Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 26, 1990 TAG: 9007250189
SECTION: CURRENT PAGE: NRV1 EDITION: NEW RIVER VALLEY
SOURCE: CATHRYN McCUE NEW RIVER VALLEY BUREAU
DATELINE: BLACKSBURG LENGTH: Long
It was a tough decision, but he and his wife, Jean, thought their timing was good, with the AT&T plant in Fairlawn apparently going strong.
A real estate analyst told the Yoders they would have no trouble selling their home in the upscale Stroubles Mill section of Hethwood. Figuring the house would fetch a good price so they could move to Tennessee, they put it on the market for $219,000.
Three weeks later, AT&T announced it was closing and would phase out operations over the next year.
The Yoders suddenly found themselves trying to sell in a buyers' market.
With "For Sale" signs popping up all around the neighborhood, Yoder lowered his asking price to $210,000, then to $205,000. Now he's down to $195,000, and he finally has some interested lookers.
But the Yoders' house is competing with about 17 others in Stroubles Mill - three times the number Yoder has seen on the market at any one time since he moved to the neighborhood six years ago.
And the "For Sale" signs keep sprouting in front of luxury homes in and around Blacksburg. The number of houses in the $150,000-and-up range coming on the market continues to increase. Stroubles Mill - a sort of upscale ghetto for AT&T executives - has been particularly hard hit.
Real estate agents, homeowners and builders concur on the reason - AT&T's gradual shutdown, which eventually will send more than 100 executives out of the area.
Then there's the hiring freeze at Virginia Tech, the valley's biggest employer, which has stymied the building and sale of top end speculation houses.
Fewer people are moving in and there's not as many professors moving into the area, said Randy Gardner, listing agent for Montgomery County's Preston Forest subdivision, where several homes are for sale.
"In Blacksburg, there is somewhat of a glut of high-price houses on the market," he said.
Georgia Anne Snyder-Falkinham, president of the New River Valley Homebuilders' Association, said the construction industry is preparing for a slowdown by cutting back on costs, even laying off employees.
"As far as we're concerned, there's really no traffic." She said the slump may last 12 to 18 months - or until Tech's state funding increases or a new industry moves into the AT&T plant.
Data compiled by the New River Valley Board of Realtors indicate that the valley's real estate market is stable overall, or at least no worse than in the rest of the country. About 14 percent, or 73, fewer houses sold this year than last year in the New River Valley.
In Blacksburg, where the third-largest market is for homes $150,000 and up, 37.5 percent fewer houses sold in the first six months of this year than in the comparable period last year.
The average price of houses for sale rose from $85,000 to $119,000 - indicating that more expensive houses are on the market, but fewer are selling.
"I really don't think we needed the double whammy," from AT&T and Tech, said real estate agent Kay Stratton, who has several homes in Preston Forest.
She said some of the Preston Forest houses have had "price adjustments" and are now in the $130,000 to $200,000 range.
Not only are there fewer people to buy those houses, the buyers just aren't buying.
Ed Fast, president of the New River Valley Board of Realtors, said he hasn't seen evidence of wide-scale price slashing or people keeping their houses off the market.
Still, after several years of brisk home building and selling, Fast said, the market has flattened out and likely will remain so for a while.
"I think it's just uneasiness about everybody's job, whether it's at Tech or AT&T or Hercules . . . the unrest of people getting laid off. I think everybody is just curtailing spending."
Real estate agent Joe Jones said some buyers are taking advantage of the quirk in the market by moving up while they can get a low price.
But Elaine Head, executive director of the New River Valley Board of Realtors, said she's heard from several agents that local buyers are waiting to see if prices will come down even more.
As more AT&T houses come up for sale, a sinking market is just what some sellers worry might happen.
The communications giant, as part of its relocation program for management personnel, offers to take over the sale of their homes. AT&T then turns the houses over to relocation companies that handle the transactions.
People not employed by AT&T fear that the company will cut prices to get rid of the homes, touching off a spiraling decrease in neighboring property values.
"We're not going to have fire sales or anything like that," said AT&T's local spokesman Tom Loner. "That's not the way they operate."
Ed Galindez, a home-sale counselor with AT&T's headquarters in New Jersey, said the company's chief goal is to sell its employees' houses at the appraised price and as quickly as possible.
Lowering the price is one option AT&T might consider in negotiating with a buyer, Galindez said, depending on how long the house has been on the market and what comparable houses are selling for.
"We're sensitive to the effect something like that would have on other homeowners in the area," he said.
Some sellers have already felt the squeeze.
One person not employed by AT&T, who asked not to be identified, sold his Stroubles Mill home after 4 1/2 months on the market - and after he dropped the original price 10 percent.
"The number of people looking at the house I found disappointing. It seemed the silence was deafening." He estimated the softness of the market cost him $20,000.
Relocation companies have taken over 22 houses and reduced the price of three. The reason, said Loner, was because the owner had overpriced the home.
The longest an AT&T-acquired house has stayed on the market is 35 days, according to company officials. The NRV Board of Realtors reports that Blacksburg houses - in all price ranges - spent an average of 145 days on the market in 1990.
Fast, president of the Realtors' board, acknowledged that some houses at the high end of the market are overpriced, "there's no doubt about it."
Realtors and sellers will have to begin pricing houses competitively to keep that end of the market moving, Fast said.
And, as expensive homes start dropping in price, a ripple effect may spread through the rest of the market - but there are unlikely to be huge waves, he said.
"A lot of people preach doom and gloom, but we're just in that part of the cycle where we've peaked out."
But Snyder-Falkinham said the high-end glut is already dampening other segments of the housing market. "It doesn't matter what price you've got; it's still not selling."
Potential buyers can't move up to a higher-price home until they can sell their own, but homes in the more moderate price range are not selling actively either, she said.
Tech extension specialist Tom Johnson, who earlier this year studied the economic impact of AT&T's closing, said that in 10 years the value of real estate in the New River Valley will be $40 million less than what it would have been.
There will be fewer expensive houses being built and more vacancies until the demand catches up with the supply, he said.
by CNB