Monday, June 14, 2010

Single Family Home Sales in C'ville Through June 1: Same in 2010 As 2009, Which Means 48% Lower Than 2006...

Wait a minute.  This is the City of Charlottesville, a "World Class City," the cultural heart and soul of Central Virginia.  And yet, the "American Dream" of owning a single family home is about half-dead in the City.  Hey...what's up with that?

Oh.  Right.  It's that pesky matter of pricing.  And lack of short-term buyers.  And lack of move-up buyers.  Difficulty getting a mortgage.  And...etc.

At the beginning of June 2009, there were 205 single family homes for sale in C'ville.  At the beginning of June, 2010, there were +/- 260.

As already noted: the Homebuyer Tax Credit had no impact on closed sales 1January-1May, 2010.

 Sales are at the same level in 2010 as they were in 2009, the depths of the Great Recession: 

Here's Nest Realty Group's graph from June 11, 2009: Sales Dropped -48% 2006-2009.
(Click for larger image in new window)

Below, the "new" column is "inventory"; contracts rose in April but declined in May, as did sales: via Pam Dent Charlottesville Real Estate Talk (Click for larger image in new window)

Pricing: May Average Sale Price is down $68k '10 over '09; Median down $25k '10 over '09. (Click for larger image in new window)

Sales in various segments around the area have been picking up--though depending on the segment, some are also still below 2008 (which means 2007, and 2006....) but no, not in the City.  

Graphs/Charts/text as noted copyright Realtor Pam Dent, Nest Realty Group, Realtor Jim Duncan.

Related Reading:
Single Family Home Contracts Jump In April, Plunge in May After Tax Cred Expires
Here's Why Prices in the C'ville Area Will Continue to Decline
Foreclosures in C'ville Area Up 72% Q1 10 over 09


Humpty said...

Wait until you see the 2011 numbers. The 2010 numbers will look good. If I was a realtor I would be convincing my clients to lower their asking numbers substantially to get today's buyers. Those owners smart enough to realize the bottom is going to fall out of the C'Ville RE market will look back and thank their lucky stars they were the first ones to bail out because in another 12 months there will be very few able buyers.

Anonymous said...

of course many sellers can't lower their asking prices because they have 0% of their mortgage paid off

a huge # of listings are showing up on Craigslist. a lot of them want 1 year leases until the market "Recovers" meaning back to peak bubble prices +6% for realtors commission.

i think it will be smart to wait it out as the supply of rental properties is going to exceed demand

Name/URL said...

noticed on CL: rents going higher because people are trying to make their mortgage payments. good luck.

a lot of sellers won't lower right now in June/July because there's the most demand this time of year. that doesn't mean they'll sell, but that's why they won't lower.

the market's not "recovering" for years buy only people who are prospective buyers and/or happy renters know this.

Humpty said...

"i think it will be smart to wait it out as the supply of rental properties is going to exceed demand"

It was naive to buy into real estate after 2003. Any seasoned investor knew it was already a bubble, it was a matter of time. I have yet to meet someone who can time the peak and the fall but many of us knew it was overvalued. Now, I can confidently say it is naive to think it is "smart to wait". Yes, if you can hold for 10 years because you have nothing to lose. But to even think this will be over in the next several years is self deceit.

Anonymous said...

"noticed on CL: rents going higher because people are trying to make their mortgage payments. good luck."

yup. it's very easy to spot the new rentals that are only there because the home can't be sold for more than is owed, versus the seasoned rental properties that were purchased in the 90s or earlier.

example, the Greenleaf home that is 3BR (although nobody would take the 3rd BR seriously) for $2200/mo when there is another 2BR rental in the neighborhood for $975/mo

John Doe said...

Mortgage apps now 49% lower by end of fifth week after April 30 tax deadline (not seasonally adjusted). And Details on number of sellers who do, and don't, lower their prices:

Montpellier said...

I'm with Humpty - it was pretty clear that things were going nuts back in 2003. It was also rather painful to be a nay-sayer and constantly have the transactions there in your face. I don't know anyone who predicted it spot-on, but the price peak does appear to have been in '06, and there were a number of people who called that pretty well at the time.

The purchase applications indicator is the really telling number right now. That and getting a clear picture of how many contracts fail to close successfully. Borrower/buyers seem willing to keep over-paying, but banks appear to be far more circumspect now.

I'm not sure about the assertion that it's naive to wait; perhaps it's naive for sellers to think the market will bounce back, but it is not naive for buyers to wait. This thing has a ways to go to finish grinding down and the bottom will be broad.

I think if you look at the historical C-S index, you'll see that once the S&L crisis (and the attendant early 90s recession - familiar anyone?) finished grinding down, prices were quite stable (with inflation) until the CDO/CDS market started to emerge in the late 90s with the final big deregulation bill. It's not so much Glass-Steagal's repeal, as the new "innovations" (and perhaps the moral hazard of Greenspan's LTCM bailout) that pumped cash in to the system, enabling the bubble.

The comment about sellers having paid precisely 0% of their principal is spot on, or rather, having 0% equity. It will never be rational for them to voluntarily cut their prices. They will not capitulate until they are forced (foreclosure).

Humpty said...

Montpelier said, "I'm not sure about the assertion that it's naive to wait; perhaps it's naive for sellers to think the market will bounce back, but it is not naive for buyers to wait." I see your point and I did try to expand on mine but will try again. It's naive to wait if you need or want to sell in the short/medium term. Obviously, if you can hold and don't need to sell it is pointless in coming out of pocket to pay the bank for the difference in your sale price and your mortgage.

The difference between the 1980s real estate bubble, the S&L crisis and what followed was that it was relatively conservative compared to what went on in the 2000s. During the former period there was easy money but you still had to put a deposit to buy and hence it prevented the crazy speculation. At the time it seemed crazy but it paled compared to the "free money", no money down 100% financing that literally allowed anyone and everyone to participate. This total lack of fiscal discipline prevailed in the global markets, both private and public and made the S&L crisis look like a picnic!

The recent bubble was a phenomenon in itself and the price we are paying and will continue to pay is far greater than anything before. If we had the interest rates that prevailed in the early 1990s this time round the economy would have collapsed. These low interest rates are the only thing that has saved the day, but the day will be a very hot and long one, followed by many other days, delaying the pain.

Only time will tell, but there are no free lunches and no magic pills.

Anonymous said...