Monday, July 26, 2010

Charlottesville Albemarle Home Sales Slow to A Crawl in July: It's A "Buyer's Market" With Soaring Inventory But Few Willing or Able Purchasers

 This market is  years away from balance, and "recovery" remains elusive, as inventory soars and sales plunge during the "Spring / Summer" selling season, typically the busiest time of year.

The handwriting's on the wall, not the contracts: June saw 122 properties go under contract in Charlottesville and Albemarle.  Through July 22, just 67 properties have gone under contract.  Even if sales keep the same pace, July will end 25% lower than June.

The slow down began after the April 30 expiration of the Homebuyer Tax Credit, when contracts plummeted 30-50%, depending on area:  May here, June here

2010 is proving to be worse for home sales than the middle of the Great Recession 2009. 

Contract Numbers:

July: 67
June: 122
Cville = 16 single family homes
Albemarle = 71 single family homes
Cville/Alb = 17 condos
Cville/Alb = 18 townhouses

There's no good news for sellers.  Buyers are waiting for sellers to realize the last sale price of the home doesn't matter.

The above chart is via/copyright RealCentralVA.


rfs said...

They sellers who have gotten contracts in June/July are very lucky as the "comps" that will be used for appraisals probably have inflated values over the past 6 months cause of the tax credit. Banks are really looking hard at comp sales and if there are none, ruh roh

so if you wanted to refi - better do it sooner rather than later cause appraisals will be much harsher come the fall...

Anonymous said...

It seems 2010 assessments in Albermarle/C'ville have exorbitant land valuations that contribute to the high prices. It would be interesting to know what the going market rates are now for subdivision builders. Could anyone comment?

Supply v Demand said...

"If it's priced right it will sell" - Inaccurate and misleading to sellers. I keep reading this kind of statement on local RE websites. If it's priced right it may sell. But the buyer may think "priced right" is a lot lower than the seller.

There's way too much supply and nowhere near enough demand even when there are price reductions.

Anonymous said...

my experience watching the cville market is that quality, updated (or new) homes priced at assessed value do sell fairly quickly. it's everything else priced 10-30% over assessed value that stays on the market

Anonymous said...

Usually not true in the City. Having kept an eye on the single family homes since January I can say not only have most of them not sold but many are priced near assessment, especially in the "First Time Homebuyer" price.

Last year's sale price, which is where the assessment comes from, is too much $$$ for this year's buyer.

The City market is all but dead for single family homes.

This sounds like something a realtor would say. It's bad advice.

Anonymous said...

Agree. The 2010 assessments are way too high and a better indication of value would be to look at the either
1) The 2002/2003 assessment
2) For new homes built before 2002-- original transfer price when built and compound 1-1.5% per annum

Anonymous said...

1/4 consumers can't qual for Fannie/Freddie financing, so they're cut out of buying a home (as they should be)

Anonymous said...

I can't believe anyone puts any stock in a tax assessment anyways. It is just a number the government uses to tax us, and it is in their best interest to have it as high as possible. When was the last time the tax assessor even looked at a house? Definitely not the interior. Tax assessments have nothing to do with market value. Nothing.

Over the next 12 months my BEST case scenario is for a six percent decline in home values in Albemarle and an eight percent decline in Charlottesville. BEST case.

Humpty said...

MLS# 479772 asking $699k. I cannot believe the hutspah! What are these owners and realtors thinking?

John Doe said...

Tax assessments mean almost nothing to educated buyers, especially in this market. "Somebody" has to have faith in tax assessments, and those "somebodies" are sellers and real estate agents and buyers who purchased in the past 7 years who are watching their "equity" disappear.

There's a desperate attempt to keep values from going lower because too many people--and too many elements of our community (schools!)--will lose so much.

But let's face it: today's educated buyer isn't going for these notions of pricing.

BTW, the FHA is perfectly willing to step in on qualifying those with less-than-stellar credit for mortgages. And those with good credit get a low down payment.

Anonymous said...

1927 Lewis Mountain Road: Humpty, it's the Dean of McIntire School of Commerce, and he's losing money on the deal, if it sells.

Advice... said...

Yeah that price is ridiculous. It's pretty out of date too.

Humpty said...

Anonymous said.July 27, 2010 11:16 AM

"1927 Lewis Mountain Road: Humpty, it's the Dean of McIntire School of Commerce, and he's losing money on the deal, if it sells."

I had no idea! After some cursory research I discovered he actually paid $659k in 2005. The property sold in 1999 for $270k and in 1997 for $135k. The latter is probably a realistic value for the property today. Just my humble opinion.

Anonymous said...

The Lewis Mountain Road property will easily sell for more than $500,000. Great location.

Anonymous said...

MLS# 479783 FTW. $3,800,000. No way. It has to be a typo. Great location, but you have to be kidding me.

Anonymous said...

Owner/Agent on Garth House. This has been for sale before. Why does listing say it hasn't? Plus, it's a rental on CL in the mid $2,000's. "Historic", whatever, that doesn't go far here, where everything is "historic." Way too close to the road IMHO because original land was sold long ago.

Re: Lewis Mountain Road: Everything is a "great location" and "near UVA" in the City. More than $500k isn't the $700k asking price, math genius ;0)

Anonymous said...

1500 Jamestown Dr, MLS #479030

asking price was 350 it went under contract in 3 weeks or less

Math Genius said...

The previous poster thought it was worth under $200,000, which is nuts.

Anonymous said...

the house was probably a mess when it sold for 135k in 1997. the 270k price in 1999 is realistic. adjusted for inflation, that's 353k today -- still half the asking price.

i don't expect the price to drop to 353k, or to sell for 699k. it will probably sell around 600, and then experience 10-15 years of 0% appreciation until the 'real' 353k value catches up to 600k due to inflation

Name/URL said...

7.38pm july 26 is a realtor, imo. I've seen realtors sticking to assessments as some way of determining the price since the old C'ville habit of adding 4-10% per year to previous purchase price no longer works.

Humpty said...

"Math Genius said...The previous poster thought it was worth under $200,000, which is nuts."

I stand by my statement. That's is what it is worth!!!! I actually think it is worth less. We're going back down to mid 1990s prices. Reversion to the mean. If it wasn't for all the fake FHA loans etc we would have been there by now. But all the "heavy lifting" in the world isn't going to change things.

Let us revisit this blog in 2014 and you will not think me "nuts". This entire high leverage mantra is a thing of the past. As the market tanks lenders will become more and more stringent. We will return to the days of 20-30% down payments. We outdid ourselves with debt this time around as individuals and as a country.

John Doe said...

Homeownership rates are back down to 1999 levels nationwide. There's not one sales chart on this blog for local numbers that indicates things around here are any better.

There's only the perpetual hope that "next quarter" things will pick up. That "hope"--delusion--has been here since 2006.

The "short term" buyer has exited this market. The "move up" buyer is scared, underwater, overleveraged, or a combination of these factors.

A house isn't an investment, that much everybody knows. But it shouldn't wipe out your financial future, either.

Paying tax assessment because it's somebody else's idea of "worth" or "value" -- you might do better in Vegas. IOHO.

Anonymous said...

The Big Announcement. That's what people are waiting for. That's what's going to change the market.

Anonymous said...

WTF Nest Realty Group's Spin on this market. Puh-leeze. They're touting sales when they know contracts have plunged.

John Doe said...

Months of inventory single family homes City of C'ville: 15.3. Using 16 signed contracts in June, divided into 246, the number for sale on MLS.

Unsold # of sfh is higher than 246, when you consider unsolds are leaving the market to convert to rentals and there are FSBO that don't enter this calculation.

8.07pm, "which" "big" "announcement"? ;0)

Montpellier said..., I tried to post yesterday on the 1927 Lewis Mountain property.

For starters - it's a little high - there is a very nice property at 106 Minor which is quite comparable (same neighborhood) languishing at $525k. Ditto the house on the corner of Alderman and Thomson. However, those are I think pretty dated (maintained by long-time owners).

The Lewis Mountain house probably has more recent updates. However, 211 Alderman - a MUCH busier street - did go for $679k finally. That house was renovated twice in the past decade - once by the '03 purchaser and again by that same purchaser to sell (so nice to have a very rich parent to house you while in law school!).

For those who claim everywhere in c'ville is "near UVa" well, yes and no. Yes, all Realtors will advertise that any property on 64 or in Albermarle is "near UVa" but that doesn't make it so. Lewis Mountain, JPA and Rugby Rd (Winston) neighborhoods are near enough to walk to UVa. That's not true of other parts of town. That bit of "location, location, location" is valid. OTOH, Lewis Mountain is constantly at risk of turning into a student slum like the JPA/Stadium Rd. neighborhoods.

Humpty - it's Chutzpah. :-)

I think anon @4:02PM is spot on.

Montpellier said...

it's the Dean of McIntire School of Commerce, and he's losing money on the deal, if it sells.

And boy, hey, there is some serious Schadenfreude for you! Another so-called expert. There are at least two rather wealthy Real Estate Investors I know of who were peak-of-bubble buyers in that 'hood too - both are seriously underwater - and they are "professionals".

Humpty said...

"Chutzpah" it is and I stand corrected.

The so called professionals are the ones that got our financial system into this mess.

John Doe said...

Expert opinion: George Overstreet, UVA associate dean and RE investment expert, dismissed the idea of a bubble and opined as how the City and particularly Lewis Mtn Road area would hold value. He has a house and lot (aka "yard") a block away on Thomson, for which he paid $850k in 2004. Now assessed for less.

Check out the numbers in this 2006 Hook article, included here: