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.

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