Tuesday, July 13, 2010

CAAR's 2010 Mid-Year Market Report: Sales Below 2002 Level, Even With Homebuyer Tax Credit and Historically Low Mortgage Rates

The CAAR 2010 Mid-Year Market Report shows that  2010 sales beat sales of 2009's "Great Recession."  Contracts had to close by June 30.*  

But these sales were fueled by the Federal Government's subsidies:  the Homebuyer Tax Credit and carefully-controlled historically low mortgage rates.  2010 sales beat the Recession, but certainly not the bubble.  And the story's longer than one year:  Sales in 2010 are lower than 2002.** 

Now, as can be seen by the Pending Contracts links beneath the sales charts, further demand has fallen off a cliff.  And inventory keeps rising.***

Click for larger image in new window.

2006 - 2010 Sales,  January 1 -  June 30 

 2002 - 2005 Sales,  January 1 -  June 30 

Pending Contracts Plunge As Homebuyer Tax Credit Expires

May Contracts Plunge Nationally and Locally, 35-50%

June's Cville Albemarle contracts are at an 11 year low

Read the report:
CAAR's Mid-Year Market Report via RealCentralVA.   

Here's What's Missing From CAAR's 1st Q Market Report
Graphs: Declining RE Sales in Central VA
What Constitutes a Lowball Offer in C'ville Albemarle?
The VA Housing Development Authority Market Conditions and Challenges Report

Daily Progress reporting on local sales:
Mid-Year 2010: Subsidies Boost Sales, Future Looks Bleak
Mid-Year 2009 "Area's Mid-Year Home Sales Reflect Continued Struggle."   
Mid-Year 2008: "Is This the Bottom?"


Median Prices

New Home Sales

*On June 30 the closing deadline was extended, but this will impact mainly to short sale and foreclosure purchases, which often take longer due to paperwork/multiple parties.
**Except for Louisa County, down to 2004 level.
***Inventory will start declining now as unsold units are rented, or pulled off the market, waiting for next year's "turn."

Images copyright CAAR.  Graph for SFH contracts via RealVCentralVA


Black Matt said...

Compare to the spin in today's Daily Progress article. Lol.

I have $400k burning a hole in my pocket said...

Buyer's Market with no buyers. Charlottesville, thy name is irony.

Star Chamber said...

It's incompetent for CAAR to compare 2010 to 2009 and leave it at that.

rfs said...

I think I said this after the last market report but what the heck I'll say it again...Even in the CAAR report it states current listings are at an average asking price of $195 per finished square foot. But actual sold inventory for the first half of 2010 averaged $140 per finished square foot. That is almost a 25% difference. I suspect that the $140 will go much lower as time goes on...

Joh Doe said...

Mortgage apps for purchase (v. refi) are at lowest level nationally since Dec '96. Sales in the region have fallen off a cliff, even though this is supposed to be busiest time of year, even with historically low interest rates. Price per sq ft asking v. selling remains disconnected. Fall and Winter will be quite a thing to see, as rfs points out.


Anonymous said...

rfs, Joh Doe...

Do you think this means that:

- Only low end buyers are in the market
- All buyers are only choosing low end properties
- The only properties selling are the ones that will accept 30% under list price

All the houses I've looked at are still in the $220-300/sqft range :(

rfs said...

Here is a piece of the CAAR market report verbatim...

"The most telling statistic related to homes currently on the market is that the average price per square foot is $195, compared to $140 for homes that sold in the first half of the year.
Housing affordability is the positive aspect of this market. There are 1041 homes for sale $200,000 or less, with an average DOM of 140 and an average price per square foot of $204."

Bottom line is that all prices are still too high whether low end or not. The exceptionally low mortgage rates are not (and should not) pull folks in off the sidelines and/or creating trade up buyers.

I will bet the $140 per square foot hits about $133 next report and then $125 for the final quarter of 2010 - maybe even lower.

Wonder what the price per square foot was in 2005 - 2000, as the CAAR report only goes back to 2006 - close to the height of the RE Market.

John Doe said...

You can get earlier CAAR reports online at wwwDOTcaarDOTcom. Look for link in upper right hand corner. (Also have some via PDF if they don't go back far enough.)

1041 "homes" for sale includes condos and townhouses. "Single family" "homes" in Charlottesville priced under $200k are often in iffy neighborhoods or have space for a couple, not a family with children.

That number is misleading, to say the least.

In the Counties there are some single family houses that are larger, but then the price of gas, let alone the time and mileage, has to be figured in as part of one's mortgage.

More later.

Montpellier said...

Do you think this means that:

I don't like your options; this is what it means:

Only houses priced below $140/sq ft. are deals that will qualify for financing, given buyer's salaries and downpayments.

Yes, that is a variation of:

- All buyers are only choosing low end properties
- The only properties selling are the ones that will accept 30% under list price

There may, in fact, be "high end" properties which are priced in line with what can be financed (given wages), and they are moving. I would exclude the "Investor Class" Estatelets, since those are tied to non-local "wages".

rfs said...

John Doe,

Thanks for the info. On the caar website, market reports go back to 2004. The last report that references price per square foot is the 3rd quarter of 2004 where the average price per sq. foot was around $143. So this latest report for 2010 we are under that $143 mark and still seemingly heading down.

Housing is still way overpriced at all price points, IMHO.

Debaser said...

Hi rfs,

The 2008 CAAR reports list data back to 2002 (i.e. 6 years of history). Starting in 2009, the reports only list 4 years of history back to 2005 and repeated statements such as:
"The median price is now a little above where it was at this point in 2005, before the housing prices started increasing dramatically." indicates real estate data prior to 2005 is being completely ignored in the more recent CAAR reports.

Compare that quote above, which is from the 2010 Mid Year Report, to this image which is from the 2008 End-Year Report.

I think the Bubble Blog somewhere showed local prices back to 1999 (but I can't find the post...) and the median price increases were in line with those of the following years.

My interpretation of the data is that house prices in the Charlottesville region "started increasing dramatically" ~1999 through to 2006 yet the recent CAAR reports only reference price increases from 2005 onwards.

I think it is very misleading to state:
- prices started increasing dramatically in 2005
- prices in 2010 have returned to 2005 levels
as it makes it look like the Charlottesville bubble has popped.

As for your square foot values, in 2002 Charlottesville was $112/sq. ft and Albemarle was $118/sq. ft.

Anonymous said...

"As for your square foot values, in 2002 Charlottesville was $112/sq. ft and Albemarle was $118/sq. ft."

Just fyi, the CPI inflation-adjusted amount (available here: data.bls.gov/cgi-bin/cpicalc.pl):

$118/sq. ft. in 2002 =
$143.11/sq. ft. in 2010

I'm not sure that the conjectures about what constitutes a "reasonable" price on this board are themselves always reasonable. If the premise is that prices should fall back to 2002 levels, then they should fall back to where the CAAR report says sales currently are. If you expect to see them fall further to $118/sq. ft., then you expect to see the equivalent of $97.30/sq. ft. in 2002, or 17.5% below 2002 prices.

There also seems to be an infinite regress on the board--I've been following since 2008 and it seems like initially a return to 2004 or "even 2003" pricing was the holy grail, but as that has happened as predicted, there's been no celebration--just this increasing radicalization as people start demanding 1999 prices, or 1997 prices, again with no adjustment for inflation.

It's as though people assumed they'd be able to afford their dream homes at 2003 prices, have figured out they can't and are now complaining about that, too. This is a relatively expensive area due to relatively high demand (and this doesn't mean I think Charlottesville is "immune" or "special"--there are plenty of Charlottesvilles in the world, but there is a reason why we all want to live here rather than hoofing it out to Louisa, right?). I don't understand why it is not possible to acknowledge such on this blog, nor do I understand the bitterness of the infinite regress with regards to pricing. While I have found the blog extremely useful in the past I am starting to wonder about many of the conclusions and much of the animus here, which seems increasingly irrational rather than clarifying.

Anonymous said...

Anon 10:18..

My primary complaint is that "high end" or desirable properties in the city have not seen price reductions. They are put on the market, with no buyers, by owners who list them at 2006-07 prices. I'm not going to give in any pay those prices, even though mortgage rates make it affordable, because what's unknown is what price I will be able to resell for in several years. i need confidence in 4-5% annual appreciation (not inflation adjusted) and I don't have it.

Anonymous said...

and how about this...

non-inflation adjusted numbers:

from 2000 to 2010, median home price in Charlottesville nearly doubled, at 180%.

yet household income only increased about 25%, the rate of inflation.

how do you explain this?

Humpty said...

@ July 16, 2010 10:18 AM

What was the price PSF in 1995 vs 2010? and then adjust for inflation. You'll see a different picture because real estate prices were already inflated in 2002.

Humpty said...

Oh sorry forgot to ask you to make the same comparison for rents. Why have rents not gone up by the same percentage? I wonder?

"There are three kinds of lies: lies, damned lies, and statistics" attributed to the 19th Century British Prime Minister Benjamin Disraeli (1804–1881.

Anonymous said...

i'll take a guess Humpty...

an unprecedented expansion in credit and people no longer saving for retirement because their house will do that for them?

John Doe said...

10:18 am if you've been "following this blog since 2008" then you know that in the interim there was a world-wide financial crisis, and the "Great Recession" in this country was brought on by the housing debacle. You also know that housing has deteriorated--including in this market.

Montpellier said...

You'll see a different picture because real estate prices were already inflated in 2002.

Spot On!

Anonymous said...

10:18, CAAR called the bottom as being late 2006 in the 2007 mid-year market report. Don't forget this salesmen's association has a vested interest in keeping people like you believing that the price they paid was sustainable and that going forward it's financially sound to keep doing so.

C'ville Bubble Blog said...

Debaser, not sure if this is the post you're thinking of? This post shows median prices 2001-2009 for all types of properties combined. The median price for detached single family homes is much higher in Charlottesville, separately, and Albemarle County, exceeding NOVA many years.


Humpty said...

Treasuries Gain as Housing Starts Drop to Lowest Since October