Edit: Bumped to the top because I really don’t want anyone to miss this analysis.
This is going to be a developing post as I read through Barry Merchant’s presentation from this morning.
Here is an advance copy of the Nest Report, what we believe to be the best, most “comprehensive and transparent analysis of the residential real estate market in Charlottesville, Albemarle and surrounding counties, prepared quarterly by Nest Realty Group.”
I’ll jump to the conclusion of the Nest Report for you:
2010 will be about the national market and not just local stories. Unemployment will drive foreclosures and excess supply. Interest rates will control limiting demand. If unemployment and interest rates converge, price drops are not just possible, they are guaranteed. If, however, unemployment can stay stable and interest rates are affected, but only modestly, we could see a continuation of the recovery that we saw in the 3rd and 4th quarter. The weather in January and early February is certainly going to decrease the number of closings, as there have been few days in which buyers have been able to shop without weather being a factor.
All in all, we believe that compared to the rest of the US, the Charlottesville market has fared relatively well. However, prices are down and will continue to fall. Sellers that are attempting to chase the falling market with small listing price adjustments are unlikely to find buyers at prices they are hoping for. For sellers, pricing the home competitively may not be enough. Sellers may need to move to prices that drive multiple offers in order to close in on one.
For buyers, interest rates are going to rise. Now is a good time for those with long time horizons. While prices will continue to fall, the ownership costs may not. Buyers need to consider monthly mortgage payments along with principal reduction though payments as part of their equation. Buyers may find that even if prices fall 7-9% more, that buying today could make better financial sense in the long run.
If you would like a printed copy, please email or call me and I will be happy to put one in the mail. Or, stop by Nest Realty Group – we’re just off the Downtown Mall in the “Warehouse District.”
Comments, feedback and input welcomed.