Tuesday, January 17, 2012

Recapping the CAAR 2011 Year-End Report: Home Sales Remain 50% Below Peak - Prices Continue to Drop - Distressed Sales Rise to 1 in 5 Transactions - Recovery Not Yet Begun

The CAAR's  2011 Year-End Report contains a plethora of numbers, data, graphs for the City of Charlottesville and surrounding counties.  You may access the whole thing here But below are the major take-aways.

The report concludes that this Area Remains a Buyer's Market.  No kidding.  The value of any property is only what a buyer is willing to pay.  And there remain fewer buyers here than ever.  A seller can point to comparables or trends or history or tax assessments or appraisals, but an asking price means nothing if there is not a buyer agreeing to it.  As stated recently, this blog expects the bottom in 2015. 

Number of Home Sales in Central Virginia Remain Down 50% From Bubble Peak

Sales remain low despite hundreds of new homes and units built, as well as condo conversions. CAAR no longer gives historical sales data: 2010 and 2011 numbers come from this year's report; the rest of the numbers appear here.

2011 Prices Decline Significantly Compared to 2010

This data, from the current report, is for all property types (condo, townhouse, single family); median price declines vary more when parsed by individual property type.  A future post will contain more info on price decreases.  Buyers have to expect to stay put for 7-10 years because even small decreases in prices put recent buyers underwater - owing more than the house is worth. 

Charlottesville -6.1%
Albemarle -4.0%
Fluvanna -2.5%
Greene -8.6%
Nelson -13.5%
Louisa -15.6%

Foreclosures and Short Sales

2011 saw 440 foreclosure re-sales and Short Sales (bank agrees to take less than what seller owes).   This is 19% of total sales of 2300 for the area.  According to the 2011 CAAR recap, 2011 foreclosure resales rose over 2010, and Short Sales nearly doubled from 2010: 76 to 112.

Often, short sales don't work, however: Pricing.  Banks and buyers can't agree on the value.  118 listings marked as "short sales" expired in the MLS, unsold, as of December 31.  They'll be back--or they'll turn into foreclosures.

Median price for foreclosure resales: $130,000
Median price for short sales: $211,000
Median price for "traditional" sales: $265,000

Despite banks pulling way back on foreclosure filings in 2011 due to "robosigning" and MERS title issues, the rate of homes lost to foreclosures increased every month in 2011 over 2010.

Short Sale and Foreclosure listings:

Distressed v. Traditional sales:


It's an article of faith in the NAR alternate universe that lower inventory is a good sign, because buyers who buy will take whatever is on the market.  Not any more.  That happened for bubble-era buyers; today's buyer is more savvy.  Lower inventory doesn't automatically lead to sales or higher prices.   Especially in a town that has so many rentals.   Lower inventory comes from folks realizing they can't sell for what they want or need to make and is due to letting homes slide to foreclosure.  

There are currently 11.6 months of inventory at the 2011 sales pace.  There is pent-up seller demand.  As soon as one guy sees his neighbor sell, he's gonna try, too....   The surge in new and re-listings has already begun for 2012.  


Images copyright CAAR.  Top graph from this blog.

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