Charlottesville Area Market Update – June 2008

If a picture is truly worth a thousand words –

/Users/jimduncan/Desktop/2005-2008-central-virginia-real-estate-market-inventory-snapshot

This market update is a bit longer and more detailed than most of my previous market reports – there seems to be uncertainty right now and I’d like to do my part to answer as many questions as possible. There is so much more that I would like to post, but feel that already I am in danger of providing information overload.

There are a lot of buyers in the market right now. Fortunately for them, there are a lot of houses on the market as well.

Diving right in –

Current Inventory – Days on Market

Right now*, there are 2,390 properties on the market (Albemarle, Charlottesville, Fluvanna, Greene, Nelson)*

312 have been on the market for more than one year.

908 have been on the market for more than six months.

1406 have been on the market for more than three months.

2059 have been on the market for more than one month.

Currently there are 606 residential properties currently market as being Under Contract. 223 of these – nearly 37%! – were on the market for less than 30 days. 307 – 50%! – were one for less than 60 days. Conclusion – IF YOU PRICE YOUR PROPERTY WELL, IT WILL SELL. You may however, come to realize that the price at which you can sell your property is either a) less than you expected/hoped for and/or b) less than you owe on your mortgage. What you need to make is irrelevant to the fair market value.

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The Agent Update

In 2007:

From January through the end of May, 158 Realtors had more than 5 sides

45 had more than 10, and about 700 had not had one transaction

In 2008:

From January through the end of May, 74 have had more than 5 sides

24 have had more than 10, about 900 600 have not had one transaction

Any Realtor who is not at least a little bit concerned about survival either isn’t paying attention or isn’t a full-time Realtor.

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On to the market update (click images for larger versions):

So far, we have seen the fewest number of monthly sales in years, the highest number of homes on the market in May, and fewer building permits than we have seen in the first quarter. Interesting times. I didn’t know how long we’ve been in this cycle until I referred to this story – Sold Comps now matter less – from February 2007; and was a bit shocked that it had been so long since I had written it.

2005
2005-Charlottesville-Albemarle-Real-Estate-Market-Analysis-Snapshot

2006

2006-Charlottesville-Albemarle-Real-Estate-Market-Analysis-Snapshot

2007

2007-Charlottesville-Albemarle-Real-Estate-Market-Analysis-Snapshot

2008

2008-Charlottesville-Albemarle-Real-Estate-Market-Analysis-Snapshot

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Median Prices of sold properties* –

May 2008

$274,000

May 2007

$287,000

May 2006

$264,000

May 2005

$255,000

May 2004

$227,998

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Outlook/projections:

I have been saying for nine to eighteen months that the recovery is nine to eighteen months away. Anecdotally, properties that are priced well are selling, and buyers are buying – but there are more options now than ever before. 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.

1 – If you plan to live in the house for at least three to five years, now could be a great time to purchase a home – some prices are tremendous, interest rates are at historic lows, and buyers are absolutely in the drivers’ seat. Be aware that well-priced properties are occasionally seeing multiple offers. If you are buying – look at the data, days on market, condition, external uncertainties and uncontrollable factors that may affect resale.

2 – If you are selling or planning to sell – be realistic with your goals and expectations. Frequently that realism will be costly.

Nota Bene

1 – a “side” is a side of a transaction – the Realtor had either the Buyer or the Seller in a transaction.

2 – Absorption Rate Number of weeks it takes to sell the current inventory at the present rate of sales.

3 – Counties included – Albemarle, Charlottesville, Fluvanna, Greene, Nelson. I will include Louisa in the market updates next year.

4 – Source of all data is from the Charlottesville Area Association of Realtors’ MLS; while it is the best source of market data available and one can draw reasonable conclusions from said data, it is only as accurate as the people inputting the data.

5 – “Right now” is Sunday evening, 8 June 2008.

6 – I would really like to provide county-specific market reports, but in the interest of reaching and serving the broadest possible audience, I’ll stick to posting market reports for the Central Virginia region.

7 – I am available for consulting contracts, whereby I provide locality-specific analysis, as well as data points broken down by price range, new construction and property type (condo/attached/single family) analysis and more. See my new “Services” page for more information.

Charlottesville and Albemarle are a bit better than the wider Central Virginia market and highlight the inherent risk in making any market generalizations. Every real estate market is decidedly local – town by town, neighborhood by neighborhood even street by street – and each property requires a specific market analysis to accurately determine possible fair market value.

Inventory-for-Charlottesville-Albemarle

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What do you get if you choose me as your Buyer’s Agent or choose me to represent you in the marketing of your home? Property and market-specific analysis – such as the selling price differential between the original asking price and the final selling price, the actual continuous days on market as opposed to the easily-manipulated MLS numbers, whether Dual Agency was involved in the transaction, and much more. Contact me if you have any questions about representation.

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16 Comments

  1. Daniel June 9, 2008 at 07:38

    Thanks Jim.

    You said: “properties that are priced well are selling”. Could you unpack that? Isn’t “priced well” a function of whether or not a property sells?

    Reply
  2. Jim Duncan June 9, 2008 at 08:35

    Daniel –

    Thanks for the comment. I’ll respond in detail later, but for now I’ll provide an anecdote.

    Here is the history of a property I have been marketing since October of 2007.

    Came on the market (with another Realtor) at $1,300,000 in December of 2006.
    When I took over in October of ’07, the price set by the relo company (owner) was $1,189,000.

    The price was reduced to $999,900 in January of 2008. Reduced again to $924,900 in May of this year. It’s under contract as of Friday, and two other parties were expressing interest Friday afternoon. Had it been priced well to start, it would not have languished for so long. I believe this is true for most if not all properties currently on the market.

    Reply
  3. Julie Emery June 9, 2008 at 15:13

    Jim,
    The last line of your comment captures what needs to happen in this market. If prices fall enough, enough new buyers will be attracted to turn the market around.

    Unfortunately, most sellers aren’t yet willing to absorb that kind of pain. (Sometimes even when the seller is a bank owner of a foreclosed property!)

    Reply
  4. Dave Phillips June 9, 2008 at 16:43

    Curious…why don’t you include Louisa in your stats since it is part of CAAR’s territory and the MSA?

    Reply
  5. Jim Duncan June 9, 2008 at 17:54

    I know – but I don’t think (my opinion) that Louisa was as significant a part of our market four years ago as it is today. As I don’t break down the data by locality, I didn’t want to unnecessarily skew the data.

    Reply
  6. Dave Phillips June 10, 2008 at 14:22

    Jim, thanks for the explanation on Louisa. Makes sense. The hardest thing about doing my quarterly market report is to make sure I am comparing apples and apples. The MLS system changes over time and we are getting ready to change the way we look at Days on Market and we are also going to be adding lots of data from MRIS and other sources. It is going to be really hard to compare stats from year to year probably starting next year.

    Reply
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