Local Economic Trends
Published 4:49 pm Thursday, May 30, 2013
PRINCE EDWARD – The question of the economic outlook may be as challenging as picking which team will win next year's Super Bowl. Nevertheless, budget prognosticators are tasked with such questions every year.
Those who don't at least take a look at revenues and expenses, run the risk of over or under funding.
A county administrator is one such prognosticator who must count the beans that feed the family budget while trying to be conservative enough to deal with unplanned costs.
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Even he doesn't know when the washing machine or heat pump is going to die, but does have as good a feel as anyone for the big picture and tries to plan ahead.
“Locally, we are seeing a rise in revenues from the rebounding economy,” Prince Edward County Administrator Wade Bartlett wrote in a March 26 memo to the board of supervisors as a lead-in to budget discussions. “The higher personal income is helping increase the collection rates which are a key factor in the amount of revenue collected. Additionally, new construction is increasing, which is expanding the real estate tax base, sale of new vehicles is strong, driving personal property tax collections higher and the collection of local sales tax is rising. While the increases are not dramatic they are cumulative and added together are significant.”
Collections of general property taxes in the current fiscal year for the County were projected to increase $190,839 and local sales tax were penciled in to rise $111,789.
Good numbers, but not off the chart in the face of increasing funding demands.
Unemployment in the county is also trending down. March figures were reported at 7.8 percent, compared to 8.8 percent reported for the same month in 2012, according to the government's Bureau of Labor Statistics. It had been as high as 10.2 percent last July, Bartlett cited in his report to the board.
“It appears values for used cars are holding steady or possibly increasing and the Commissioner of Revenue has mailed out approximately 150 more tax applications this year than last,” Bartlett wrote in a memo to the board.
While the local economy may be improving, most funding entities that rely on County funds are still feeling the squeeze-from fire departments to the county's schools.
Some agencies asked for level funding. Some asked for more, and some asked for a lot more. Ultimately, with pressing needs, County supervisors trimmed requests, but also wound up-on a bad-case revenue scenario-keeping the same tax rate and planning to dip into the County's fund balance nearly $1 million for the 2013-14 budget year.
But are things better locally? That still depends on whom one asks, of course, but we have compiled some figures that typically give some insight.
Building and building permits shine a light on the construction part of the economy.
According to County statistics, a total of 425 permits were issued for the 2012 calendar year. There were 646 issued in 2009, by comparison, and 777 in 2008.
The greatest number of the permits in 2012 were for electrical (153), followed by plumbing (61), mechanical (56), additions (49), mechanical/gas (29), one and two family dwellings (27), manufactured homes (21), remodeling (13), commercial (six), pool (three), and two each for in lieu of soil and erosion, farm buildings, cell tower, and one for demolitions.
The value of the additions totaled $694,511.22, cell towers were valued at $128,000, commercial $482,000, demolitions, $8,500, one and two family dwellings, $3,619,071, electrical $2,206,227.31, farm buildings $1,515,000, mechanical $598,743, mechanical/gas $108,794, manufactured homes $983,088.64; plumbing $321,960; pools $16,400, remodeling $844,900, and in lieu of soil and erosion, zero.
If new home construction is an indication of a growing economy, the number of one and two family dwellings is well off of 2006 when 112 permits were issued.
While it's difficult to draw conclusions on the reasoning, the number of trustee sales advertised seems to have topped out in 2010. Circuit Court clerks don't track such figures so we looked internally to the Herald's advertisements. The figures (representing an approximate count) are not broken down by county (though, generally, such advertisements involve the three counties in our coverage area – Buckingham, Cumberland and Prince Edward).
There were only 77 trustees sales in 2007, before the economic downturn and tightening of loans. That rose to 114 in 2008, 225 in 2009 and peaked at 249 in 2010.
There were only 168 in 2011 and a relatively static 172 in 2012.
Why are there fewer? Perhaps the economy is better, or maybe the banking industry's stabilizing, or possibly there can only be so many foreclosures in a given year.
Numbers-wise, the real estate market also seems to be improving. President of the South Central Association of Realtors, Dempsey Jones, detailed that all types of property sales-residential, land and commercial-is up for the region. There were 495 properties sold in the region in 2009 for $58,218,117; that dipped to 490 in 2010 for a value of $56,935,019, but rose to 521 in 2011 for $57,616,741 and 547 in 2012 for $60,350,500.
Looking closer at the area, last year 180 residential units were sold in the region including (by county) from January 1-May 13, 14 in Appomattox, 13 in Buckingham, 11 in Charlotte, seven in Cumberland, 14 in Lunenburg, 12 in Nottoway and 32 in Prince Edward.
Sales from January to May 13 of this year also show positive signs: Appomattox, 22; Buckingham, 13; Charlotte, 4; Cumberland, seven; Lunenburg, 14; Nottoway, 12; and Prince Edward, 39.
Why so busy in Prince Edward? It's because of jobs.
“The reason people go to Cumberland, Buckingham, Charlotte, wherever, if they're working in Farmville, is cause they can get something a little cheaper…The prices in Farmville are higher,” Jones cited.
It's a story of supply and demand. The average sale in Prince Edward is $159,000 when the average sale in the area is $110,000.
Sales totaled $18,536,440 from January 1-May 13 of 2012; looking at the same time period for 2013, it's trending up, with a total of $22,193,019. The average total sale is down from $116,000 to $110,000 over the same time span, while the average days on the market is also down from 200 last year to 168.
Real estate is local, Jones says.
“And…what you see in Richmond, what you see in Northern Virginia, what you see in any other part of the country is not necessarily true with what's going on in Southside Virginia,” he said.
On the loan front, Jones says it's very difficult for people to get mortgages now.
“You need (a) 620-plus credit score in most cases. A few lenders are doing less than that, but most of them are 620.”
Most lenders have to meet the same criteria because most mortgages are sold to the federal government in some form. And they set the standard.
“Some local banks do hold some paper, but for the most part, they don't want a mortgage at three and a half percent on the books for 30 years,” Jones stated.
New loan standards, coming out June 1, are actually tightening up, Jones reports. FHA is changing their PMI insurance required on all of their loans. Where it used to drop off when reaching 78 percent of the loan value, it will now span the life of the loan.
“So…once you have an FHA mortgage, you'll pay that PMI insurance…until you pay it off,” he said. “It will not drop off.”
The only type of loan that won't have the stipulation will be a conventional one, which means having a higher percentage of money down.
Jones advised anyone looking to buy a home not to make any major purchases until they get their house closed because of the impact on the credit score.
“Once you get a pre-approval, don't make any changes on your credit until you get that loan closed or you…can mess it up,” he said.
Still, Jones noted, “I think we're going in the right direction. Washington just needs to get out of the way and let the economy work instead of trying to fix everything.”
Retail sales in Farmville (as reported in The Herald's April 10 edition) declined less than one percent from 2011 to 2012, but the total dollar volume rose by over four percent.
Grocery stores registered an increase from $60.1 to $60.8 million in 2012; restaurants increased from $38.88 to $39.984 million; automotive sales (which factors sales and service stations) increased by over $3 million to $73.675 million; contractors registered $49 million in business-a hefty hike over 2011's $23 million (though much of it related to Longwood building projects); and motel business registered a slight increase over 2011 figures to $4.4 million.
Other retail sales, however, fell from $181 to $173 million in the single year.
“I think it's holding its own,” Farmville Town Manager Gerald Spates said of Farmville's economy, as reported by Herald Editor Ken Woodley. “I don't think the economy's fully recovered but I think the university adds a lot to that.”