Charlottesville area real estate market update – 1st Quarter 2008

There’s a bit more housing inventory in the Charlottesville MSA (region) than we are used to.

First – the basic update.

Right now, in our market* –

2,352 residential properties are currently active on the market.

504 are under contract.

426 have sold since the first of the year.

The good news first – some sellers are starting to “get it.”

Of the aforementioned 504 properties under contract, 198 have continuous days on market of under 30 days and 259 have continuous days on market of less than 60 days. **

Framed another way – about 50% of new sellers understand (and are financially able to make this decision – this is another story) that pricing one’s home properly is crucial to actually selling the house. If you do not price your home well – from Day One – be prepared for frustration, aggravation and not selling your home.

Summary – We are going to continue to see a market adjustment (read: many Sellers still have yet to recognize that in many cases, we are back to 2006 price levels), but those who want to sell must realize the new market realities. Buyers who are pre-approved, have some cash saved and don’t have houses to sell are absolutely in the drivers’ seat.

Now really and truly is a great time to buy a house – if you are buying for the right reasons (ask me for specific insight for your situation) and you intend to actually live there for a couple of years. I have heard anecdotal evidence that long-term investors are starting to snap up inventory. Multiple offers, while certainly not common, are in fact happening all over Charlottesville and Albemarle.

My prediction? There are so many unknowns that are affecting the marketcredit crunch, mortgage bailout, things likely may get worse before they get better. But – if you happen to care about living in a house and enjoying the intrinsic value, of being a part of a community and the rest of the intangibles, now may very well be the time to buy.

With that caveat, 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!

Inventory numbers for 2005 through 2008 for the Charlottesville region –

2005-inventory-for-Charlottesville-regional-housing-market.png

2006-inventory-for-Charlottesville-regional-housing-market.png

2007-inventory-for-Charlottesville-regional-housing-market.png

2008-inventory-for-Charlottesville-regional-housing-market.png

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Accounting for new construction –

In 2004, 793 new construction residential properties were listed. 615 sold.

In 2005, 980 new construction residential properties were listed. 662 sold.

In 2006, 1215 new construction residential properties were listed. 609 sold.

In 2007, 820 new construction residential properties were listed. 499 sold.

So far, 196 new construction properties have come on the market this year. 60 have sold so far.

——-Tune in to WINA this afternoon at five o’clock PM to hear me talk about this report and the current state of the market. ——-

* Albemarle, Charlottesville, Fluvanna, Greene, Nelson

* * All data come from the Charlottesville Area Association of Realtors’ MLS, with my standard caveats – it’s the best source of data out there, and represents a super-majority of the real estate market, enough from which to draw relatively accurate conclusions. The data is only as good as the Realtors entering the data, however.

* * * Waynesboro/Augusta Market report coming tomorrow.

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6 Comments

  1. Scott April 8, 2008 at 14:03

    Jim –

    Thanks for the great update – I’ll have to wait for the podcast to hear the show, but it’s very nice of you to put the numbers out there.

    WRT pricing – I think you’re absolutely correct that sellers have to move on from denial to acceptance. Of course, many have made that adjustment and are not able to move on. The ‘foreclosure crisis’ hasn’t hit here yet, and it may never be as bad as it is many places, but it will continue to exert serious longterm downward price pressure. I think people here – and that includes the banks who have REO on their books – will not be back to reality until they accept that prices are really headed back to 2004.

    The bubble in RE prices is only a symptom or secondary effect of the poor underwriting practices over the past 7-8 years. Even if the credit markets unfreeze and MBSes start to trade again, the underwriting will be more stringent. Without access to the cheap high leverage, buyers just cannot afford the higher prices. If we fall to ’03-’04 levels, prices will be back in line with documented incomes, as measured by traditional underwriting guidelines.

    Heh…now that Yun is retiring, I think I’ll apply for his job…this RE prognosticating is pretty fun. Anyway…there’s my prediction!

    Reply
  2. Reno April 8, 2008 at 14:28

    I’m not sure if you’ve already written about it, but “A Reality Check for Home Sellers” by Austan Goolsbee in the NY Times goes straight to the heart of the problem.

    Reply
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