Thursday, May 27, 2010

The Homebuyer Tax Credit Had Absolutely No Impact On Single Family Home Sales in Charlottesville - 1 Jan to 1 May

None.  Zero.  The Homebuyer Tax Credit had no effect on detached home sales in the City of Charlottesville.  Zilch.  Nunca.  Nada.  Nyet.  Sales for 2010 thus far are essentially neck and neck for the same months during 2009.  
 
This makes the "Great Recession First Quarter '09" sales and "The Governement Subsidized Housing Market '10" sales -43% lower than First Quarter 2008 (Q108 here). 

Chart shows 2009 and 2010 detached sales in the City of Charlottesville.  Click for larger image in new window:

Shockingly low sales?  Of course they are.  There was an up to $8k tax credit, historically low interest rates, and FHA loans with 3.5% downpayments, and this market couldn't do any better than during the worst financial crisis since the Depression?

And yet, it's not shocking: this market defies "logic," and is a "buyer's market" only by definition of the huge amount of available inventory.  The inventory of single family homes, including fantasy proposed, has hovered at 260 for the past few months.  There's a lack of short-term buyers, a lack of move-up buyers, and buyers expect prices to continue declining.  It's not shocking when one actually looks at the inventory, as these commenters do. 

The reality on houses priced $300k and below?  At the "First Time Buyer" price point, the houses often still need tens of thousands of dollars of "improvements" (kitchens, bathrooms, roofs, floors, siding), or are miniscule (the "charming Belmont bungalow" at 800 sq. ft. for $225k), or, in the under-$200k range, are in neighborhoods that never "finished" being "gentrified" during the Bubble ("euphemisms").

As for higher-priced single family home inventory in the City of Charlottesville?  A buyer has to really adore an 1800 square foot house on 1/4 acre for $650k that elsewhere in the Commonwealth would be a 12 minute rail commute to DC, or south, west, and east of here would be under $200K....

We're not a bedroom community for NOVA--yet.  We just have the prices.  Any moment now, cash will come raining down from the sky, saving sellers.  That run-up in prices wasn't a "bubble," it reflects the true "value" of this area.  Sales may be slow, but they have been for years, and any moment now things will be looking up....

*PM: Title updated to reflect first 1/3 of the year.  March and April contracts will close in June and July.

Related Reading:
Nest Realty Group's post on this topic, where this CAAR chart appears (copyright/courtesy of)
Here's What's Missing From CAAR's Q1 2010 Market Report
CAAR Q1 2009 Market Report - Sales overall down 33%  
Q1 2009 Single Family Home Sales in C'ville and Albemarle 
2009 Contracts, January - May 2009
Graphs of 2003-3009 Sales in Cville / Albemarle

18 comments:

Jonathan Kauffmann said...

One caveat to your analysis that the tax credit had no impact on home sales: we don't know the answer to this quite yet.

In order to qualify for the tax credit, purchasers had to be 'under contract' by the end of April and officially closed by the end of June. The charts that you cited in your post only reflect closed sales.

So, we really won't know the true impact until the first or second week of July...after those buyers who were taking advantage of the credit have had a chance to close.

We'll try to pull some under contract and pending numbers within the next few days and post them on our blog.

Anonymous said...

I'm still going to guess that future closings are low. We made 3 offfers during March and April. Only one saw any negotiating.

Sellers seemed to be using the tax credit to maintain their asking prices. They certainly weren't using recent sales.

We still have a third of a million dollars to give away, btw. And none of those houses have sold.

The inventory under $300k is really not very nice. Now we're looking at new construction. Pavillions at Pantops.

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

Jonathan, The post title now reflects the time period for which contracts have already closed.

Thanks for commenting. Looking forward to seeing contract numbers.

Elsewhere, 1st Timers seem to have exited the market early:

http://www.cnbc.com/id/37342495

And nationally, the "Spring Selling Season" is halting

http://www.calculatedriskblog.com/2010/05/mba-mortgage-purchase-applications-at.html

Bleed It said...

Why didn't that chart include the First Quarter of 2008? For that matter, why can't the chart go back to 2003?

There's a serious lack of transparency in this market. Sales in C'ville have nose dived. Let's see the numbers. Buyers and sellers should both have this information.

Come on, Jonathan Kauffman. Step up. Or any of you many other Realtors who no doubt read this blog. Step up.

Anonymous said...

the realtors are all busy telling buyers and sellers that prices are on the way up. act now!

Jim Duncan said...

bleed it -

Here is one post that shows 2005 numbers:

http://bit.ly/shows-2005

The automatic reports go back only 4 years; it's a limitation of the MLS software.

This post shows 2004 numbers.

There's a lack of transparency if you don't know where to look.

Start of 2008:

http://bit.ly/start-of-2008


There's quite a bit here -

http://www.realcentralva.com/category/market-statistics/

rfs said...

I think a simple answer to whether the tax credit did anything here could be answered by how many ratified contracts b/t 5/1/10 and today. It does look like the number of sales that CLOSED in May, 2010 will equal or eclipse April, 2010. While the number of ratified contracts from 5/1/10 to now is is not totally telling, it gives a decent clue. That is certainly info Realtors do HAVE at their disposal as its likely in the internal components of the MLS...Side note here - if folks bought thinking they will get that tax credit, I will go out on a limb here and say a good 20-25% will NOT actually close and record by June 30...Between the lenders dragging their feet, attorneys/title companies not properly staffed to handle a bigger influx, and then lines at the courthouse to record later in the month, many will not get recorded in time for that tax credit.

Anonymous said...

USDA loan? SOL

http://www.cnbc.com/id/37275097/Home_Buyer_Tax_Credit_Snafu_No_USDA_Loans

Bleeed It said...

Thanks? But what am I missing? I don't see the graphs for Single Family Homes in Charlottesville?

Bleeed It said...

Thanks? But what am I missing? I don't see the graphs for Single Family Homes in Charlottesville?

Anonymous said...

Here's a tip to save City buyers a lot of time. Sellers are committed to their asking prices because the local real estate machine has told them that this what the house is worth. If you notice price reductions (trulia.com) they occur in the city in increments of about 3%. There's no such thing as lowballing in the city espectially if you're trying to buy in the summer. It doesn't matter how few houses are selling. The asking price is the accepted price until it's changed by the seller.

Anonymous said...

"As Is" $600,000 http://www.mycaar.com/(mikotizcwg1lfl55kjgkn53j)/propertyDetails.aspx?mls=477924

Anonymous said...

Last sales on that one, 1112 E High St

9/2000 - $86,500
8/2003 - $392k "High Street Enterprises"
3/2007 - $626.5k

So they just want every dime they still owe on the mortgage

Anonymous said...

Well at least they're serving cake and cookies. Makes me want to pay $600k for it.

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

Downloadable doc of Asking v. Selling Prices in the City of Cville, from Jim @ RealCentralVA.com

http://jimduncan.posterous.com/sold-properties-in-the-city-of-charlottesvill

Sometimes "selling" is a little less than 3% 'discount,' fwiw. :0)

BTW if you don't want to sign up for SCRIBD, use the tiny "download" link at the bottom left of the document box.

Humpty said...

Perma-Bullish Realtors Are Babbling About A Return To Rising House Prices -- Here's Why They're Wrong

Read more: http://www.businessinsider.com/perma-bullish-realtors-are-babbling-about-a-return-to-rising-house-prices-heres-why-theyre-wrong-2010-5#ixzz0pQa4e75h

Anonymous said...

Check out Trulia price reductions, sorted by date. The end of May is here and buyers just are not. There's a lot of capitulation to these market conditions. Houses that have been listed for months have $20k, $30k, $40k reductions. Glenwood Station condos slashed in the double digits (lots of foreclosures there).

Not that the summer is ever the time to get a decent price especially in this area, agreed, but these drops are notable.

no volume said...

May sales below 2009 combined with little to no impact from tax credit.
http://www.realcentralva.com/2010/06/01/weekly-charlottesville-real-estate-market-update-june-1-2010/