Charlottesville Regional Economy – Good, Bad and the Ugly

Brian McNeill with the DP has an insightful summary of where we are right now. One point of clarification regarding this –

The number of homes listed for sale has dropped from 3,530 last month to 3,427 on Thursday. The average number of days on market fell from 128 in October to 113 last week, according to CAAR.

Relevant Data

Accurate Data Relevant to Central Virginia

Two points –

1 – the data in the Daily Progress is for all of the homes in the MLS. The data above is for all of the homes in Charlottesville, Albemarle, Fluvanna, Fluvanna, Greene and Nelson Counties.

2 – I’m really, really hoping that there is some sort of statistical or data entry anomaly that accounts for the jump from nearly fourteen to nearly eighteen months of inventory. (chart after the break) We’re following normal trend lines, but this is a bit extreme.

Additionally –

Median Sales Price

What does this mean???

I think that sales are down nearly 50% in Albemarle County and 25% in the City of Charlottesville … but median sales price is up $75k? Really? This is why I have advocated for so long for good data in the MLS – whether it be the Charlottesville area, Waynesboro area or elsewhere. Without good data, we cannot draw sound and accurate conclusions.

With the data in the first chart, this –

“We’ve had a decline of inventory of housing for the last four months straight,” Gaffney said. “It’s still certainly a buyer’s market, but it’s headed toward balance. Maybe we’re turning a corner.”

(excepting a flat June) Is proven accurate by the data; and that’s great news.

* I had this post scheduled for this afternoon, but then the Bubble Blog went and posted an in-depth analysis and response. Also, I’m not the only Realtor who finds great value in Bubble Blogs.

Absorption Rate

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  1. jason November 24, 2008 at 09:45

    Jim, thanks for the analysis. You’re not alone in wondering what’s going on with the median sales price. I would assume that there are just more higher priced homes vs. lower priced homes in the MLS right now, compared to last year. Any anecdotal evidence? RE: Months Inventory – why the surprise? Monthly sales dropped 25% while inventory only 1%. Or is there a question of the accuracy of the data?

  2. Jim Duncan November 24, 2008 at 10:16

    Jason –

    Thanks for the comment. I suspect that the reason for the odd-looking data is a combination of sales reductions and bad data, and I’m trying to figure out what’s going on.

    Realtors are supposed to be the penultimate source of local real estate data; I’m hoping that we can maintain that status.

  3. Real C'ville - The Bubble Blog November 24, 2008 at 11:41

    Jason & Jim,

    This is just an observation, but we think that “merely” with “time passing” some Sellers’ Agents believe that prices in this “insulated” market should still be rising.

    So this year’s $419K rancher is last year’s $339K rancher (those numbers, of course, aren’t exact). Makes little sense, except to a seller with pride in the home.

    We believe the opposite, obviously, due to the facts that the area has been in a bubble for years, there’s a (possibly deep and long) recession under way, and prices “everywhere” are dropping. New Asking Prices should be lower than they were in the past.

    So if the higher Median is not due to wishful thinking on the part of Sellers & Sellers Agents, on what is it based?

    And we believe we’re on to something when we say “sold comps matter less.” What’s been sold during the “credit crisis”? This is the place to start finding an Asking Price, and then decline it from there, if a seller really wants to sell.

    And if a buyer really wants to buy, s/he will probably hold out for lower, lower, lower. The “rules” of house pricing, mortgage availability, and “value” are changing along w/the rest of the economic landscape.

  4. Jim Duncan November 24, 2008 at 11:48

    BB –

    Thanks for the comment, as always.

    I think that the median price is due to an anomaly or a huge estate or two selling in October.

    But you’re right – waiting it out isn’t a reasonable option. Aggressively pricing against the market is the only way to attack this market.

  5. jason November 24, 2008 at 12:56

    Perhaps Bubble Blog is right, that it’s a matter of seller psychology. Or Jim could have it with the estate sales.
    Here’s my hypothesis: The timing is uncanny in relation to the decline in the jumbo mortgage market. I thought that maybe since jumbo mortgages became harder to come by after the September/October credit meltdown that the jumbo housing market would be lagging as a result. On my side of the transaction, I have observed first hand the difficulties in jumbo financing. It’s been obvious that the lack of jumbo money will affect the housing market, but the question has been how much. It occurred to me that the numbers might be showing us evidence of the impact.

    But maybe I’m just over analyzing.

  6. Scott R November 24, 2008 at 17:10

    Jim –

    queue Inigo Montoya – “I don’t think that word means what you think it means” – in re: penultimate – I do have to admit, it’s pretty funny irony.

    penultimate: next to last.

    I guess in some respects the MLS is the next-to-last place you’d find good data.


    I think the price numbers reflect that fact that the only deals moving are those where the buyer is pretty well heeled to begin with.

    Thanks for the analysis, as always!

  7. Jim Duncan November 24, 2008 at 17:58

    Dammit. You mean people read my comments?

    Thanks, Scott and no – I meant ultimate/pinnacle/definition of accurate data, without which, drawing conclusions and advising clients well is that much more difficult.

    Thanks as always for stopping by.


  8. Keith November 24, 2008 at 22:43

    Couple things.
    1) Inventory in terms of months is a joke for the MLS because of the way it is calculated. Do we really believe that every June the market is really turning around. No, we have more sales because this is when people are buying homes, and thus the way the MLS calculates out the Months of inventory are screwy. That said, when we only have 131 sales in a month compared to 280 two months earlier, it is safe to say that we do not have sound fundamentals. The actual months of inventory needs to be based on either a 6 month average or a seasonally adjusted number, not a single month.

    2) As for the Median price increasing. I have been pointing out this trend for the last 9 months. Almost every Realtor I work with has indicated that the sales prices are indeed falling with very few exceptions, but the median has been going up in most locales for the last year. The only explanation is a change in the product mix, not the actual price. When one does look at neighborhoods closely (rather than an 8 county average) one can isolate the change and recognize that transactions are continuing in expensive sections of the city, but falling off in more affordable Crozet. Thus the median goes up while prices are falling.

  9. Jim Duncan November 25, 2008 at 07:44

    Keith –

    Thanks for this comment –

    1) I agree to a certain extent; while it’s not the best metric, it is a consistent metric by which we can see trends, particularly the trend lines in the graph – I still think that there must be something with the data. I really wish that our association would provide localized data rather than system-wide, but that’s another topic.

    2) Regarding median price – that jump – $75k – has to be an outlier. Also, are you finding that the more expensive transactions are seeing reductions from asking to close price? What %?

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