2nd Quarter Market Update for Charlottesville Region
Very little has changed since last month’s comprehensive market analysis, published just over a month ago.
First, a quick look back at my responses to the calls of “bottom” over the past eighteen months.
- The market is a bit like the axiom - “a watched pot never boils.” We won’t know how the market is doing today until we look back from a six- to nine-month removed perspective. We can gain insight by looking at the numbers - interest rates, 10 year Treasury notes, pending sales, recent solds … but to get an accurate understanding, we have to look in the rear-view mirror. December 2006
- We’ll know whether we’ve hit bottom today in 18 months when we have the benefit of hindsight. Interest rates remain low. Sellers are motivated, and it really and truly is a great time to buy a house - so long as you do the appropriate due diligence, detach your emotions and negotiate well. September 2007
- I think that the calls for the proverbial “bottom” are premature. When I was a kid I wouldn’t know the bottom of the swimming hole until my toes dug down into the muck and I was heading rapidly back to the surface. Our current market is very much the same. We won’t know when we hit bottom until we have the benefit of 18 months of hindsight - or, to continue the swimming hole metaphor, until we’ve crawled out and told our friends - holy cow! It’s really deep! April 2008
- We may not have seen the worst of what this cycle has to offer. I believe that the bulk of short-term ARMs have not yet reset, and until this happens (likely in 2009 and 2010) we may not see the proverbial “bottom.’ That being said, we won’t know the bottom until we have the benefit of nine to eighteen months of hindsight. June 2008
- The problem with saying we’ve “hit bottom” is that we don’t have anything to base that on other than speculation Yesterday on Twitter
Even Barron’s is saying that we might have hit bottom; the Big Picture respectfully disagrees.
At least I’m consistent. I’m not saying that we haven’t hit the bottom, but that calling it as such with so many unknowns and new variables in the equation would be the wrong thing to do right now, despite Lawrence Yun’s statement - “Without Forecasts, we don’t look credible.”
The Realtor update (1):
1st half 2005: 115 had more than ten sides, 296 had more than five sides, 679 had at least one, with about five hundred or so not having a single transaction
1st half 2006: 107 had more than ten sides, 285 had more than five sides, 740 had at least one, about four hundred fifty not having one.
1st half 2007: 73 had more than ten sides, 232 had more than five, 687 had at least one, about four hundred with zero
1st half 2008: 44 had more than ten sides, 169 had more than five, 619 had had least one, leaving about seven hundred with zero transactions so far this year. (out of 1201 sold residential properties)
From the DP on Saturday:
Many real estate agents may not manage to weather the moribund market before it solidly rebounds, Savage said. A full 15 percent of the Charlottesville area’s 1,110 real estate agents are expected to drop out of the business by January.
“We’re seeing a lot of good Realtors leave the business,” she said, citing the example of two agents in their mid-30s who are quitting soon.
“It’s been a tough time for sellers and it’s been a tough time for Realtors,” Savage said.
Personally, this has been one of the hardest parts of this market - seeing good people leave.
Related reading: A Market in Transition - October 2006
An interesting note: 115 agents have done Dual Agency so far this year (and at least one who has spoken openly against the practice), versus 140 last year and 190 in 2006.
Market Update (2): - Click images for larger versions
Currently there are 2,622 properties on the market.
347 have CDOM of less than 90 days
Courtesy of one of my favorite writers in the real estate space:
“It’s a buyer’s market… only if you’re actually buying,” I say, having gone through this same exchange on more than a few occasions in recent months.
Conclusions:
- This too shall pass. We’ve been in this downturn for about twenty months now. I predict that we will start to come out of it in the Spring of 2009 at the earliest. Nothing is going to happen before the election, and little is likely to change before December of 2008. Early 2009 will be the time to recover, take our collective breaths and hope for what 2009 will bring. There are too many unknowns right now to make any sort of accurate prediction.
- All real estate cycles come around, and this one will be no different. I subscribe to an outlook that is a mix of Calculated Risk and Nouriel Roubini, in that this recession may look like a “U” rather than a “V” and I sincerely hope that it will not look like an “L.”
- New construction coming onto the market has slowed dramatically, and the number of builders in the Central Virginia region is waning. Ultimately, this may be a good thing.
- Those who survive this downturn (God-willing I’ll be one of them) will come out on the other side far stronger and knowledgeable about the market.
Managing fear is an ongoing task. News about IndyMac and the bailout of Fannie and Freddie is inescapable. Why is nobody listening to this man?
First half market report 2007, with interesting comments.
1 - Realtor Update includes Charlottesville, Albemarle, Greene, Fluvanna, Louisa and Nelson, ~1200 agents total, a “side” is either the buying or selling side of a transaction
2 - Includes Charlottesville, Albemarle, Greene, Fluvanna and Nelson
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One of the differences between Albemarle and Greene Counties
I almost titled this post, “ARB? We don’t need no stinkin’ ARB!” But thought better of it.
Albemarle County has an Architectural Review Board that micromanages minutiae.
Both Wal-Mart and Lowe’s said they will begin building their new stores there in the spring and fall, respectively. They will serve as anchors for the Gateway Center, a new retail shopping center in Greene County.
Unlike other shopping centers, there isn’t an artist’s rendering available for the Gateway Center; the future of the site’s appearance depends on which businesses move in.
…
“There will be space for smaller retail stores to lease, but the exact location and design have yet to be determined,” Hughes said.
…
Officials know the layout of the site, said Steve Catalano, chairman of the Greene County Board of Supervisors. However, the county doesn’t have an architectural control committee.
…
Catalano said the board did request that the site have “a tasteful appearance.” (bolding mine)
Greene County absolutely needs these stores. The closest “big-box” stores are in Culpeper, about 45 minutes north and Charlottesville, about 20-30 minutes south. The segmentation of our region continues, and I can’t determine yet whether this is a good or a bad development.
What this does mean for certain is that traveling Route 29 is going to become even more time-consuming and frustrating.
Technorati Tags: albemarle, charlalbemarle, greene
3rd Quarter Market report for Charlottesville area real estate market
What a difference a year makes.
The Charlottesville Area Association of Realtors releases its Third Quarter Market report today. (The full PDF report is here)
There were 2,875 homes sold in the first nine months of 2007, which was down 647 (-18.4%) from last year. All local areas (Albemarle -17.8%, Charlottesville -25.6%, Fluvanna -21.5%, Greene -34.7%, Louisa -18.5%, and Nelson -21.5%) posted lower sales than the same period last year. Looking at the past 6 years (see chart below), our region has returned to a sales level just above 2003 – which was a record at the time.
Interestingly, this report comes on the heels of a post at Inman News that asks this of the National Association of Realtors:
But enough’s enough with the spin. Why can’t they just tell it like it is? Some markets are doing fine, but many are struggling. And while the jobs forecast and interest rate outlook appear to be in good shape, the mortgage market remains a huge wildcard. Prices are falling in many markets, which complicates the delinquency equation as many mortgages continue to reset at higher rates and higher monthly payments.
The new Charlottesville report seems to have less spin than many of the previous ones, which is beneficial to everybody - buyers and seller, the public, the media and the Realtors (and their credibility).
One aspect of the report that needs clarification is this - when looking at non-locality-specific numbers, the numbers they use are for the entire MLS, not just our market area, which I have noted several times before skews the numbers.
In the City of Charlottesville, Albemarle, Fluvanna, Greene, Louisa and Nelson Counties, as of 14 October, 2007:
There are 2,492 properties actively on the market right now.
2,444 properties have sold since the first of the year. (Down 22% versus 2006, down 25% versus 2005, down 19% versus 2004 and down 4.5% when contrasted with 2003)
Currently, we have 3,471 homes on the market and the median price of these homes is $329,000. The average DOM of these homes is 126 days. There are 588 homes for sale under $200,000 with an average DOM of 120. There are 262 homes currently on the market priced at a million dollars or more with an average DOM of 154.
There are 367 homes under $200k on the market (and I don’t have the ability to do the average DOM for that many properties) and there are 170 homes over one million dollars on the market.
A few choice quotes from the report, decidedly un-spun:
In the early part of the decade, we saw extremely low inventory levels of around 4 or 5 months of supply. This caused home prices to soar, as buyers were forced to make aggressive offers to purchase the home they wanted. Today, we have a 20-month supply of homes on the market, which is very high and possibly a record. We are just entering a quieter selling season with the holidays approaching, so we will likely see a continuation of high inventory into the spring. First-time buyers, who don’t have a home to sell, have an extraordinary opportunity in this market.
…
The seasonal aspect of the Charlottesville area real estate market allows us to draw year-end conclusions based on the first three quarters. The balance of the year is the “slow” time for sales, so unless there is a dramatic real estate swing, the third quarter will be reflective of the year-end situation. That means we will end the year with the 4th highest year for sales reported to the CAAR MLS. Prices will continue to rise slowly and inventory will continue to be the big story in the market.
Take note: the lenders do not consider the Charlottesville area a “declining market,” which is declared after a market has witnessed several consecutive quarterly declines. From an email from one of the lenders with whom I work : Northern Virginia is getting hammered; these counties are listed as being “declining markets” - Fairfax, Arlington, Clarke, Spotsylvania, Stafford, Warren, Fauquier, Prince William, Loudoun, Including the following cities: Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park - sharing the page with Florida and California.
In closing, we see little in this report that is different than the trends we have been tracking all year. Patience and preparation are key virtues for both buyers and sellers.
I’m sticking by my predictions from 1 January of 2007.
As always, all stories about our market statistics are here.
Technorati Tags: albemarle, charlalbemarle, charlottesville, fluvanna, greene
Charlottesville area listing inventory numbers
Between the first of January 2006 to the 8th of January 2006, 225 properties were listed. For that same timeframe for this year, 132 residential properties have been listed.*
There were 23 price changes in this timeframe in 2006 versus 60 price changes in 2007. Without a way to determine whether these were changes upwards or down, this is honestly a bit of a shot in the dark; my very educated guess is that these price changes in 2007 were more down than up.
Witness this new construction property in Crozet that came on the market last June - it started at one million three hundred forty nine thousand and was just reduced to $899,000!
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NB: Contrast what follows with what was released in yesterday’s End of 2006 market report:
One factor that affects the DOM statistic is inventory. If inventory is low, then there are fewer properties for buyers to consider and properties sell more quickly. CAAR tracks the number of new listings that come on the market each quarter to help us monitor the inventory of available homes. As of early January 2007, our database has 2,504 homes actively listed for sale.
What that 2504 number includes is every county that is in our database! Including only our MSA (Albemarle, Charlottesville, Greene, Fluvanna and Nelson), there are as of 10 January 2006, 1672 properties actively on the market. See what a little digging into the numbers reveals?
For example, there are 184 properties on the market in Madison and Orange Counties - at least 35-45 minutes north and north east of Charlottesville. There are 14 on the market in Rockbridge County (home of my alma mater) - at least an hour and fifteen minutes away (realistically 90 minutes).
Less inventory is a good thing, at least in this transitional market.
* Albemarle, Charlottesville, Greene, Fluvanna, Nelson
* This post was inspired by Rob’s continuous tracking of his market. All real estate is local.
* I have not seen an analysis such as this anywhere else.
Technorati Tags: albemarle, charlalbemarle, charlottesville, fluvanna, green
Central Virginia development moves on
Biscuit Run, the proposed development to the south of the City has been revised downwards from a proposed 5,000 homes to 3,500 homes. The traffic study work session next month should be interesting.
As always, Cvilletomorrow has much more information as well as a podcast of the planning commission’s meeting.
Wal-mart is finally coming to Greene County! If only NBC29 will stop with the bringing “green” to Greene lines. Hardy-har-har. So clever. There has been much discussion locally about the merits of Wal-mart, but I do know that my clients in Greene will welcome this addition to their community. Soon they won’t have to go to Culpeper or CharlAlbemarle,
Yesterday at an open house for a new development, I was interested to see that their solution, as approved by the County, to the affordable housing situation is to provide affordable “accessory apartments. (pdf)” At least it’s something. More at the County’s website.
Fluvanna’s clustering is moving forward and Daniel has his thoughts on the newest Fluvanna development.
Piedmont Environmental Council’s new report says that we have enough housing in the pipeline. (pdf)
I’ve said it before and I’ll say it again - studies that consider only Charlottesvile/Albemarle or Fluvanna or Greene are too myopic for today’s settlement and travel patterns. We need to look at development and its benefits and impacts from at least a regional point of view.
Housing inventory is up, but development plugs on, and for many, that’s a good thing. The various development industries add so much to our local economy that many don’t realize. Managed appropriately, growth can be good. Might as well attempt manage it, because it seems it’s going to happen anyway.
Tracking all of these things is almost a full-time job!
Technorati Tags: albemarle, charlalbemarle, crozet, fluvanna, greene, real estate
Housing numbers are down
And inventory is up.
Rates are low.
Home price appreciation is slowing.
Inventory is up. Significantly.
note: as soon as I figure out how to upload an image via coding, rather than depending on my normal program, I will.
Regarding NAR’s press release: They have an obligation to present the facts, and their best opinions. Everybody has opinions and interpretation of data. Assumptions and conclusions may (and usually do) differ.
Take this for example:
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – dipped 1.9 percent to a seasonally adjusted annual rate of 6.18 million units in September from a level of 6.30 million in August, and were 14.2 percent below the 7.20 million-unit pace in September 2005, which was the third strongest month on record.
“The good news is that fewer new listings are coming online. A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth within a few months. Taking the long view is always the best way to approach housing decisions, and right now, buyers are in a very favorable market.”
With the Calculated Risk’s “alternate” take on the report:
Sales plummeted 16.3% from September 2005. This is a record YoY (Year over Year) Sales decline.
Median Prices dropped 2.2% from September 2005. Bloomberg: “… the biggest year- over-year decline since record-keeping began in 1969.”
Locally in the Charlottesville region (inclusive of Charlottesville/Albemarle/Fluvanna/Greene/Louisa/Nelson), the market has slowed. Using a quick YoY analysis, in September of 2005, 333 residential properties closed. In September 2006, 211 closed - quite a drop year over year.
Listings under contract - September 2005 - 305 listings went under contract. In September 2006 - 214. Sit down. Take a breath. It will be ok.
And here you have the Virginia roundup from The Housing Bubble Blog, while Dewita’s calling NoVa a Buyers’ Market. A different one, but a Buyers’ Market all the same.
K Hovnavian slashing development
I moved this to its own story, from today’s “Links” post, because they represent the second builder (Ryan was first) to announce major changes. Interestingly, while local builders have seemingly made some significant changes to their pricing and development strategies, it is the national builders who seem most affected. Perhaps the smaller builders are more nimble and able to alter their course? Were national builders more prone to over-extending themselves? I don’t yet know, but remain interested in these developments.
The Greene development is K. Hovnavian’s only development (of which I am aware) in the Central Virginia region. Ryan is everywhere in Central Virginia. Their Four Seasons development also represents something our area desperately needs - housing designed for the 55+ segment of our population - so they do have that going for them.
These new market conditions have affected us in many ways and will continue to affect us in the months ahead. In the area of land acquisition we have been re-evaluating our current land positions and the contracts for new land in the light of these new conditions. Many of those contracts no longer make good financial sense when you factor in lower prices and a slower sales pace.
Time will tell …
Technorati Tags: albemarle, bubble, charlalbemarle, charlottesville, greene
Following the Charlottesville area market trends
*Active in August 2006: 432
Active in August 2006: 441
% change: 2.08%
Contingent: -28.74%
Pending: -34.36%
Sold: -21.95%
Very, very interesting data. What do the data tell us about the Charlottesville and Central Virginia area’s real estate market? It has slowed - significantly.
The market is very good for buyers right now - good Buyer’s Agents are advising their clients that there is sometimes significant flexibility in asking and selling price.
From a general market overview, properties are still selling for 97% of their asking price - not bad. In short, don’t believe all the doom and gloom reporting. The market is different. There are more houses on the market now than there have been in many years. Is this a “sky-is-falling” scenario? Not in my humble opinion - market “normalization/cooling/equilibrium” - whatever you want to call it - qualifies as a “good thing.”
A return to a market where the timeframe in which houses are sold and resold is measured in years rather than months is healthy for everybody.
Daniel has the County-by-County breakdown.
*Only for those properties in CharlAlbemarle, Fluvanna, Greene.
New construction numbers in Charlottesville/Albemarle:
Sold from June 1 2006 to September 1 2006: 106
Sold from June 1 2005 to September 1 2005: 140
Sold from June 1 2004 to September 1 2004: 119
Sold from June 1 2003 to September 1 2003: 111
Was 2005 an anomaly? These numbers seem to suggest that the reports of the new construction market’s demise have been - how do they say it - greatly exaggerated? Now, if I were to delve in and see how many now are offering incentives and upgrades …
Technorati Tags: albemarle, charlalbemarle, charlottesville, real-estate
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