The 3700+ number reflects everything available in the Cville MSA plus the Valley and surrounding Counties, including proposed projects in addition to new and existing homes. The 3700 does not include houses that are for sale without the use of a Realtor.
What's the problem here?
And obviously, there's a lack of buyers. Specifically, the "Move-Up Buyer."
The "First Time Home Buyer" is driving the market right now. In Charlottesville between January 1 and May 3, 77% of all contracts were under $300K. In Albemarle, the percentage was 62%.
Where are the "Move-Up Buyers?" The short answer is that many would-be "move up" buyers are now stuck in their homes because they won't make enough by selling to achieve the next "level." This is not only because house values are falling, but also because pricing in this area is out of synch with wages, no matter what the wage is. A 4 bedroom home for $750K? Sure, in the days of no money down, interest-only loans. Not now. Moving up is harder than ever nowadays, when a "starter" home is about $250K, and today's buyer can expect to build no equity for several years. According to the Virginia Housing Development Authority (and many economists, among them Robert Shiller, Nouriel Roubini, Paul Krugman, et al) prices will be declining for some time to come (see links at bottom). As always, a buyer should be purchasing due to a need for housing, not in the anticipation of making a profit.
Between Gen Y being priced out of this market, and the Baby Boomers either approaching retirement or freaking about recent loss of personal wealth, there are fewer buyers than ever.
BUT what about the sellers whose properties are on the market now? Where are they going? Not many of them are turning around and buying. As CalculatedRisk says, it's "One and done." When you look at the transfer history of the properties for sale, you start seeing the same stories:
- seller is leaving town for a new job
- seller is leaving town after a UVA program or residency ended
- property is for sale by a trustee due to owner death
- seller is retiring or ill and downsizing
- seller has been in the property about 5 years--there's an Option ARM resetting
- seller wants to unload an investment property
- the property is REO or short sale
- the seller is trying to downsize due to financial hardship before a foreclosure or shortsale
Supply far exceeds demand in this area, but there are sellers who have made significant cuts to Askings. However, many sellers remain firmly optimistic (not just in this area!) about their homes' value: according to Zillow, 74% believe their homes will not decline in value in the next six monts.
And nearly 1/3 of homeowners are considering putting their homes on the market once the market "turns." Talk about a Shadow Inventory!
It's the same old story in this area: too much inventory, prices far beyond wages, homes that achieved a bubble "value" and now have owners who can't or won't sell for less, no new jobs coming this way (except those spoken for at DIA/NGIC), a luxury component that is frozen, and not enough buyers.
With the lowest sales in a decade, the market is due for a correction in pricing. Big City Prices will in many cases bring a big city correction.
Related Reading below the graphic. The graphic shows what used to happen in the housing market.
House Price Puzzle: Mid-to-High End - CalculatedRisk
The Real Housing Crisis Has Yet to Begin - Minyanville