Charlottesville Real Estate

2010 First Quarter

Published by the Charlottesville Area Association of REALTORS®

 Where Are We Now?

In the first quarter of 2010, the Charlottesville real estate market continued the trend seen in the fourth quarter of last year. Home sales, compared to the first quarter of 2009, increased slightly. In the first quarter of 2010, sales (436) were up 4.3% from the same period in 2009 (418). This increase was somewhat surprising because of the unusually snowy winter that significantly hindered home sales.  Although this is the second consecutive quarterly year-over-year increase in sales we have seen, it is the second lowest quarterly total in the past 10 years. As CAAR President Greg Slater explained, “the snowstorms really held down our sales volume for most of the first quarter, but we saw a rally in March when the weather finally got better.”

As reported in the past three quarterly reports, prices have been falling, but in the first quarter of 2010 there was a small change. Although most of the data indicates a continuation of soft prices, there is some evidence that prices might be stabilizing. It is too early to draw conclusions because of the limited amount of data, but this bears watching in the coming quarters.

Home Sales for 2010

There were 436 homes sold in the Charlottesville area in the first quarter 2010, which was up 4.3% (+18 sales) from the same quarter in 2009. Albemarle (+13.1 %), Fluvanna (+12.5%), Greene (+22.7 %), Louisa (+19.0%), and Nelson (+104.8%) showed an increase in sales, while Charlottesville (-26.1%) and Orange (-26.8%) showed a decrease.

Sales in the Central Valley region were generated from the Greater Augusta MLS, which has more complete data on the Valley market than the CAAR MLS. Sales were up in the Valley by 4.3 % compared to last year.

Home Prices Have Dropped

Based on the data from the CAAR MLS, we continue to see a decrease in home prices compared to the same quarter last year. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing/able to pay and is not a true reflection of individual home prices.

We believe the numbers displayed below provide evidence that prices are still declining, but the rate of this decline has slowed from the previous reports. As shown below, median prices in two counties have increased, and the area price per square foot remained unchanged from last year.

Overall, the median home price (including attached homes) declined $19,500 (-7.6%) compared to first quarter last year. The median price is now a little above where it was at this point in 2005, before the housing prices started increasing dramatically. It is interesting to note that two counties showed increases in their median prices:  Louisa (+16.1%) and Fluvanna (+2.4%). All other areas covered in this report showed a decline as follows: Albemarle (-1.6%), Charlottesville (-5.7%), Greene (-18.1%), Nelson (-27.0%), Orange (-16.7%) and the Valley (-2.6%).

Price per Square Foot (Finished)

Another indicator that allows us to see what is happening to home prices is the price per square foot numbers. The average price per square foot of finished space in homes is not an exact science, but a downward trend over the years clearly indicates a decrease in prices (and vice versa). For the first time in the last three years, the first quarter numbers indicate that the prices have stopped declining and held their own year-over-year.

Inventory of Homes for Sale

The inventory of homes for sale in the Charlottesville area has continued to decline. As we have reported for the past year, the excess of inventory is causing many of the problems with our local housing market. The decline in inventory is very encouraging, but we will still have too many homes on the market for the current demand.

As of this writing, we have 3,353 homes on the market, compared to 3,608 at this time last year. This is the largest year-over-year decrease in several years, but we are still above a balanced inventory level in the 2,000 to 2,500 range. The median price of homes currently for sale is $289,900, which is $8,100 less than last year. The average DOM (days on market) of these homes is 151 days, which is 4 days less than last year and 13 days more than homes that sold in the first quarter. The most telling statistic related to homes currently on the market is that the average price per square foot is $228 compared to $140 for homes that sold in the first quarter.

Housing affordability is the positive aspect of this market. There are 903 homes for sale $200,000 or less with an average DOM of 145 and an average price per square foot of $141. There are 242 homes currently on the market priced at a million dollars or more with an average DOM of 240.

Days on Market (DOM)

In this market, the average days (DOM) a property stays on the market is less important than it would be in a more balanced market. There are many variables in the marketplace – excess inventory, foreclosures, short sale, and financing issues – that affect the length of time a property is on the market. This quarter shows a reflection of that, as the average days on market went up by 5. We are still in a buyer’s market, which means the best way to shorten the days your property is on the market is to price it correctly.

 Conclusions and Predictions

The good news is that the winter weather is behind us. It is impossible to quantify how much the record snow fall hurt real estate sales in the first quarter, but there is little doubt that it was a significant impact. The good news is that the pent-up demand from the first quarter appears to have moved into the second quarter. Reports from agents in the field indicate that there has been above normal activity since the weather improved in mid-March. Only time will tell if this activity turns into sales for the second quarter market report.

 CAAR is also watching the inventory of homes for sale to see if it continues to decline. A reduction in inventory will help take pressure off home prices and indicate that the market is becoming more balanced. Price sensitivity is still the key factor in this market and if you are looking to put your house on the market, be sure to have a REALTOR^® or appraiser prepare a comparative market analysis (CMA) for your property so that you can price it to sell. And, if you are looking to buy, a REALTOR® can help you understand the current market place so you can buy what is right for you.

 CAAR Market Report  

Where Are We Now?  Updated January 2010

Home sales, compared to 2008, continued to show improvement in the second half of 2009. At mid-year, sales were down 28%, but by year-end sales were only 8.7% below the 2008 levels. In the 4^th quarter of 2009, sales (696) were up 34.1% from the same period in 2008 (519). This is the first year-over-year increase in sales we have seen in several quarters in the Charlottesville area. While it is certainly exciting to see such a significant increase in sales, it is important to remember that the 4^th quarter of 2008 was the height of the economic and housing crisis. As predicted, the 4^th quarter of 2008 (and the 1^st quarter of 2009) appear to be the bottom of the housing downturn in the Charlottesville area.

Home Sales for 2009

There were 2,730 homes sold in the Charlottesville area in 2009, which was down 8.7% (-261 sales) from 2008. Albemarle (+5.7) and Greene (+11.7) showed an increase in sales for the year.

Home Prices Have Dropped

Based on the data from the CAAR MLS, we believe that the numbers clearly show a significant decrease in home prices during 2009. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing/able to pay and is not a true reflection of individual home prices. It is probably safe to assume that a steady, year-to-year decrease in the median price is a good indication that prices are going down, but it is not an exact measurement.

We believe the numbers displayed below provide compelling evidence that our local real estate market has experienced a noteworthy drop in home prices. The CAAR market reports have been discussing this trend since the Fall of 2007, and this report shows further evidence of the decline.  The one caveat that we need to make is that part of this median price decline is a reflection of an increase in home sales in the lower price ranges. Of the 2730 homes that sold this year, 1565 were sold for $300,000 or less. This surge in the lower end of the market will naturally pull the median price down.

Overall, the median home price (including attached homes) declined $20,823 (-7.8%) compared to last year. The median price in 2009 fell just below what we reported as the year-end median price in 2004. All areas covered in this report showed a decline as follows: Albemarle (-10.9%), Charlottesville (-7.1%), Fluvanna (-17%), Greene (-5.8%), Louisa (-15.7%), Nelson (-7.2%), Orange (-25.6%) and the Valley (-5.6%).

 Home Sales for 2009

There were 2,730 homes sold in the Charlottesville area in 2009, which was down 8.7% (-261 sales) from 2008. Albemarle (+5.7) and Greene (+11.7) showed an increase in sales for the year.

Inventory of Homes for Sale

The inventory of homes for sale in the Charlottesville has continued to decline very slowly. As we have reported for the past several quarters, the excess of inventory is causing many of the problems with our local housing market. The decline in inventory is very encouraging, but we will still have too many homes on the market for the current demand. This could change very quickly going into the busy spring market.

Currently, we have 2,877 homes on the market, compared to 3,086 at this time last year. This is the largest year-over-year decrease in several years, but we are still a little bit above a balanced inventory level in the 2,000 to 2,500 range. The median price of homes currently for sale is $289,900, which is $10,000 less than last year. The average DOM (days on market) of these homes is 182 days, which is ten days less than last year and 42 days more than homes that have sold. The most telling statistic related to homes currently on the market is that the average price per square foot is $208 compared to $143 for homes that sold in 2009.

 Housing affordability is the positive aspect of this market. There are 786 homes for sale $200,000 or less with an average DOM of 164 and an average price per square foot of $146. There are 232 homes currently on the market priced at a million dollars or more with an average DOM of 270.

 Days on Market (DOM)

In this market, the average days (DOM) a property stays on the market is less important than it would be in a more balanced market. There are many variables in the marketplace – excess inventory, foreclosures, short sale, and financing issues – that affect the length of time a property is on the market. The local area DOM stabilized in the second half of 2009 which, combined with the decrease in inventory, may indicate a change in the market. We are still in a buyer’s market, which means the best way to shorten the days your property is on the market is to price it correctly.

Conclusions and Predictions

Hindsight is always helpful in seeing the overall market twists and turns. Now that we can look back on 2009, it is easy to see that the local real estate market shifted in 2009. Based on the sales figures for the past 2 years, the market was at its lowest point between July 2008 and June 2009. The obvious conclusion is that the market has hit bottom and that we are on our way to better times in local real estate. CAAR is cautiously optimistic that we are looking at a bright future, but there are a lot of unknowns in front of us. What will happen when the home buyer tax credit expires in April? Will interest rates increase dramatically? Will the overall economy and the job market continue to improve?

 With the benefit of hindsight, we will look forward to answering these questions when we publish the 2010 year-end report.

 For now, we will continue to watch the inventory of homes for sale and the number of foreclosures that happen in our local market. If we see inventory levels continue to decline and the pace of foreclosures stays steady, we can expect prices to start creeping up. If inventory climbs again and the overall economy and home financing see further troubles, 2010 may end up being a repeat of 2009.