Friday, May 8, 2009

Charlottesville Albemarle Real Estate Update: All Contracts 1 Jan. - 3 May 2009

Realtor Greg Slater of Real Estate III sent the information that appears below. Regular readers will recognize Greg as a consistent and cheerful commenter.

The spreadsheets show data for all contracts (pending, contingent, and closed) by type from 1 January through the evening of May 3. This means, of course, that some of these sales could fall through; let's hope not. Greg notes that Ryan Homes (a new home builder) has not yet entered April sales data into the MLS system; he'll add this in the comments section when it's available.

After the Q1 Report, Greg commented on the pricing/sales trend of properties below $300K selling at higher percentages than others. This is continuing to hold true in Charlottesville, Albemarle County, Fluvanna County, and Greene County.


There are currently 369 properties available.

In Charlottesville 1 Jan. - 3 May in 2008, 63% of all contracts were under $300K. In 2009, 77% of all contracts are under $300K.

Townhouses are down in contracts -27% in 2009 YoY 2008.

UPDATE, as per comments: the percentage decline for condos and detached (single family) homes is transposed in the spreadsheet. Detached is down -27%, and condo sales are down -56%.

Take a look at the decline in sales in the $300K-$600K price range. What is often repeated in comments seems to be playing itself out with buyers, who are either saying "no" to higher prices or "waiting." (That is, except for a couple of buyers at the $600-$700k level, who made 2009 a 100% increase over 2008). Sellers in the $300-$600k have reason to be worried...except there are a couple more months of "prime season" selling. (And all it takes is one buyer to get a home sold.)


In Albemarle there are currently 1140 properties available.

Albemarle County is both more expensive and has many more properties for sale than Charlottesville, typically even in a more "normal" period. The good news is that the YOY change in sales from 1 Jan. to 3 May 2008 to 2009 is just -5%. The price points of what's going under contract are lower, however. Browse the MLS and it will seem like thousands of prime acres and a limitless supply of estates and farmettes are for sale; but this part of the market is essentially frozen.

In 2008, 47% of sales were under $300K. In 2009, 62% of sales are under $300K. In the "under $300K" category, there's been an increase in sales of 26%.

When you look at "property type," you find the answer: condos and townhouses are selling well, also significantly up from 2008 at +17% and +40%. Greg notes that the Pavilions at Pantops are driving these sales.

But, ouch, single family homes are down 21%, as is the Western Albemarle area--Crozet.


In Fluvanna and Greene there are currently 579 properties available.

Fluvanna County
is suffering from low sales in the over $300K category: down -75% from 2008. This seems like it would be acreage and horse properties that aren't moving as well as in the past. Contracts on properties under $300K have increased by 15% in 2009 over 2008.

Greene County has managed to keep the same numbers on the contract percentages, even gaining in sales by 7% in 2009 over 2008.

There are several reasons the "under $300K" properties are selling:

1. The $8K first time homebuyer tax credit has an income limit of $75K single/$150K couple, and properties under $300K are the most easily affordable for these income levels;

2) In Charlottesville and Albemarle there tends to be an annual turnover of medical residents, B and law school students, plus visiting faculty, who may buy property at lower price points;

3) There's a large supply of condos/townhouses available;

4) There's something of a "pent-up demand" for well-priced ($200k-$250K) single-family homes, as both Michael Guthrie and Pavel Dovgalyuk have noted, and when sellers are able to price "realistically," these are going fast. "Realistically" means recognizing that while interest rates are low, today's buyer probably doesn't have a large downpayment and is very likely to be conservative about how much mortgage debt will be taken on due to the potential that the home's value may stay flat over the next several years. Pricing in this area, as in many areas of the country, got out of whack with price-to-income ratio (currently 5.5 to 1 v. historical 2.5 to 1). The median income for a family of 4 is $48K/$58K in the City/County; houses priced for this customer have been shown to sell.

5. Jumbo Loans not only have higher interest rates than conventional 30 yr fixed mortgages, they also require a concomitant higher downpayment. Because these cannot be backed by Fannie or Freddie, they stay on a bank's books; the bank opens itself to greater risk with a Jumbo. Thus, harder to come by.

Many thanks to Greg for sending the data. Got questions? He'll be checking comments.

Greg Slater is the Director of Sales and Marketing at REIII. He's the 2009 President-Elect of the Charlottesville Area Association of Realtors, and will be President in 2010.

Related Reading:
Q1 Market Report


Greg Slater said...

A couple of thoughts to consider as you evaluate this information.

1. On March 1 of this year, the MLS added a field to help sort the active inventory. It is "proposed" status for new homes not started but available by builders. There has been a rush to use this status to promote all options within a community. If you eliminate those from the active inventory, as of yesterday, Albemarle has 1016 and Cville has 352 actual homes on the market. The most interesting stat I see in in the inventory figures is, as of yesterday, there were 102 new homes on the market (not proposed). That is roughly 50% of where this number was in May for the last two years.

2.Just like we can use Pavillions at Pantops to explain sharp increases in activity, there are explanations for sharp decreases too. For example, Cherry Hill drove the market in the city in 07 and 08. Nothing has replaced that in the city. One could argue that segment of the market is being served by Pavillions. Mosby Mountain experienced high sales numbers in 05 and 06 and of course, there was a significant drop off in condo sales after the rush of 04 and 05.

Is it time to start talking about college football yet?

Anonymous said...

Greg, thank u for the update.
Any info on prices?

wondering said...

I've been seeing the "proposed" listings pop up on MLS. With so much available, why do builders do this? Do they already have the loan? Or is it a just in case scenario?

Greg Slater said...

Anonymous- I'm not sure what you are asking.

Wondering-We have builders in the area who do not start homes unless they are sold or who put "to be built" listings in the MLS. We created a new category to separate these listings from existing inventory. Since implementation, more builders are using this field to display the variety of models they may have available in a community whether they plan on starting the homes or not.

We were getting feedback that these listings with "similar" photos were creating the confusion that these listings were actually built and ready to go. We also thought it would help with data integrity.

So if you use and you are interested in new construction or the building process, be sure and search the proposed listings.

Debaser said...

The % CHANGE value for Charlottesville Condo and Detached property types have been mixed up in the spreadsheet.

got me a movie said...

or maybe the numbers are mixed?

Debaser said...

got me a movie,
i want you to know,
that is possible but it's highly unlikely there were 6x more condo contracts than detached homes

Greg Slater said...

You are right. The % change for Cville condo and detached are transposed.

Sorry but I can't fix now, but was my mistake.

name/URL said...

ok, so condo sales are down 56%? is that surprising? i find it surprising b/c it seems like the condo prices are coming down faster than other prices. but maybe a professional doesn't find it surprising?

the price range numbers are interesting. really appreciate the info.

Greg said...

I do not find that surprising. There are a few reasons:

1. Condo financing is on a bit of a roller coaster. Some of the projects have lost their low downpayment financing options. Its a weekly saga. There are a couple of projects with restricted use and controlled owner occupancy. These projects still have FHA as an option. Most of the others start around 10% down as an option. Low down payment investor loans for condos are much harder to find, if available at all.
2. Under 200K, which dominated condo sales 2008, buyers have trouble with the 10% down.
3. Condos are competing with attached product. Attached sales in Albemarle are taking away from this category.
4.The project responsible for the most sales in 2008 is down to a handful of units. Less than 5 developer controlled, I think. JPA. This location proved to be vital in condo sales world.
5. If you combine Albemarle and Cville numbers, condo sales are off only 28% which is more in line with the overall market.

Anonymous said...

Describing condo financing as being on a roller coaster is like saying despite the auto sales dropping off a cliff the last 2 quarters, we'll be sure to see sales skyrocket next month.

It's not on a roller coaster - it's in the gutter and not coming back any time soon. Condos represent the most speculative side of the real estate bubble. Banks want nothing to do with them.

Pavel said...

Just showed a condo that is priced 25% below it's last purchase price. Ouch.

Anonymous said...

Pavel, welcome to the real world! This has been going on in the rest of the country for some time now. And it includes single-family and town homes. I know this comes as a tremendous shock to realtors and sellers in this area.

North said...

Greg, thanks for providing this stuff. I have two questions if you have a minute.

1. Last night I followed a link from the front page of to an agent's blog called real estate talk. It stated that in this time period there were 104 detached homes sold compared to 60 sales in 2009. City of Cville. It also has a graph showing pending and contingent sales. This agent listed the decline as -42%.

Is there an explanation for this (other than user error :0) ) ?

2. Condos that have "controlled owner occupancy" or FHA loans. Are those units that are subsidized?

Greg Slater said...

I found the blog to which you refer. I recognize the difference in our numbers.

The numbers you mentioned are closed sales by close date. My numbers above or sales by contract date. I like to use sales by contract date since it is the most current data we have. Sold data by close date is important, but is a look a little further back.
I do not distinguish b/w contingent and pending status as I deem the words virtually synonymous. I would not present the numbers in the manner I do if I did not think they were reliable. In my own market data reports, I always go back several months to update contract date sales numbers to be sure. The only significant change is usually to the positive. For example:

This weekend Ryan Homes has posted 10 new home sales to the MLS that occurred in April. 5 attached. 5 detached. 3 in Albemarle, 3 in Fluvanna, 1 in Greene, and 3 in Louisa. All under $300k.

2.No. I was hired by the declarant of Webland and Hessian to help convert those projects to condo several years ago. At the time, condo financing was more like it is now. Lenders evaluate each project on the basis of several parameters. Owner occupancy is key. Lender by lender guidelines have moved, but 60% owner occupancy usually keeps financing available if other paramaters are okay. These two projects implemented deed restricted owner occupancy. In other words, only 40% of the units were sold and deeded as "leaseable." Mainly because of this, these projects often allow for conventional or "warrantable" financing. (ie FHA)

The condo market is a niche with much complexity. If you are considering condos, be sure and get insight from someone who has experience and understands the variety of instruments that govern the various projects and the many other factors that will impact long term value.

Pavel said...

Why do the "anonymous" responders use some sort of negative/attack-like tone on this blog? Trust me, anyone that is reading this blog and who has been following the news for the last few years does not need to be welcomed to this world.

Anonymous said...

Pavel, the tone is one of exasperation mixed with sarcasm. It's extremely frustrating to be a buyer who is effectively shut out of this ridiculously inflated, frozen housing market. I can show you ENTIRE NEIGHBORHOODS in other very nice parts of VA that are down 25% or more from just a year ago. Your astonishment that a condo seller here would actually price 25% below what he/she paid is emblematic of what is wrong here.

Anonymous said...

I'd say the tone is one of realism vs. fantasy. Consumer vs. salesman.

It looks like Pavel has a bone to pick with people who, while wishing to remain anonymous, disagree with his bubble perspective/opinion. If he has a "positive" point of view, anonymous must certainly have a "negative" one. As we all know, "negative" disagreements are, by nature, attacks. :-/

Pavel demonstrates well that the realtor model is fundamentally flawed. While realtors claim that they are your representative, the fact is, their compensation depends solely upon closing the deal. That conflict of interest ultimately (*most of the time*) ends to the detriment of the consumer. The lesson? Realtors, as with all salesmen, should be approached with caution.

Anonymous said...

I agree, my brother/sister Anon, it's truly "Buyer Beware" out there, now more than ever. And I feel sorry for those uninformed buyers who are relying on the ignorant and, frankly, selfish advice that many realtors are still hawking in this area.

When (it appeared that) prices only went in one direction -- up, I think it was a much simpler matter for realtors to advise clients. Even if a buyer struck a poor deal, the rising tide would eventually lift all boats and they would soon see a (paper) gain on the transaction. It's a win-win situation, everybody's happy!

And when that one-way market was hot and buyers were competing for, and even bidding up properties -- whoa, it was an absolute feast for the realtors! Many realtors adopted the car salesman's "just-close-the-deal" mentality. The job called for some pretty simplistic skills in promotion and advertising (which many still cannot seem to master). And the number of agents rose as many saw that you could do extremely well with exorbitant fixed commission rates, basically showing people houses/investments that pretty much sold themselves. And the agents who were supposedly working for the buyers -- were paid fat commissions by the sellers! What a sweet [conflict-laden] arrangement.

But now, there has been a fundamental shift. Prices are in a steep and prolonged decline, and the realtors' lack of any REAL, objective market knowledge, negotiating skill, and dubious professionalism have been laid bare for all to see. Instead of the insightful, independent analysis and hardball negotiating tactics that this market calls for in a buyer's agent, we get more marketing propaganda and idiotic slogans like "it's a great time to buy" and "rates are historically low" (for loans to buy flagrantly overpriced, steadily depreciating assets).

So yes, I agree buyers are on their own now more than ever, especially in an out-of-touch-with-reality market such as the one that presently exists in Cville/Albemarle. And hopefully, there will be a major shakeout in the local real estate business. But for God's sake buyers -- don't whisper anything negative or you might upset somebody! [sarcasm]

Jim Duncan said...

Anonymous 10:46:

I'd love to see examples of the "selfish advice that many realtors are still hawking in this area" -

It's easy for an anonymous commenter to make accusations such as this, but I'd take your claim much more seriously if you would back up your statement. If you email me, I will keep your email in confidence, as I do all commenters on my blog.

I haven't seen anyone make blanket statements like "it's a great time to buy" and "rates are historically low" ... but I will say that

1) rates are low
2) It can be a great time to buy - but there is no one-size fits all advise that is both honest, intellectually sound an true.

If I told you that I advised two sellers in the past five days not to sell because of the market rather than waste their time and mine by putting overpriced properties out there, what would you say?

Buyers who do not do their due diligence are on their own.

On this -

"And the agents who were supposedly working for the buyers -- were paid fat commissions by the sellers!"

Some of us are working to get rid of cooperative compensation ... it's a long road, but please don't put us all in the same boat. :)

Anonymous said...

Jim, as for the selfishness of the advice being offered by "many" (not every) realtors in this area, can you explain how agents can rationally recommend that buyers purchase properties in the current market environment (local, regional, and national) at prices that are still well above their 2009 assessments? [I know, assessments are not necessarily representative of the market price, but they may well be the most objective measure we have right now.] There are always exceptions (e.g., the buyer who "just has to have it" at any price), but with prices undoubtedly declining for the foreseeable future (disagree?), there are simply too many sales occurring at prices that are well above the assessment to be economically justified. Either all of these buyers are ignoring the advice of their buyers' agents not to succumb to overpaying (highly unlikely), or the agents are more interested in closing the (increasingly rare) deal than making certain that their clients pay a reasonable price and not risk ending up underwater in a declining market.

As for the "blanket statements," a readily available example is the advertisements being run on a local radio station urging ALL buyers that "now is a great time to buy," with no caveats whatsoever? Do you consider these ads irresponsible? I certainly do. I see them as deceptive and designed to perpetuate the bubble thinking that persists in this area.

Finally, I applaud your position on conflicts and turning down the listings of the unrealistic sellers. Now, if that can become the norm rather than the exception here, we will be making some progress.

Real C'ville - The Bubble Blog said...

A few thoughts, possibly a bit muddled due to lack of coffee.

First, a big thanks to Greg for the data and for answering in detail questions and comments.

RE: Realtors as advisors, salespeople:

There are a lot fewer Realtors than there used to be.

The ones who are still around are skilled, tenacious, lucky--or all three.

Realtors don't make that much $...especially nowadays. Jim has a post on this.

There are several practical reasons to use a Buyer or Seller Agent BESIDES financial advice nowadays.

Buyers and Sellers both need to rely on their own gathering of knowledge as much as on their Realtors' nowadays...hence the rise of Bubble blogs (many of which came about years earlier than this one).

There are some unfortunate buyers and sellers who can't or won't educate themselves on where this or other markets are going. There are some agents who will do the same. There are even some bad advertiesements and bad actors still out there. But at the end of the day, it's still the buyer's choice to sign the contract. And it's the seller's choice to set a price...even if the seller has "help" (CMA, etc) in discerning what that price should be.

For the two anonymous commenters: We can certainly understand your frustration with the market in this area and the process and what seems to be continuing spin. That being said, not ALL Realtors are spinning. AND prices are coming down. NOT YET at all points...but we firmly believe that they will. Local, regional, national data inform this idea. Patience.

Are we defending Realtors? As a GROUP, NO. As INDIVIDUALS, YES. They're only human, with failings and foibles. For a while, what the "group" said was true: prices would only go up. Until they didn't. The NAR, particularly during the days of Economist David Lereah, contributed to the huge inflation of house prices and the downfall of the US--and global--economy. But so did BUYERS AND SELLERS, and Wall Street, Bankers, Mortgage Brokers, Appraisers, etc etc etc. YES, members of NAR "should" have been expected to have had more info and financial expertise than Joe on the street buyer/seller...but many didn't, since they jumped on the bandwagon as the bubble inflated. And what a "sales person" says is not "regulated" by any entity, including the SEC.

And when you see the "it's a great time to buy" slogan still bandied about...well, it's not good. BUT things are rapidly changing. And even as Anon commenters, you keep others on their "toes" and/or give other buyers insight.

The bottom line is that buyers and sellers have to watch out for themselves more than ever...and this isn't necessarily a bad thing.

Re: Pavel

IOHO, Pavel is aware of the issues in this market... he posted about the 25% drop from previous purchase price, and it's doubtful that's the first time he's seen such a thing. He was giving an example of pain that one particular seller is going through right now. That seller isn't alone, and won't be alone for some time into the future. We're sure Pavel knows this.

We think Pavel is disagreeing with the tag "anonymous," not necessarily the comment. The Realtors appear as themselves on this blog, and there are several commenters who appear with nicknames on this blog and other blogs. These commenters have a consistent POV. But when there are several Anons going, it's difficult for folks to know "who" they're talking to.

Pavel has lately been taking the heat...but he's got to be admired for coming back and continuing to comment. And we do appreciate his perspective as an active Realtor.

It's an interesting landscape out there...IRL as well as cyberspace, isn't it?

Now off for coffee.

Real C'ville - The Bubble Blog said...

ANONYMOUS who wrote:

But now, there has been a fundamental shift. Prices are in a steep and prolonged decline, and the realtors' lack of any REAL, objective market knowledge, negotiating skill, and dubious professionalism have been laid bare for all to see. Instead of the insightful, independent analysis and hardball negotiating tactics that this market calls for in a buyer's agent, we get more marketing propaganda and idiotic slogans like "it's a great time to buy" and "rates are historically low" (for loans to buy flagrantly overpriced, steadily depreciating assets).

Despite what we just said in previous comment, we also tend to wonder how much insight, INDEPENDENT analysis, and negotiating skills one might actually find in this area, since in a way it's a "closed" eco system? Maybe for some people "importing" an agent is the way to go? Somebody from a nearby city?

Anonymous said...

Interesting idea BB. I'm sure that realtors from other areas of the state would have a very interesting take on things here. Perhaps a more realistic perspective.

BTW, here's a little gem I just saw on the ironically titled site

Think you should WAIT to buy a home? Consider the costs of waiting…
* Appreciation in the Charlottesville market area continues year after year. The longer you wait, the less house you will be able to purchase.

Buyer said...

That's just not true. Bad information.

here's more from that site:
Website updated May 11, 2009
Charlottesville, Virginia Real Estate

"Think you should WAIT to buy a home? Consider the costs of waiting…
* Appreciation in the Charlottesville market area continues year after year. The longer you wait, the less house you will be able to purchase.

* Interest rates are at an all-time low and this affects the amount you can borrow. For example, a $200,000 house at 5.75% interest rate over 30 years has a monthly payment of $1,168/month. At 6.25% interest rate (just .5% more) has a monthly payment of $1,233/month.

* With lower interest rates, there are more buyers competing to purchase the same properties you’re interested in – more buyers, less homes, prices increase. As interest rates get higher, less buyers may be able to qualify (possibly you) – less buyers, larger inventory of homes, and prices decrease because the seller doesn’t have as many interested buyers."

Greg Slater said...

I've worked with buyers who had agents from outside of the area and I don't have a problem with it. However, based on some of the BPO's and appraisals I have seen latetly, its easy to misunderstand this market. On the short sales I am working, the biggest hurdle I have had is the bank not accepting what I percieve to be a good indication of FMV because the agents and appraisers they are hiring are coming in too high.Way too high.

I recommend finding an agent that you trust is working towards achieving YOUR goals and create a relationship. If you don't want them paid by the seller, pay them yourself. If you don't need an agent, so be it. I too turn down listings, and guess what, I turn down buyers too. I've met both who have goals I do not think I can help them achieve. That's reality.
On the way up in the early 2000's, sellers complained we were pricing homes too low and thus causing all of the sales to make a buck. Now we are pricing homes too high so we can make a buck. Neither is true. In my role with my company I have spent a lot of time helping agents come up with ways to help buyers and sellers understand this market. Its not always easy. The most recent case I can tell you about is spending two days and showing several properties to a seller to prove their price was much lower than they thought. I failed, but did keep them from selling now.

Back to the point of the story, I forgot to include just the April YOY contracts and think they are important.

April 2008 Contracts 124
April 2009 Contracts 121

April 2008 Contracts 77
April 2009 Contracts 62

April 2008 Contracts 34
April 2009 Contracts 34

April 2008 Contracts 20
April 2009 Contracts 27

I'll be looking at all of this data again in early June and will be happy to share to see how things look.

The conversation that needs to be had here to help understand this market is that of the adjustment to unimproved lots. Lots that have been mass foreclosed on that are coming back into the market. A key ingredient to our market is the value of the dirt. A couple of builders are re-setting "value" on adjusted lots. Some are significant adjustments. Some are joint venturing with banks to absorb the lots the banks do not want to own. We don't know the value of the lot until the home sells and you strip out all costs to build. I don't have time to go any deeper but there are a few communities and builders I watch for key indicators of what is going on.

ITBH said...

It doesn't matter if interest rates are going to go up.

FWIW, that realtor's blog post hasn't even been updated to reflect the fact that 30 yr fixed is below 5%.

The basic fact is that there's going to be a steadily increasing supply of unsold houses here for years. It doesn't matter if interest rates go up.

Prices have nowhere to go but down. It's simply a question of supply v. demand.