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.

1 comment:

Anonymous said...

Lately it seems that the sentiment surrounding local real estate changes on a week by week basis. For a bit in March there it was "multiple offers are back!" and "under contract in one week!" and now it's back to something like stagnation. (Or at least that's how it seems.)
One thing is clear, though, there are LOTS of sellers who are still pricing like it's 2006. It's not.
Also seeing a lots of overpriced property that was pulled off the market come back on with new listing agents. Because it's the agent's fault, and not your unrealistic notions of what your house is worth, right?