In short –
– Days on Market are up, year over year
– Inventory in Charlottesville/Albemarle is slightly up, year over year. This may be a signal that we’re moving in the right direction.
– Absorption Rate (the time it takes for the existing inventory to be churned) is up – anything over 5-6 months is considered to be a Buyer’s Market. 14 months of inventory in Charlottesville/Albemarle certainly fits that definition.
– Buyer clients of mine made an offer on a very well-priced house in the City last week – and were one of four offers.
– Properties are still selling, average sale price is still up.
Buyers are buying and sellers are selling – the price and the property have to be right.
Market data for the Charlottesville Metropolitan Statistical Area (MSA) – Charlottesville/Albemarle/Fluvanna/Greene/Louisa/Nelson after the jump.
* Data is pulled from the Charlottesville Area Association of Realtors‘ MLS – data is the best that is available, and is (by my ballpark estimations) about 85% accurate – both for inventory collected and data entry by the Realtors.
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Jim — in your post you say average sale prices are up. I just did the math and I don’t think that’s right. If you take the average of the sale price for the 10 mos. reported in your data for 2006 and then again for 2007, you get $389,521 and $387,788 respectively. So nominal prices have dropped just a bit. But of course *real* prices have dropped further. Why? Because (a) inflation was about 2.5%, and prices had to rise by that much just to stand still. So we’ve had a real price drop of at least 2.7%, by my reckoning. And that’s not all, for (b) these reported sale prices are undoubtedly inflated by the value of unreported give-backs, such as seller-paid improvements and seller-paid closing costs, that are common in the market at the moment. I would estimate that real prices dropped year-on-year by about 5%, and I think that’s just the beginning.
I’m calling a 20%+ drop in real prices, unfolding over the next four years. Care to make a bet with me? Winner gets a nice dinner at his C’ville restaurant of choice.
Hey again Jim. I just re-ran the numbers using the greater number of sales for the Charl/Albemarle region. The result is the same — 2007 prices are marginally lower than 2006 prices for the comparable 10 mos. $353,452 vs. $354,230, respectively.
So again, prices are not going up. They are going down — at least that is what the data suggest. The decrease is very small in nominal terms, but is larger in real (i.e., inflation-adjusted) terms. And the drop in prices is quite probably understated in the realtor data, b/c that data doesn’t capture a host of seller concessions that currently are reducing the real sale prices of homes.
I’m always grateful for your presentation of these data, but I think it’s important that your readers understand fully what the data show. There is no reason to think that this data shows a price increase. It shows a drop. And there is no momentum in the monthly data suggesting that prices are about to swing up. Again, the data suggests that price declines will steepen. Notice the steadily increasing DOM. Notice the steady erosion of list vs. actual selling price. Notice — most importantly — the absolute explosion in months inventory, to a level (14 mos.) that I suspect is unprecedented in this market. None of this is good, and nothing in this data suggests it will be over soon. 3 years of falling prices? 5 years? 10 years of price stagnation? At this point, who knows. But it’s time to start calling a spade a spade.
One also wonders to what extent the DOM data is manipulated or skewed. In my development, there are several properties that have been on the market for well over 1 year, but they’ve been listed and relisted several times. If that DOM clock keeps getting reset to zero, how accurate can that statistic be?
Thanks, as always for your insightful comments and for your time.
This is a piece that is often not pointed out. Thank you.
We are very likely looking at a downward swing in prices, but we are going to be supported in no small part by the University’s impact. Making broad generalizations is a hard thing to do – real estate values vary by neighborhood, block and street.
I don’t think there’s any way that we are going to see 20%+ declines – have you been reading Nouriel Roubini?
Dinner in four years. It’s on.
Excellent! Whoever ends up paying the tab for dinner, it should be good fun. All best regards, AC
I have written about Days on Market many times before; last month I noted the new continuous days on market field. If a property has been off the market for a pre-determined period of time (I think it’s 90 days) it is considered to be a “new listing.” The best approach is to look at the history of the property – to see when it was originally listed, what the price changes have been and whether it has been “off the market” for any period of time.
But yes – some Realtors do try to game the system. It just takes a few clicks to ferret that out, though.