The 2007-2009 comparison in your report highlights the problem with using sales and listing volumes. It’s apples (2009) and oranges (2007). The numbers in 2007 contain a lot of what I would call “optional” sales, those driven by 1) the irresistible desire to cash in on increased home values and 2) the opportunity to buy new construction. With uncertainty (much of it healthy) gripping the real estate market, cashing in is not an option. With new construction vastly decreased, and–most importantly– now that everybody knows the bubble is over, of course these numbers are going to be lower.

If the 2007 sales numbers include new construction (I don’t know if they do), my point is even more salient, particularly in the City. Not only is home building less profitable now, there is nowhere left to build in C-ville. While the surrounding counties still have plenty of buildable land, in the past decade builders have stuck a house in every available patch of land in Charlottesville. For example, take a look at the first townhouse in Brookwood off of 5th Street, with its basement/garage on ground level in the front and its second floor looking at a retaining wall in back. Brookwood, Carter’s View, Huntley…these places were better suited for ski slopes than houses, but they still built.

In short, the City is pretty much built out. Thus, listing volumes there will return to pre-“investment” levels. 2006 listing numbers are a permanent peak. In the out counties, bankruptcy wiped out a lot of builders and is making development less financially lucrative, so construction there is also decreasing.

The 2002-2007 inventory, sales, and price figures are saturated with the “investment” mentality, which means more inventory, more optional sales, more construction, and higher prices.

What’s it all mean? While we’re all statisticians at heart, there’s no comparison between 2009 and two or three years ago. The game has changed. Consider the 471 home sales in Albemarle in the first half of 2007: of those 471, at least 200 of the buyers probably believed they could re-sell the place in 2-3 years for a tidy profit. Of the 260 Albemarle sales in the first half of this year, how many buyers do you think have that belief?

Today, the reasons to buy a house don’t include the words “investment,” “flip,” or “equity.” Now people are buying houses they like, that they can afford, in the hopes of achieving happiness or some other intangible (non-financial) benefit. Median sales price is still very relevant, of course, for figuring out the price at which seller ought to list, or how much a buyer should offer. And even that’s debatable: comps might be the best metric in today’s environment. Often value is determined by what buyers can afford or are willing to pay, or by how much or how little sellers are willing to lose.

That said, I think the volume, sales and inventory numbers are only useful to realtors and mortgage brokers estimating this year’s business, devising strategies to maintain or increase their piece of a permanently smaller pie, or even deciding to get another job. Not sure how useful any of it is to the rest of us. What do you think, Jim?

Fixed. I’m sorry; I had no idea that Scribd required a sign-in. Thank you for pointing that out.