Braun Center, 700 Monroe Street, Huntsville, Alabama 35801.

Why not plan a family outing so as not to let one of the best lineups in the history of the festival pass you by. Big Spring Jam usually features four or more temporary stages set up throughout the park. Each stage typically features the same genres of music throughout the weekend. One stage features country music exclusively, another features Christian contemporary, and the remainder of the stages are rock-based.

Ticket Prices:

• 1 Day Pass: $25 online and at the VBC Box Office $30 at the gate
• 3 Day Pass: $45 online and at the VBC Box Office – Not available at the gate

Gates Open:

• Friday, September 25, 2009 5:30 p.m.
• Saturday, September 26, 2009 4:00 p.m.
• Sunday, September 27, 2009 4:00 p.m.

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The 3 most popular High Schools in the Huntsville Metro Area are normally arch rivals when it comes to any sporting event. However on Aug 20th, 2009 the schools are coming together, yes to compete on the soccer field, but primarily to raise money in fight against breast cancer.

What, Where, and When

• Soccer Competition
• Bob Jones High School
• August 20th, 2009
• 4PM Grissom vs Bob Jones
• 5PM Huntsville vs Grissom
• 6PM Bob Jones vs Huntsville

Receive a ticket for a free hot dog and soft drink from the concession stand with a $5 donation at the door. Students wearing pink get free admission.

The teams will be selling pink ribbons to display at the match for each donation to the Liz Hurley Breast Cancer Fund. Cash and checks are being accepted.  Checks should be made out to The Liz Hurley Breast Cancer Fund.  Donations can be given to any Bob Jones varsity or junior varsity players between now and Wednesday, August 19th.

This is a competition between the schools, but our main goal is to raise as much money as possible. See ya at the Bob.

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