Thursday, April 26, 2012

Albemarle County Home Sales Q1 2012: Will the Road to "Recovery" Be Blocked By Rising Asking Prices?

The sales and price data come from the Nest Realty Group Q1 market report, embedded below.  See also a recap of City of Charlottesville Sales and Price Declines in Q1 2012.

The positives in Albemarle County:
  •  Inventory is lower.
  • The sales activity is highest since Q1 2007.  
  • There are reports of "multiple offers." 
  • There are "well priced" homes that sell in under two weeks. 
  • Buyer activity is up in comparison to 2011, as assessed by contracts which will close in the Second Quarter.
The negatives in Albemarle County:
  •  Lower inventory isn't necessarily a positive: locally or nationally.
  • There are still hundreds and hundreds of "mispriced" or "mislocated" properties that are  not selling.
  • The enthusiasm for believing the market is closer to "recovery" will lead to a rise in asking prices.  Anecdotally, this started happening in March.  
  • Price increases will lead to lower sales. As buyers have shown repeatedly over the past five years, there's only so much they are willing to pay. 
  • There simply aren't enough folks in this area "moving up" to relieve the amount of high-dollar inventory.  "Family homes" (McMansions) priced $600K-$1.3M are a slow market.  These already-built homes are competing with new construction, which is now less expensive, often "greener," and can be customized to the buyer's specifications.
  • There are listings at all price points offered for tens and sometimes hundreds of thousands under what the seller paid. 
  • Banks are still holding foreclosed inventory, at all price points, off the local market. 
  • At the highest end, the "farmette" and "estate" listings from $1.5M-$16M, pricing and valuation remain highly subjective--more than ever a matter of "opinion."  (Example: Donald Trump offering $3M+ for the foreclosed Albemarle House, which Bank of America has listed at $16M.)

The data:

Single Family:
Median price increased +10.1%: $343.5K from 2011's $312K
Sales rose +10.8%: 2011 130 v. 2012 144 

Median price increased +20.9%: $238.2K 2012 v. $197K in 2011
Sales rose +9.4%: 58 in 2012 from 53 v 2011 

Median price declined -2.5%: $101.2K  2012 v. $103.7K 2011 
Sales rose +62.5% 26 in 2012 v. 16 in 2011 (investors are grabbing these)

Your micromarket may vary.

Recapping the Nest Report in podcast.
A list of the headwinds that continue to face the market.
The CAAR report.

Q1 2012 Charlottesville Real Estate Market Report

Tuesday, April 24, 2012

As Prices Continue to Decline, 61% of All Home Sales in the City of Charlottesville Were Under $250K in Q1 2012

The details come from the Nest Realty Group market report, embedded below.

The report states "The reduction in prices likely has had a positive impact on generating more sales." Additionally, mortgage interest rates have been  at or under 4% since the Fall of 2011.

The positives: Price declines are a big positive for buyers.  And buyer activity is up, with significant increase in contracts written; the closing dates occur in the second quarter. 

The negatives: price declines can hurt anybody who bought during the bubble years, whose equity is being wiped out.  There are many would-be sellers who simply can't lower their prices, which can lead to short sales or foreclosures.

Pricing still remains prohibitive for single family homes in the City: price is often not based on a beautiful product; it's based on paying a premium for proximity, or building on a bubble-era valuation.  City prices often rely on the mortgage holder(s) spending much more than the historic home-price-to-income ratio of 2.5%.  

There is a significant inventory priced at or below $200k in the City.  Problems: many of these props need a lot of work; or are too expensive for investors hoping to turn them into rentals.  And they're too expensive for lower-income families that don't have the downpayment (even for an FHA loan) and/or can't qualify for a mortgage.

The data:

Single Family:
Median price declined -4.3% over 2011
Sales rose 40%, from 42 to 59 over 2011
69% of all sales in the City are single family detached homes

Median price declined -26.2%
Sales dropped 25%, from 8 to 6 in 2012

Median price declined -26.3%
Sales dropped 23.3% y/y from 2011

There are currently 258 units total units available.
181 of these, or 70%, are single family homes.
In Q1, only 2 listings above $750k sold.

Click on image for larger version.

Recapping Nest Report in podcast.

A list of the headwinds that continue to face the market.
The CAAR report.
Q1 2012 Charlottesville Real Estate Market Report

Tuesday, April 17, 2012

First Quarter 2012 CAAR Market Report: Sales Rise As Charlottesville Area Average Home Prices Drop 7.5%

Supporting the old saying "There's nothing price won't fix," the greater Charlottesville Area (City plus 5 counties) is seeing a rise in closed sales as well as properties going under contract.   The -7.5% year-over-year decline in average price represents all property types combined.  The "American Dream" category of the single family (detached) homes in the Greater Charlottesville Area fell more: a -9.3% year-over-year decline.  Average Q1 prices have now fallen -23.5% since 2005.  Despite the loss of $$$ in home eq and for sellers, the current CAAR prez sees the sales portending "blue sky" ahead. Is it a Great Time To Buy?   The full report is embedded below.

Average Prices.  Click on image for larger version.

See also: Q1 Prices and Sales 2002-2011 and Ongoing Headwinds in C'ville Area RE

Charlottesville 1st Quarter Real Estate Market Report 2012

Image, report, copyright CAAR.

Thursday, April 12, 2012

1st Quarter 2012 Charlottesville Area Housing Market Report: Upside, Downsides, Expectations, and A Recap of Sales and Prices 2002 - 2011

2012 First Quarter price and sales data for the Charlottesville Area Real Estate market will be published soon.   The closed sales from January and February, contracted a few months earlier, show Winter weakness: 

February 2012 Charlottesville Area Single Family Home Prices Drop -32% Since 2010 
January 2012 Home Sales: Charlottesville Down -39%, Albemarle Down -15%

Those numbers give pause, but the first couple of months of 2012 have seen healthy buyer activity.  And this is specifically because prices have declined.  Additionally, the 30 yr fixed has been at or below 4% for nearly five months.  This buyer activity has just started to show up in the data: so the closed sales for Q1 won't necessarily reflect the foot traffic agents have reported. Nevertheless,

Expect Some Spin for Q1 2012 Reporting -- As Usual

Every Spring there's the hope that the turn toward good times--that is, price appreciation--is just around the corner.  Realistically, in this area, it's not for some time.  But RE lives in the moment.  With contracts and viewings up over 2011, there will be froth on Realtor blogs and in the local media outlets that report the trade association data without perspective. There will be comparisons of 2012 v. the past two years (previous years be damned).  There will also be anecdotes about well-priced properties (ie, those at 2003 levels) receiving multiple offers.  All of this is the expected celebration.  But it doesn't necessarily translate into a market "recovery" or sales to hit a sustainable pace for the rest of the year.

Buyers need to beware of being "bid up" due to transient market characteristics (ie, Spring).
Sellers need to beware of overpricing for the same reason, and therefore missing their sale.

The potential Upside? 

The "Move-Up Buyer" may be back here and elsewhere, based on seller listings, after disappearing for the past couple years.  This can make the median price rise, even as the "low end" of the market continues to lose value and remain unsold.  "Move up" in this instance and area is used to mean homes priced $350K-$599K.  The $600K-Millions segments will continue to struggle--and continue to drop in price.

The Downsides?  We have the same old local headwinds

A) The inventory, lower than in previous years, does not indicate C'ville Area market "health"
B) Foreclosures are still coming at a steady pace
C) There's a significant local shadow inventory (bank re-po'd props that haven't been relisted for sale)
D) The number of local folks underwater is staggering
E) Local owners with "effective negative equity" cannot sell
F) There's a lack of first-time buyers due to price points, college debt, and change in priority
G) Home-Price-to-Income Ratio remains out of whack
H) Unemployment remains exceptionally high for the area 
I) The pent-up seller hopes, especially from $600k-$3M price points is significant
J) Sales volume remains lower than in the late '90's
K)  And, o yeah, there's the issue of obtaining a mortgage

Historic Perspective: Q1 Data 2002 - 2011

The info, below, appeared in a post on April 19, 2011:

C'ville Area RE First Quarter 2011: Median Home Prices Slide Back Six Years, Fall $70,000

The Charlottesville Area Association of Realtors quarterly market reports typically recap the past several years.   But the new one-page format only compared 2011 to 2010, which resulted in the headline "Central Virginia Home Prices Fall $19,000."  The reality is that area home prices have moved more than this.

2011's $220k actually means that this area is back down to the median in 2005

For individual City/County, the declines are steeper from the peaks, which also occurred later than the National peak in 2006:

Albemarle  $250k down $94,400 or 28% from 2006 peak
Charlottesville  $225k down $56,250 or 20% from 2008 peak 
Fluvanna $210k down $52,650 or 17% from 2007 peak 
Greene $235k down $79,900 or 25% from 2007 peak 
Louisa $199k down $50,000 or 22% from 2007 (and, tax cred, 2010) peak 
Nelson $220k down $119,000 or 34% from 2006 peak 
Orange $140k down $171,525 or 57% from 2007 peak
  • This aggregated "median home price" is found by combining all sales categories (single family homes, condos, and townhouses) then identifying the number halfway between high and low.   
  • These figures indicate what buyers were willing to pay in the first part of 2011.   
  • Though the figures have limited use for buyers/sellers interested in only one category, the aggregated median is the most widely reported dollar figure each quarter. 
Prices have been falling steadily, accelerated since the expiration of the Homebuyer Tax Credit April 30 2010.
Click image for larger version in new window.

2006-2010 Q1 Median Home Prices

2002-2007 Q1 Median Home Prices


 2011 Compared to 2010

All images copyright CAAR.  These images may be found in the First Quarter 2007 and 2010 Market Reports at the "Market Reports" link in the upper right of your screen at the CAAR website.