Published by the Charlottesville Area Association of REALTORS®
Where Are We Now?
In the first quarter of 2010, the Charlottesville real estate market continued the trend seen in the fourth quarter of last year. Home sales, compared to the first quarter of 2009, increased slightly. In the first quarter of 2010, sales (436) were up 4.3% from the same period in 2009 (418). This increase was somewhat surprising because of the unusually snowy winter that significantly hindered home sales. Although this is the second consecutive quarterly year-over-year increase in sales we have seen, it is the second lowest quarterly total in the past 10 years. As CAAR President Greg Slater explained, “the snowstorms really held down our sales volume for most of the first quarter, but we saw a rally in March when the weather finally got better.”
As reported in the past three quarterly reports, prices have been falling, but in the first quarter of 2010 there was a small change. Although most of the data indicates a continuation of soft prices, there is some evidence that prices might be stabilizing. It is too early to draw conclusions because of the limited amount of data, but this bears watching in the coming quarters.
Home Sales for 2010
There were 436 homes sold in the Charlottesville area in the first quarter 2010, which was up 4.3% (+18 sales) from the same quarter in 2009. Albemarle (+13.1 %), Fluvanna (+12.5%), Greene (+22.7 %), Louisa (+19.0%), and Nelson (+104.8%) showed an increase in sales, while Charlottesville (-26.1%) and Orange (-26.8%) showed a decrease.
Sales in the Central Valley region were generated from the Greater Augusta MLS, which has more complete data on the Valley market than the CAAR MLS. Sales were up in the Valley by 4.3 % compared to last year.
First Quarter Residential Sales
County
2006
2007
2008
2009
2010
Albemarle
305
271
171
145
164
Charlottesville
131
112
110
69
51
Fluvanna
94
91
71
48
54
Greene
72
51
40
22
27
Louisa
47
49
52
21
25
Nelson
61
59
41
21
43
Orange
22
24
30
19
12
Area Total*
827
771
610
418
436
Central Valley**
154
166
Home Prices Have Dropped
Based on the data from the CAAR MLS, we continue to see a decrease in home prices compared to the same quarter last year. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing/able to pay and is not a true reflection of individual home prices.
We believe the numbers displayed below provide evidence that prices are still declining, but the rate of this decline has slowed from the previous reports. As shown below, median prices in two counties have increased, and the area price per square foot remained unchanged from last year.
Overall, the median home price (including attached homes) declined $19,500 (-7.6%) compared to first quarter last year. The median price is now a little above where it was at this point in 2005, before the housing prices started increasing dramatically.It is interesting to note that two counties showed increases in their median prices: Louisa (+16.1%) and Fluvanna (+2.4%). All other areas covered in this report showed a decline as follows: Albemarle (-1.6%), Charlottesville (-5.7%), Greene (-18.1%), Nelson (-27.0%), Orange (-16.7%) and the Valley (-2.6%).
First Quarter Median Prices
County
2006
2007
2008
2009
2010
Albemarle
$344,400
$289,000
$335,000
$290,000
$285,300
Charlottesville
$274,000
$249,500
$281,250
$262,893
$248,000
Fluvanna
$245,000
$253,000
$242,000
$200,450
$205,250
Greene
$294,975
$314,900
$262,500
$307,000
$251,500
Louisa
$212,000
$238,000
$254,500
$218,825
$254,000
Nelson
$339,000
$249,000
$285,000
$299,900
$219,000
Orange
$280,750
$321,525
$245,000
$161,400
$134,500
Area Median*
$289,900
$262,500
$274,500
$255,000
$235,500
Central Valley**
$192,428
$187,363
*includes sales outside the counties listed
**numbers courtesy of the Greater Augusta MLS (note: these are average prices, not median)
Price per Square Foot (Finished)
Another indicator that allows us to see what is happening to home prices is the price per square foot numbers. The average price per square foot of finished space in homes is not an exact science, but a downward trend over the years clearly indicates a decrease in prices (and vice versa). For the first time in the last three years, the first quarter numbers indicate that the prices have stopped declining and held their own year-over-year.
Price Per Finished Square Foot (Year to Date)
County
2006
2007
2008
2009
2010
Albemarle
174
174
175
154
150
Charlottesville
186
186
192
158
159
Fluvanna
141
135
137
122
119
Greene
148
157
147
134
137
Louisa
146
142
153
114
109
Nelson
232
206
196
170
169
Orange
175
195
129
110
87
Area Average*
169
166
163
140
140
Central Valley**
144
123
*includes sales outside the counties listed
**based on CAAR MLS data
Inventory of Homes for Sale
The inventory of homes for sale in the Charlottesville area has continued to decline. As we have reported for the past year, the excess of inventory is causing many of the problems with our local housing market. The decline in inventory is very encouraging, but we will still have too many homes on the market for the current demand.
As of this writing, we have 3,353 homes on the market, compared to 3,608 at this time last year. This is the largest year-over-year decrease in several years, but we are still above a balanced inventory level in the 2,000 to 2,500 range.The median price of homes currently for sale is $289,900, which is $8,100 less than last year. The average DOM (days on market) of these homes is 151 days, which is 4 days less than last year and 13 days more than homes that sold in the first quarter.The most telling statistic related to homes currently on the market is that the average price per square foot is $228 compared to $140 for homes that sold in the first quarter.
Housing affordability is the positive aspect of this market. There are 903 homes for sale $200,000 or less with an average DOM of 145and an average price per square foot of $141. There are 242 homes currently on the market priced at a million dollars or more with an average DOM of 240.
Days on Market (DOM)
In this market, the average days (DOM) a property stays on the market is less important than it would be in a more balanced market. There are many variables in the marketplace – excess inventory, foreclosures, short sale, and financing issues – that affect the length of time a property is on the market. This quarter shows a reflection of that, as the average days on market went up by 5. We are still in a buyer’s market, which means the best way to shorten the days your property is on the market is to price it correctly.
Average Days on Market (1st Quarter)
County
2006
2007
2008
2009
2010
Albemarle
70
116
135
114
146
Charlottesville
62
75
141
165
97
Fluvanna
79
108
135
127
96
Greene
76
99
90
84
136
Louisa
119
158
110
50
134
Nelson
83
118
152
158
181
Orange
83
95
125
163
121
Area Average*
80
107
132
133
138
Central Valley**
144
167
*includes sales outside the counties listed
**numbers courtesy of the Greater Augusta MLS
New Construction Continues to Decline
It is important to note that many “new” homes are not included in CAAR MLS statistics. Some buyers work with a builder directly to custom build a home. With that said, the historical perspective of the pace of new home sales gives us a reasonably good picture of the market for new construction. As the chart below shows, new home sales are still struggling and until the inventory of re-sale homes declines more, new construction will lag.
Condos and Townhomes (Attached Homes)
The sale of attached homes is only reported in Charlottesville and Albemarle because very few properties in this category are located in other counties, except Nelson. Since the condos in Nelson are primarily in the Wintergreen Resort market, we have decided not to include them in this report.One of the more interesting numbers in this report is the small increase in the sale of attached homes in Albemarle in 2010 compared to the same period last year. The Albemarle median sold price dropped significantly, from $224,295 to $198,000 and the days on market was 132. In Charlottesville, there were only 15 attached home sales compared to last year’s 28. The median price was down from $273,344 to $169,000 and days on market was 112.
The good news is that the winter weather is behind us. It is impossible to quantify how much the record snow fall hurt real estate sales in the first quarter, but there is little doubt that it was a significant impact. The good news is that the pent-up demand from the first quarter appears to have moved into the second quarter. Reports from agents in the field indicate that there has been above normal activity since the weather improved in mid-March. Only time will tell if this activity turns into sales for the second quarter market report.
CAAR is also watching the inventory of homes for sale to see if it continues to decline. A reduction in inventory will help take pressure off home prices and indicate that the market is becoming more balanced. Price sensitivity is still the key factor in this market and if you are looking to put your house on the market, be sure to have a REALTOR® or appraiser prepare a comparative market analysis (CMA) for your property so that you can price it to sell. And, if you are looking to buy, a REALTOR® can help you understand the current market place so you can buy what is right for you.
This Quarterly Market Report is produced by the Charlottesville Area Association of REALTORS® using data from the CAAR MLS and the Greater Augusta MLS where noted. For more information on this report or the real estate market, pick up a copy of the CAAR Real Estate Weekly, visit www.caar.com, or contact your REALTOR®.
The Basics: Short Sales
Due to current economic conditions, the number of short sale properties on the market is rising. The increasing number of short sales on the market presents challenges for REALTORS®. Below you'll find more information on: short sales and their challenges, the government's efforts to address these challenges, and tools to help you navigate the short sale process.
Home Affordable Foreclosure Alternatives Program (HAFA)
On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA), part of the Home Affordable Modification Program (HAMP).
What is a short sale?
A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.
Why is the number of short sales rising?
Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.
A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.
What challenges have short sales presented for REALTORS®?
The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:
Limited experience Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders' lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.
Absence of a uniform process and application Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions.
Multiple lenders When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.
As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.
What is being done to address or eliminate these challenges?
On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program. Among other things, the new program:
Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.
Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.
Requires the short sale agreement to specify reasonable and customary real estate commissions and costs to be deducted from the sales prices. (The servicer must agree not to negotiate a lower commission after receiving an offer.)
Will provide standardized documents, including short-sale agreements and offer acceptance letters.
____ Pending home sales Rise ____
Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
The PHSI in the Northeast rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009. In the Midwest the index jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago. Pending home sales in the South increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009. In the West the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.
“Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,” Yun said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
Existing-home sales for March will be reported April 22 and the next Pending Home Sales Index will be on May 4; release times are 10 a.m. EDT.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, tables and surveys also may be found by clicking on Research.
