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Mid-Year Market Report: Charlottesville Market Stabilizes in First Six Months of 2007

Mid-Year Market Report  Market Stabilizes in First Six Months of 2007    By Dave Phillips, CEO  Charlottesville Area Association of REALTORS®    

Mark Twain once said, "When we remember we are all mad, the mysteries disappear  and life stands explained."  He could have been talking about the real estate market  over the past few years.  After two years of insanity (irrational price increases and crazy  sales numbers), the market appears to be leveling off at a rational level.  As the charts  and graphs below show, 2005 and 2006 were spikes in an otherwise steady market.   The real estate market is now much easier to understand.     Overview of the Second Quarter  While the second quarter numbers for 2007 are down from last year’s mid-year marks,  they do show a strengthening real estate environment.  Home prices appear to have  stabilized, the glut of inventory of homes for sale has peaked, the average days on the  market has dropped slightly, and home sales have picked up.  There are still soft spots  in the market, but overall this is the most balanced market in years.  We are still in a  “buyer’s market,” so buyers have a slight upper hand on sellers, but the pendulum is  gently easing back to a nice equilibrium.    Homes Sold  There were 1,882 homes sold in the first six months of 2007, which was down 385 (17%) from last year.  All local areas (Albemarle -13.3%, Charlottesville -33.7%,  Fluvanna -18.5%, Greene -34.7%, Louisa -20.7, and Nelson -24.9%) posted lower sales  than the same period last year.  Looking at the past 6 years (see chart below), our  region’s core markets have returned to the sales levels of 2003, which was just prior to  the crazy boom years of 2004-2006.  Sales outside the core areas listed were strong, so  the total market is closer to the impressive numbers we saw in 2004.  It should be noted  that the decline of sales in the city is a bit misleading.  Last year the city condo market  exploded and this year has returned to normal.  That accounts for a large portion of the  city’s sales decline.

Inventory of Homes for Sale 

The inventory of homes for sale in the Charlottesville area has been a key factor in the  local market for the past several years.  Inventory levels are generally a good indication  of where home prices are going.  In the early part of the decade, we saw extremely low  inventory levels of around 4 or 5 months of supply.  This caused home prices to soar as  buyers were forced to make aggressive offers to purchase the home they wanted.   Today, we have slightly over 11 months supply of homes on the market, which is more  than adequate.  We are just entering the peak selling season, so a high inventory is  good for the marketplace.  Buyers will have plenty of properties to choose from and  prices should be stable.  In other words, we are still in a “buyers market.”    Currently we have just over 3,400 homes on the market and the median price of these  homes is $330,000.  The average days on the market of these homes is 116 days.   There are 513 homes for sale under $200,000 with an average DOM of 105.  There are  247 homes currently on the market priced at a million dollars or more with an average  DOM of 146.           

Condos and Townhomes 

The explosion of condominiums and townhomes from 2005 and 2006 appears to be  over.  Attached homes are a very important part of the real estate market and the 2007  numbers show sales close to the historic averages.  Most of these attached homes are  in Charlottesville and Albemarle, so this report covers only those areas.  The charts  below show the attached homes sold in the first six months of 2007 compared to past  years.  Inventory levels of attached homes for sale are still high, with 454 listed for sale  in Charlottesville and Albemarle.  The 127 average DOM for the attached properties  currently on the market  is slightly more than the 115 days for detached homes in  Charlottesville and Albemarle.  With several new attached projects currently under  development, the inventory levels and DOM for these properties are both expected to  rise during the second half of the year.

Conclusions 

The mid-year numbers clearly show that the real estate market is once again on the  upswing.  We hit bottom in late 2006 and have started a period of slow, sustainable  growth.  While gradual price increases and modest improvements in sales is not very  exciting, it provides both buyers and sellers with a rational platform on which they can  make wise buying and selling decisions.  A more consistent market is a welcomed relief  after the roller coaster over the past few years.    We are still in a “buyer’s market” due to the high inventory of homes for sale, but  demand is high and properly priced homes are selling quickly.  With interest rates  remaining low and the overall economy strong, the real estate market should be in solid  shape for the remainder of the year.      For more information on this report or the real estate market, visit www.caar.com or  contact Dave Phillips, CEO of the Charlottesville Area Association of REALTORS®, at  434-917-2393 or Dave@caar.com.

email  Roger for a pdf version of the complete report including graphs

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