Caroline’s home decline

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One in an occasional series on foreclosures

Abuilding lot that sold for $40,000 two years ago is on the market for $6,000.

A spacious house in a new subdivision is listed for $100,000 less than what it sold for new in 2007.

That's the good news for Caroline County. Bargains are plentiful.

It's also the bad news. The rural county about halfway between Richmond and Fredericksburg has been hit hard by foreclosures, which are driving down prices for all homes.

The lot and the house are foreclosed properties.

In Caroline, 18.6 percent of all home sales in the first 11 months of 2008 were foreclosed houses, the largest percentage in the Richmond region, according to an analysis by the Richmond Times-Dispatch. Petersburg had the area's next largest, with 11.8 percent.

Caroline recorded 217 foreclosures in the first 11 months of 2008, up nearly 113 percent from all of 2007. By comparison, foreclosures in the Richmond region, which includes Caroline and 19 other localities, rose 84 percent in the 2008 period from the previous year.

Realtor Brian Liggan, whose company listed the foreclosed $6,000 lot, said he can't get people to talk to him about the property, even at the reduced price.

Nor can Liggan stir up interest in a two-story house with a full basement in the Belmont subdivision off state Route 207.

It's on the market for $204,900. It sold in February 2007 for $310,625. It's assessed at $358,000.

"It hardly looks lived in," said Liggan, owner of Virginia Capital Realty in Richmond, which exclusively sells repossessed houses in central and Northern Virginia.

"I can't believe that it is one of the nicest homes, and yet, we are looking for offers."

. . .

Caroline was one of the fastest-growing localities in Virginia during the housing boom in 2004 and 2005.

With home prices rising fast in Fredericksburg and Northern Virginia, developers and builders looked at Caroline as a place to offer big houses for less money.

They built in established gated communities, such as Lake Land'Or and Lake Caroline, with lakes, pools, parks and tennis courts. They developed new communities, including Belmont and Ladysmith Village, a new-urbanism project with different housing types in a small village feel.

"Two years ago, we were riding high," Caroline Commissioner of Revenue Sharon Carter said.

Caroline was touted as being a great place for two-income households, with job access to Richmond and Fredericksburg and places farther north.

Then the housing market crashed. Gas prices rose to $4 a gallon in July, making the 40-mile commute from Ladysmith to Richmond and 70 miles to the District of Columbia too costly for some.

People were so anxious to get big houses that they forgot about commuting expenses, said Jennifer Rathbun, an agent with Coldwell Banker Elite in Ladysmith.

What's more, with house prices falling most everywhere, including Northern Virginia, more people can afford to live closer to where they work, agents say.

"As it did everywhere, everything came to a screeching halt," Carter said. "People are cautious, unsure of the economy.

"Once we see money loosen in the banking world, we'll see a resurgence of subdivisions in our entire area," Carter said. "The tax rate has kept us looking good."

Property taxes are 53 cents for every $100 of assessed value. By comparison, the rate for Richmond is $1.29 for every $100 of assessed value.

. . .

The high number of foreclosures in Caroline hurts the overall economy.

Some lenders are selling repossessions at steep discounts, said Chris Burns, a sales agent for home builder William Beach Construction.

Builders have trouble competing with such low prices, he said. People who want to relocate can't sell their houses for what they owe, nor can they move to bigger houses because they might not be able to sell their houses.

"Currently, the market is foreclosures," Burns said. "A lot of folks are snatching them up."

. . .

In Lake Land'Or, one of the county's largest communities, 74 homes -- from 1,000-square-foot ranchers to 2,000-square-foot two-story houses -- were foreclosed in the past two years, according to Times-Dispatch data. That's 4.9 percent of all homes in the 2,000-acre community.

Rathbun said she and her husband, Matthew, thought they got a great deal when they moved into Lake Land'Or more than a year ago. But a larger house that was listed for more than their house eventually sold for less than they paid.

Lake Caroline, a similar established neighborhood, had 30 foreclosures in a 23-month period -- or 3 percent of all homes there.

Belmont, which opened in 2003, had 29 foreclosures, or 13.8 percent. And Ladysmith Village recorded 17 foreclosures, or 10.8 percent.

Ladysmith would do well in Northern Virginia, agents say, but not a lot of people move to the country to live in an urbanlike community.

Its retail component has space for about 12 stores -- all empty except for one, which is occupied by the developer. A restaurant was supposed to go there, but it pulled out.

. . .

"The market slacked off in 2006, picked up a little in 2007 and then it died. . . . 2008 was horrible," said William Beach, owner of William Beach Construction.

Beach, with 33 years in the business, said he usually builds 70 to 100 houses a year in a seven-county area, including Caroline -- his mainstay of business.

Last year, he built 22 homes. "I used to have 26 employees; now I have three."

Beach said he first noticed a problem in spring 2006.

"We were wide open, selling and building like crazy." But inquiries from perspective new-home buyers began to slow.

He adjusted his business strategy, cutting expenses and not buying as many lots. "The banks didn't see it. No one did. It was great guns. But in my heart I didn't feel right."

Beach recalled the housing downturn in 1977 and knew what could happen. "It cleaned me out," he said.

For all the bad news, it could be worse, he said.

"We're not in as bad shape as Florida, California and Arizona, and I think we will recover quicker."

Contact Carol Hazard at (804) 775-8023 or .