Pay close attention to the charts. We have double the foreclosure rates of surrounding jurisdictions and the homes are being sold so cheaply that it is bringing the value down for everyone’s home. It seems as if some are so desperate to put a ‘positive’ spin on what’s happening by calling us a ‘Jewel of Recovery’ which is particularly odd phrase.

Dr. Fuller will be extremely useful over the next couple years as we attempt to map the recovery process. I would agree 100% with him about the shift from owners to rentals; this is going to further exacerbate problems in these older neighborhoods which is another reason why the County should invest in additional zoning enforcement officers.

91 Thoughts to “Dr. Fuller on Real Estate Market”

  1. Anon

    Just one note… the filmmakers spelled county with an extra u. I know it’s a typo (like a key sticking), but I thought they might want to know.

  2. To be more precise, as of Feb. 15th, 2008 we had double the foreclosures of the next worst county (Loudoun) in the DC metro area, and nearly triple the foreclosures of the third worst (Staffard).

    There are recent developments as well. Greg Letiecq pointed out at Citizens’ Time Tuesday that there was a spike in home sales in PWC last month. I wrote to Dr. Fuller to verify this. Here is Dr. Fuller’s reply:

    Eric, it is true that the number of sales increased sharply in March
    but what the speaker did not say is that prices were dramatically
    lower. Two things are working here. First, foreclosure sales are
    contributing to the higher number of sales and that prices have come
    down so much in the County that its housing stock is the most
    affordable in the region; low prices are generating increased sales.
    Still, the county has a 15 month excess backlog of unsold houses and
    the highest foreclosure rate in Northern Virginia, and possibly the
    state.
    Stephen S. Fuller, Ph.D.
    Dwight Schar Faculty Chair and University Professor
    Director, Center for Regional Analysis
    School of Public Policy
    George Mason University

  3. To read the chart above without having to hit “pause,” go to:

    http://www.cra-gmu.org/forecasts.htm

    It’s called “Washington Area Economic Outlook
    MCA of Metro Washington — April 7, 2008”

    PWC’s foreclosure rate is literally off the chart. They put a couple of arrows to show where our numbers would be if the page were twice as wide.

    The other chart in the video came from a different study:
    http://borderbattles.ssrc.org/Rumbault_Ewing/

  4. pvogel

    Times are bad everywhere, but racism is never good for the economy.

    Mr Lettiques house has declined 100k in value. at least 40k of that has been attributed to the fearful climate in PWC

    The next county election would be a god time to send all these politicians packing

  5. Just like Greg Letiecq, your economist seems to be fishing the data with less than the requisite objectivity. The entire nation is experiencing a loss in housing values, not just Prince William County.

    With the rapid growth in Prince William County, it should be no surprise that housing values in this area would also be the least stable. New homes are most often populated by new employees. Such people are most likely to move and also most likely to be unable to afford the house they just bought. So when housing values drop, areas with a lot of new homes suffer the greatest price drop.

    I have seen such a collapse in housing values before. When I was in Houston, TX, in the 80’s, the price of oil dropped. I had just bought a house that was 2 1/2 years old. Oops! Since I was in the military, I had no choice except to move — and to keep the house until I could afford to sell it. Five long years.

    When I retired and moved to this area, I bought an older home.

    The overall positive economic impact of illegal aliens does not amount to much. These people work low wage jobs. So the only people they really help are the people who employ lots of them.

    I will concede that illegal aliens are less likely to use public services, but almost none of them can afford to pay the taxes required for such services. In particular, that includes those with children in our public school system. So long as large numbers of illegal aliens are coming into our community, we will have children taught in trailers.

  6. Moon-howler

    Citizen Tom,

    You should have seen the trailers when all those damn military and government people moved into the area back in the 70’s. PWC Schools even had to have year round school. The eastern end of the county was especially hard-hit.

    Are you an economist? Perhaps you can point out the error of Dr. Fuller’s assessment.

    Perhaps we have come full circle.

  7. Citizen Tom said:

    I will concede that illegal aliens are less likely to use public services, but almost none of them can afford to pay the taxes required for such services.

    Yes but this is the nature of social services. It means everyone in the community gets equal treatment when it comes to the service provided. Don’t blame illegals for an effect that is inherently ingrained in a system that provides social services. Illegals can’t even vote for or against social services. Stop scapegoating them. If we abolished all the social services tomorrow, they would accept it and make the best of the situation.

  8. Elena

    But Citizen Tom, what accounts for the PWC’s foreclosure rate being double that of our immediate “sister” counties?

  9. casual observer

    My, oh, my! Look who appeared TOGETHER today on an “illegal immigration” panel at the “Virginia Conservative Leadership Conference.”

    Hint: it’s not Eric and Anabel. 🙂

    http://www.virginiaconservative.org/agenda.html

    Check the 9:20 AM session.

    Wonder if they carpooled. 🙂

  10. Fire-n-ice chick

    Dumb and Dumber? Tweedle Dee and Tweedle Dumb? FAIR???? What’a that? I don’t know nothing about no fair.

  11. Moon-howler — I pointed out the error of good doctor’s assessment. Why don’t you read my previous comment again?

    As for the 70’s, the problem there is the way schools are financed. During periods of rapid growth, you may notice that the privately financed parts of our infrastructure have less trouble keeping up. Whereas investors view growth with pleasure, government tends to regard growth as a burden. Nevertheless, military and government people do pay enough taxes to build permanent infrastructure. So eventually, when rate of growth eases off, school infrastructure catches up. Illegal immigrants, on the other hand,… Minimum wage jobs are what they are.

    Mackie – I agree that it is the nature of our social services system to attract illegal immigrants looking for handouts. I concur that it is a bad system, but I do not blame the illegal immigrants. Instead of giving them handouts, I just think we ought to send illegal immigrants back to their home country. I also like your idea about abolishing all social services. Why don’t you write your congressman? 🙂

    Elena — I explained the high foreclosure rate, and you are smart enough to understand the explanation. But I will add few more details. Prince William experienced a particularly high rate of growth concentrated in the west end of the county. Due to easy credit, prices soared. Then the credit debacle hit, and we have a credit crunch. As a result, price collapsed.

    Look around. We now have thousands of new homes, built since 2000, sitting right next to each other. Would you like to guess how many of the owners have unconventional loans? Would you like to guess how many of the owners have mortgages larger than the value of their house?

    When I was in Houston in the 80’s, some people could have paid their mortgages, but they did not. When the housing market collapsed, they saw their mortgage was larger than the value of their house. Then they looked at their bank account.

    Some of the owners then walked away from their house with the big mortgage. They paid cash for another house. Our foreclosure laws are that lenient.

    Do I think the illegal immigrant have anything to with the drop in home values? Not likely. The houses that dropped the most in value tend to be the most expensive houses. How many illegal immigrants can afford a half million dollar home? Perhaps if they band together, but do you really want a house in your neighborhood with 15 – 30 people in it? That will do wonders for the value of the other homes in the neighborhood, right?

  12. Elena

    Citizen Tom,
    I am no economist and math was my least favorite subject, so you’ll have to bear with me here 🙂

    I know that Loudon also experienced a rapid growth, especially with the initial repeal of their Rural Area for high density housing, and yet they do not appear to be remotely close to our forclosure crisis. I know that we had a high influx of hispanics into our county, but unless we assume they all had fuzzy lones, and most were not documented, I don’t see where you explain PWC’s dire circumstances in relation to our “sister” counties forclosure rates. I do believe that the resolution and the climate in this county have had serious negative consequences.

  13. admin

    We knew a blended family that has since left the City, the home was valued at 575,000 when the bought it back in July 2006. According to the City’s website it’s now valued at 392,000. So, yes, undocumented families own these homes. I know they purchased and moved up every 2 years, I can recall 3 homes that they lived in before the last one. They started in a townhouse, then a larger townhouse, then a single family, then this last home.

    It was a combination of a slowing in the construction industry plus increased of his paperwork and the resolution that caused them to leave the area. He had worked at the same company for 7 years as a backhoe operator and the employer said he wanted to keep him on. The employer even went so far as to suggest the guy should just go to the immigration office and get the problem fixed; as if that was an option.

    They did end up abandoning the home, although I can’t remember when.

  14. Anon, thanks for the typo catch. Embarrassing but not enough to redo… But it’s good you posted because I often copy title art from one movie to another. It could have been an on-going thing! (=

  15. Elena – There is an old joke about putting ten economists in a room and getting ten different opinions. Our economic system is too complex to model accurately. Eventually, when a problem becomes sufficiently complex, people tend to believe what they want to believe.

    Consider that we are talking about real estate. There are three words for making money in real estate: location, location, and location. But what makes one location better than another? Why would prices in Prince William drop more than in Loudoun? Are these two counties identical? Except for Prince William’s crackdown on illegal immigrants, is that what you are assuming. Yet there could numerous reasons that explain the difference that have nothing to do with illegal immigrants.

    What is most likely true is that what you have observed is a coincidence. Consider what you are saying. You are asserting that the presence of large numbers of illegal immigrants improves the value of residential real estate. That is simply preposterous.

  16. redawn

    Amin,

    “They did end up abandoning the home, although I can’t remember when.”

    There are legal people that have or are thinking of abandoning for being upside down in equity or mad at the tax increase when properties are deprecating. There are numerous reasons and situations to blame for the foreclosures and economic down turn.
    If people are walking away, THEY need to own the blame. It is not being responsible and hurting them AND people left behind.

  17. SecondAlamo

    Moon-howler at 8:42 said “those damn military and government people”. Gee, if I said “those damn illegal-aliens” I’d be chastised to no end. So you embrace illegals yet have contempt for people who defend your liberties? How totally un-American. As a vet I say kiss my ………. well you know!

  18. Parker

    There’s more going on here than the dueling simplistic theories suggest. One thing is that the automobile suburbs are not a tenable way to live after peak oil. If you think gas prices are high now think again.

  19. Moon-howler

    Oh good grief Alamo, I was being sarcastic. Sorry, that one isn’t going to play out. If you knew anything about the history of the county you are trying to control you would have understood the nuances of what I was saying.

    Where do you get off saying I embrace illegal aliens? You don’t know what I embrace or don’t embrace. I do believe you are stereotyping.

    Tom and SA, I was making the point that all sorts of conditions bring an influx of people into an area. And yes Tom, the government and military did bring in their fair share of taxes and plus…ding ding ding….they brought in federal impact aid. Sweet! ker ching ker ching!

    As a daughter of a vet, SA, no thank you.

  20. Marie

    Citizen Tom- Let me straighten out the issue of Social Services. There are no persons here who are undocumented (you say illegal) who receive Social Services. I worked in the system for 28 years and I know that to be a fact. No one qualifies for Social Services unless one is a resident alien, and many of them do not qualify because of a 5 year rule, or a citizen of the US . You might want to look at the statistics that show undocumented do pay far more into the tax system than they use. There are a variety of ways they pay. They pay real estate through rent or homeownership, sales tax, personal property tax and many pay their federal and state tax as well as Social Security.

    Reality: The National Research Council concluded that immigrants pay on average $80,000 per capita more in taxes than they will use in government services during their lifetimes. The Social Security Administration, for example, estimates that workers without valid social security numbers contribute $7 billion in Social Security tax revenues and roughly $1.5 billion in Medicare taxes annually, yet elderly immigrants rarely qualify for Medicare or long-term care services provided through Medicaid.

  21. Moon-howler

    Well Marie, it looks like you have debunked one more myth that people love to spout about regarding social services and illegal immigration.

    Someone started the social services rumor (illegals are using up all our social services) and it just perpetuates, like the best of urban legends.

    That is not to say that illegal immigration does not have some problems, this just isn’t one of them.

  22. I will concede that illegal aliens are less likely to use public services, but almost none of them can afford to pay the taxes required for such services. In particular, that includes those with children in our public school system. So long as large numbers of illegal aliens are coming into our community, we will have children taught in trailers. –citizen tom

  23. First I want you all to be proud I used the blockquote correct.

    Now on to you Tom….

    1. Just because you are on public assistance doesn’t mean you don’t pay taxes. It means you fall below a certain income. These folks just aren’t making enough money to survive in our high cost-of-living area. Furthermore, it’s lack of oversight in social services/assistance that causes abuse. And why is there lack of oversight? Because the programs are underfunded and the employees get laid off! How can you have oversight when there’s no one to do it?

    2. We had trailers LONG before we had this “issue” of “illegals”. Furthermore, since we don’t know how many “illegals” have children in school, it’s illogical to blame them for trailers. According to Wally Covington, people are having larger famillies in general, and this account for crowding in schools. We see it ALL the time in my district. And we can also see the county’s lack of planning and the developers’ lack of funding our schools. Developers built a gazillion homes but built schools that would only house less than 1000 students. Duh. I’m no math genius but that doesn’t add up.

  24. LuckyDuck

    Marie, I agree with your analysis of qualification for Social Services usage and having to demonstrate citizenship for services.

    However, there are certain areas such as the free public health clinics that ARE used to a large degree by people who have illegal or undocumented (which ever makes you happy) status and these are funded by both State and County monies. In addition, in the current County budget, there is an amount of monies paid to the hospitals located here as part of a clinic to offer medical services to the public that are used by the same group(s). In fact, in the Potomac News a few weeks ago, in an effort to demonstrate the effect of the resolution on people leaving the County, representatives of both of these clinics acknowledged that they had witnessed a decline in the amount of services and while they do not inquire as to legal status, they acknowledged at least part of their respective clientele was illegal or undocumented.

    So to say that some highly expensive services are not used by illegal or undocumented residents on a regular basis is incorrect.

  25. LuckyDuck

    Also, while the illegal or undocumented do pay sales taxes, gas taxes – as we all do, that hardly compares to the additional real estate taxes that funds our schools that overcrowded houses do not pay on the same scale as everyone else. I have a house down the street from my house that has two families living in it. Each family has one child in our public schools. That house is getting twice the bang for the money that I am getting. If each family had their own house, the County would get double the money. I don’t know if they are illegal or not, that’s not my business. But wherever and whenever this overcrowding takes place, it cost the County and all of us money to make up what the County loses.

  26. Lucky–

    1. Most of these clinics provide basic services like immunizations. These aren’t expensive. And they save us money because they control disease that everyone is supposedly so concerned about in the “illegal” communities.

    2. You can’t attribute the decline to “illegals” because first, the foreclosure rate has driven all sort of people out of PWC and second, you don’t know who the “illegals” are and neither do the hospitals because according to their PR person who emailed me, they don’t ask and don’t collect stats citizenship. Who is saying these people are “illegal”? It’s a perception, not a statistical fact.

    3. If these folks has a work pass or a way of working for an agency, they could get health insurance which would take care of the problem on a national level.

  27. Luckyduck says, “I have a house down the street from my house that has two families living in it. Each family has one child in our public schools. That house is getting twice the bang for the money that I am getting. If each family had their own house, the County would get double the money. I don’t know if they are illegal or not, that’s not my business. But wherever and whenever this overcrowding takes place, it cost the County and all of us money to make up what the County loses.”

    1. You don’t know if these people are “illegal.”
    2. If these folks aren’t compromising safety limits or fire codes, then they can do what they want. We have families that do it here because it’s too damn expensive to live in this area.
    3. So are you saying we aren’t allowed to share a home because we are ripping off the county? Come on! Or is it you are trying to “define family” like they did in Manassas and got their BUTTS spanked for discrimination?

  28. Damn! I didn’t do the block quote correctly. GRRRRRRR!

  29. LuckyDuck

    Kgotthardt, I am not attributing any part of the decline to illegals, I was merely pointing out to Marie that there ARE some areas in the social service arena that do cost the rest of us money.

    Your call for a work pass is beyond the County’s means of providing.

  30. LuckyDuck

    Kgotthardt, you must not be reading my posts closely. I never said they were illegal, I am not trying to define family. What I am saying is that wherever this type of overcrowding takes place, it cost the County income.

  31. Elena

    Citizen Tom,
    I NEVER said people who were walking away were all illegal. I said that the reslution had created a climate that influenced the double, yes double forclosure rate in our county. I guess I am not a big believer in coincidence. We don’t have the scientific data to prove why WE are double, but what is the one variable that stands out in our county? The resolution, and we know that people who were perfectly legal did leave. I still do not see where you explain why WE are double or possibly even number one in the state in forclosure rates. I understand that we grew incredibly fast, but faster than Loudon? I don’t think so.

  32. Marie

    Lucky Duck You may also want to know that a large percent of the funds for Public Health services are Federal dollars, not just State and Local tax dollars. Hospitals also receive a large amount of Federal dollars. As soon as I can locate the cost to provide those health services to undocumented vs citizens of the US I will post them. I can assure you that undocumented do not receive what you may think or what the BVBL people espouse.

    I am not saying there are any easy answers or that there are not problems associated with undocumented immigrants. I believe everyone has the right to be treated with respect and dignity and I have not seen that prevail in this County nor the Cities. It is deplorable that human beings would be dehumanized and that some would have them laying in the gutter bleeding rather than provide adequate health services. That is a bunch of crap!!!

    Hey Lucky Duck do you have the same problem with one family living in a house that has 6 children? Don’t peddle that nonsense. Not only did Manassas get their “butts” spanked for their definition of family and their alleged unfair housing practices they are facing a huge lawsuit which is going to cost Manassas taxpayers a bundle.

  33. SecondAlamo

    Moon-howler,

    Oops, sorry about that! I love sarcasm also, but didn’t realize that was what you were trying to convey. I owe you one, my apologies.

  34. redawn

    Elena,

    There are numerous factors even before the DRAFT of the Resolution.

    This area already made this list back in June of ’07

    http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/

    Also see this link of the doubled foreclosures
    http://www.bvbl.net/index.php/2007/05/30/foreclosures-almost-double/

    And finally this ad I ran across this morning.

    New mortgage crisis looms

    Steep price declines and interest-rate resets will have even prime borrowers simply walking away from their mortgage obligations.
    By Mark Gimein, Slate

    http://realestate.msn.com/Buying/Article_slate.aspx?cp-documentid=6914731&GT1=35000

  35. LuckyDuck

    Marie, I am not peddling “nonsense”. Read closely, I am not defining family. I am just pointing out a fact that if two unrelated residents share a house and they each send children to local schools, they are not paying a fair share of the cost of educating those children. Unless the structure was designed as such (like an apartment building) then the County is not getting the return for which it issues building permits. How can you dispute that?

  36. SecondAlamo

    If people are buying up the foreclosure properties for use as rentals, then they had better continue supporting the Resolution. A friend of ours went to Woodbridge yesterday to look at a townhouse that was being foreclosed, and found a place that required several months of work to make livable by ‘normal’ standards. The rugs were all stained from spills left to dry, and practically every wall was marked up with children’s scribbles plus a general lack of upkeep if you know what I mean. Oh, and the family was present at the time, a Hispanic family with 4 children. So if you have rental property, you don’t want them moving back in any time soon. (before everyone attacks with charges of assumption lets just say this is based on first hand observations and leave it at that. You can draw your own conclusions)

  37. SecondAlamo

    To Marie,

    You speak of ‘dehumanizing’ people, but if someone chooses to live like an animal by our standards, then who is doing the ‘dehumanizing’ to them? We’re just calling them as we see them! Sorry, if my standards are higher than that of a third world slum, but that is just how I was raised as a US citizen!

  38. anonymom

    Citizen Tom said, “With the rapid growth in Prince William County, it should be no surprise that housing values in this area would also be the least stable.”

    Nice try, but according to the last census, growth in Loudoun County exceeded Prince William. So why is Prince William and not Loudoun the least stable?

    Dr. Fuller is saying that Prince William has more than its fair share of foreclosures and that the price of homes in Prince William is falling at a greater rate than the surrounding jurisdictions. If this pattern continues, the price of homes is Prince William will have to rise at a greater rate than in surrounding jurisdictions in order to regain lost ground.

    Will the current climate of aggressive intolerance toward people who are not white, ultra-conservative Republicans help or hurt Prince William when the economy begins to recover?

    I think it can only hurt. When a jurisdiction proudly advertises intolerance, the only people who feel welcome are those that agree with the narrow-minded rhetoric promoted by officials.

    Many people will not feel welcome and exclude Prince William when they seek to purchase a new home because they will not feel welcome. Prince William will have limited its ability to compete with surrounding jurisdictions, and this alone could keep housing prices lower than those in the surrounding area. It will also limit Prince William’s capacity to attract new businesses that pay a living wage, although it may increase low-end retail and “dirty” business.

    Regarding schools, Citizen Tom said, “So long as large numbers of illegal aliens are coming into our community, we will have children taught in trailers.”

    This is a surprising statement from someone who covers School Board meetings. I see different reasons for this. So long as the School Board continues to use taxpayer dollars to build fancy new administration buildings, increase administrative salaries instead of building new schools, and fail to explain the growing amount of budget overruns to the public, we will have children taught in trailers.

    And large numbers of classrooms in trailers are another negative that will turn people away from relocating to Prince William County.

  39. admin

    SA-
    Sounds like a coat of paint and either cleaning or replacing the carpet; either or both of which are pretty standard when you own a rental property.

  40. SecondAlamo

    admin,

    The impression from the person at the house was “utterly disgusting” so it went much deeper than my description may have portrayed. This was not your normal wear and tear from day to day living (unless you live below the border). Some photos were taken, and I hope to get a copy later this week. Having said that, I know that any amount of evidence will be rationalized away, or excused, so why do I even bother?

  41. Elena

    SA,
    Ahh yes, those “dirty ” hispanics with all those children. And children scribbling on the walls, better not come to my house, we’ve scrubbed many a wall and now just have to repaint. Yes, those disgusting people who live “below the border”. Thanks for sharing your perspective SA, I think I get the picture now.

  42. Elena

    Lucky Duck,
    You do bring up an interesting point. I have suggested, numberous times in previous threads, that most immigrants live, when they first come here, in homes with more than one family. This is nothing new, I would venture to say that Fairfax and more urban counties have dealt with this issue for decades longer than we have. I believe the federal govt. should allot more money to schools with higher ESOL enrollment. In fact, at the school I was a counselor in(bailys crossroads), our Principal was AWESOME in getting federal grant money for our school based on our extremely high esol population. We had kids from 36 different countries, it was a really awesome place to work.

  43. RedDawn, your point about people walking away from mortgages reminded me of something else Dr. Fuller said. He said that people who feel uncomfortable with the negativism, people of color especially, will be more likely to abandon their homes if they get into a bad situation such as owing more on the home than it is currently worth. Another unintended consequence that few foresaw.

    PWC is becoming less diverse in an era when other areas are becoming more diverse, and diversity is considered to be, not only a positive, but a must for economic growth. Our next video will touch upon why diversity and economic growth go “hand and glove.” Before I post it, can anyone guess why?

    The answer made sense to me once I heard it, but I hadn’t thought about it that way before.

  44. redawn

    Eric 🙂 sorry~

  45. redawn

    Controversy?

    Note 2:07 of this video

    Business and Investors AVOID Controversy.

    http://www.youtube.com/watch?v=2oiwJ-_BipU

  46. casual observer

    Eric,
    I’m hoping you went to Richmomd yesterday to tape/watch Corey Stewart and Greg L chair that table discussion on “illegal immgration” at the VCPC convention.

    http://raisingkaine.com/showDiary.do;jsessionid=071A9A1CE395100B8D307AE025325953?diaryId=13963

    Either that, or I’m hoping for a transcript.

    I’m guessing that many PWC citizens who are active in community issues (on the grassroots level) would love the chance to spend an entire day with BOCS chair. Talk about unfettered access! Corey was steeped in “illegal immigration” hysteria and outrage yesterday, which should leave him completely unwilling to listen to other points of view, much less compromise, on Tuesday. How unfortunate for our county, and our budget.

  47. SecondAlamo

    Elena,

    A better description I couldn’t have given myself, but then those are your words!

  48. SecondAlamo

    Eric,

    What the hell does diversity have to do with economic growth? That makes no sense at all. Basically you’re saying that any country without diversity is doomed to economic failure. How did the US become an economic power house when the majority of business people were ‘white’ rather than ‘diverse’ as the minorities are always quick to point out? Many countries are extremely less diverse than the US. As a matter of fact, as they endure huge influxes of immigrants they are beginning to suffer the consequences. England and France are two examples of countries with recent problems dealing with immigration.

  49. Do the Right Thing

    SA,

    I’ll take this one. Go out to West Virginia and see how many “immigrants” you see. There are none. In the rust belt…there are very few. Anywhere you go where there is economic prosperity, you will find immigrants…both legal and illegal. Go to older towns in states with no economic growth…no immigrants…legal or illegal.

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