Charlottesville Market Report – First Half 2009

The market – buyers, sellers, Realtors, everyone, is searching (fumbling?) for equilibrium and balance. The $8k dollar tax credit is absolutely helping first time homebuyers (really anyone who has not owned a home in the past three years) – and is liable to be extended – get into the market and there are glimmers of hope and opportunity every day – well-priced properties and multiple offers abound.

First – Not much has changed since last month’s market report. Nor is my advice any different than in January of this year:

– If you’re seeking to buy, buy smart.

– If you’re looking to sell, what you “need to make” does not matter.

I will go further – if you are selling your home and are neither willing nor able to negotiate, please take your home off the market.

Charlottesville Area Association of REALTORS® - Inventory levels - absorption rate

Looking at the start of 2008:

As of 1 January, there were currently 2206 properties on the market in the Charlottesville market area, and 400 were under contract. A quick look back at the past three years shows that our market has changed dramatically. On 3 January, there are 2443 active on the market, and 467 under contract.*

Looking at the baseline set in January:

There are 2,196 homes on the market in Central Virginia* with 303 being under contract. Compare these numbers with last year

Right now*, there are 2,380 homes on the market. 551 are listed as being under contract.

In Charlottesville and Albemarle, there are 1396 active properties and 406 properties currently listed as being under contract.

More appropriately let’s compare right now with the first quarter report of 2008:

Currently there are 2,622 properties on the market.

Why the reduction in inventory? Properties are selling, some – an undetermined number – are moving to the shadows and there is less new construction. (and I have a sneaking suspicion that foreclosed properties haven’t fully hit the market)

Market data:

Have fun with this – I’m doing it differently this month. Below are the inventory levels for the past four years. Median prices coming soon.

Inventory levels for Central Virginia – Charlottesville, Albemarle, Greene, Fluvanna, Louisa, Nelson

Inventory levels for Charlottesville and Albemarle from 2006-2009

Charlottesville Area Association of Realtors Market Report for 1st and 2nd Quarters 2009 – a good overview, that although too broad by design, provides a reasonable of the market.

Concerns:

– The wider Charlottesville market has not seen the price corrections that are necessary to achieve market stabilization. Some pockets and homes are adjusting, but I have yet to see consistent trends that indicate that X price range has reached "bottom."

– The shadow inventory remains an unknown factor that is impacting the market in both tangible and intangible ways.

– Jobs, jobs, jobs. People are concerned about their jobs – this leads to fear, uncertainty and doubt.

– Appraisals – the HVCC and the lack of good volume of transactions is holding back the market. More to come on this, and as I said in a comment on AgentGenius – "Accuracy and competency are all I want – for my business and my clients."

– Some (many?) sellers are stubborn – either from a mis-guided belief that their properties are worth more than reality dictates or because they have not accepted the reality of being in short-sale or possible foreclosure position.

Positives

– Some sellers are being reasonable,

– Interest rates remain historically low – check out this page for some perspective.

– From a buyer’s perspective, there is a lot of inventory on the market … but there remains a dearth of quality properties available. The well-priced properties are selling – (very) often with multiple offers.

– Smart sellers are either negotiating or pricing effectively from Day One.

– If I had a million dollars, I would be buying properties in the Charlottesville market left and right. There are some tremendous opportunities out there, and ready, willing and able buyers and investors are taking advantage of this market.

Predictions:

– I’m bearish on the wider Charlottesville real estate market, but recognize (and more importantly, have clients who recognize) the opportunities to buy smart.

– I think that, respective to individual houses, neighborhoods and areas, there is likely a continued decline in prices. My guess says anywhere from 5% to 15%, and in my opinion, all the predictions you are going to read are going to be the same as mine – educated guesses.

The bottom. I think we’re going to see a bottom of the market in or by 4th Quarter 2010. If we can achieve mere stagnation by then, I will be pleased. We’re not going to know the bottom until we have the benefit of 18 months of hindsight.


* Right now is Tuesday, 7 July

** Central Virginia is Charlottesville, Albemarle, Fluvanna, Greene, Nelson

*** The data is only as good as the Realtors inputting the data, and so far, Realtors as a whole do not recognize how crucial correct data is to our business and our clients.

**** Aggregate Days on Market, even Continuous Days on Market, should be regarded as reasonable guides, not "to be trusted" numbers, as neither truly accounts for properties that are re-listed. I have seen properties with DOM of 7 when reality is closer to 307.


As always, if you have any questions, comments, or would like to see more or different information, please contact me.

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5 Comments

  1. John Handloser July 13, 2009 at 18:45

    Jim,
    Thanks for your data collection and analysis. As a Home Inspector, I have seen a larger shift towards 1st time buyers, and foreclosures with my business. It is also interesting that my business has picked up closer to Charlottesville, and slowed in the surrounding counties.
    Keep in mind, this is a perspective from only one inspector, and in no way validates a trend (one way or another) There’s no way to track home inspections in our area, but it might be interesting to see if we could gather some data from our ASHI group. That may be harder than it sounds since we all keep our numbers (and bragging rights) in a vault.
    As the President of Blue Ridge ASHI, I invite you to one of our meetings. You may get some additional information. Your CAAR President (Michael Guthrie) spoke at a Spring meeting, and provided some very informative numbers and perspective on the market

    Reply
  2. MN MLS July 14, 2009 at 21:15

    Hi Jim,

    I just stumbled upon your blog here and stopped to read your thoughts about your local market. Thanks for the data. I’m bearish as well on the market as a whole. I don’t know what the real score is, but im guessing prices will continue to fall. But there are a lot of investors that are getting good deals left and right.

    Cheers!
    Nicole

    Reply
  3. on the market July 15, 2009 at 19:55

    “…likely a continued decline in prices. My guess says anywhere from 5% to 15%…”

    By “prices” do you mean what the place sells for? I’ve seen a bunch of properties w/several small price changes “chasing down the market.” Say the total price drop on asking is 15% then buyer offers 10% less and it’s accepted. Then would you expect a further price decline off that?

    Reply
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