Friday, July 2, 2010

Pending Home Sales Plunge 30% Nationally - The Decline Is Deeper in Charlottesville and Surrounding Counties

*With the expiration of the Homebuyer Tax Cred, The National Association of Realtors report  Pending Home Sales plummeted 30% from April to May, a record low.

* Every City / County in this area saw a decline in pending contracts from April to May.  See charts below; here's a recap of the numbers:
  • Charlottesville Albemarle Single Family Homes   -50% 
  • Charlottesville Attached Homes  -55%
  • Charlottesville Condos  -36%
  • Greene County  -44%
  • Fluvanna County  -52% 
  • Louisa County Decline -11% 
*Noted earlier in the month: Charlottesville and Albemarle Single Family Home sales contracts plummeted nearly 50% from April to May.

*The NAR's monthly "Pending Home Sales" index tracks contracts that will close in 1-2 months for detached, condos, and attached homes.  Locally and nationally, May and June will see stronger closed numbers than July, August, September.

*This area has skyrocketing inventory.  RealCentralVA recently suggested buyers  IGNORE National Data?  Sure, why not?   This market has its own troubles.   Sellers need to understand local data that buyers already know

The reality is that if a home hasn't sold by now  --  July 4th essentially being the end of "Spring Selling Season" -- chances are low that it will sell soon.  Properties are being pulled off the market to become rentals, "waiting out the market." There will be action in June as buyers try to close before the school year begins...and then...barring interest rates going down to 2% or a new homebuyer tax credit (both possible)....sales will be challenging.

*Closed Sales Jan - 1 Jun rose over 2009, but remained at a decade low.

Charts:  the top two via/copyright RealCentralVA.  Colored charts via/copyright Pam Dent.

Single Family Homes in Charlottesville and Albemarle  -50% from April to May.

April 2010
May 2010:

In the charts below:
"New" = inventory that came on the market that month.  
"Pending" = Signed Contracts.  
"Sold" = closed sales for properties that went under contract 1-3 months earlier.
  Charlottesville Single Family Homes Pending Contracts Decline -50% 

 Charlottesville Attached Homes Pending Contracts Decline -55%

Charlottesville Condos Pending Contracts Decline -36%

Greene County County Pending Contracts Decline -44%

Fluvanna County Pending Home Sales Decline -52%

Louisa County Pending Home Sales Decline -11%.  Louisa is rural and doesn't have "jobs", but it's close enough and "affordable" enough for C'ville's priced-out homebuyers.

Related Reading: 
CalculatedRISK on the record low contract numbers


Anonymous said...

What happened this May is not comparable to what happened last May because a massive government incentive program did not expire last April.

Anonymous said...

If I was going to buy a house in the near future I'd wait to see if there will be another Tax Credit. There are so few new buyers at this point that it seems likely the tax credit will be reignited.

I'm not going to buy a house in the near future, however, because I live in this area. To buy a house here right now is a guarantee that money will be lost.

Humpty said...

With all due respect you would be really stupid to buy a house right now. If you don't need to buy don't because you will miss the cherry picking season in the next 24 months. Just my humble opinion!

Anonymous said...

If you are a potential buyer, I would not wish for another tax credit. The tax credit causes people to act irrationally and overpay for houses well beyond the value of the credit.

A problem is many people simply do not have the means to buy a house unless they are given cash towards a downpayment/closing costs. Do you want more competition?

Sellers are hoping for a tax credit...not financially smart buyers.

Montpellier said...

The last anon. poster has it right: this is all about buyers actually qualifying for financing.

It's not about rates. It's not about people waiting for another tax credit.

The tax credit did push forward demand and really pulled out all the remaining buyers who actually qualify for a loan: down payment, credit score and income. You can have ZIRP mortgage rates (and we're getting there!) but if buyers don't have a big enough down payment at these prices...