For more than a year now, the housing market has been on a nonstop rollercoaster ride. On Monday, April 13, the Charlottesville Area Association of Realtors (CAAR) released its first quarter market report, and although the local real estate market improved compared to the fourth quarter of 2008, the outlook is grim.
First, the good news.
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With 3,600 properties currently on the local market, one real estate agent estimates the percentage of foreclosures to be between 5 and 10 percent. |
“Even if the market activity is somewhat seasonal and relative to a dismal fourth quarter in 2008, it feels great to see market activity again,” writes CAAR CEO Dave Phillips. According to the report, interested buyers are touring open houses regularly, and if the traffic numbers transform into actual contracts, the market could take a much-needed positive turn.
“The other good news is that we have the ability to look at properties that have recently gone under contract, which will ultimately settle in April or May, and the difference between 2008 and 2009 is only about 5 percent,” says Michael Guthrie, President of CAAR and CEO of Roy Wheeler Realty Co.
Of these recent contracts, a large percentage stem from properties that are priced under $300,000. “It’s significant in the fact that … I think that the $8,000 tax credit the government has issued and the low interest rates are bringing first-time buyers back into the market,” says Guthrie. Compared to the first quarter of 2008, the number of homes that have sold under $300,000 this year so far has doubled, according to Guthrie.
Other realtors are seeing the same trend. “Absolutely,” says Jim Duncan of realcentralva.com. “I have several sets of [first-time home buyers], and it’s good news, because the market depends on first-time homebuyers.”
Now, the bad news.
According to the report, in the city of Charlottesville, home sales were down 40 percent compared to 2008— 66 homes sold compared to 110. In Albemarle, sales were down only 19 percent—139 compared to 171; in Fluvanna 32 percent; in Greene 50 percent and in Louisa almost 60 percent. Median prices also declined an average of almost 8 percent, or $21,500, compared to the first quarter of last year. In Charlottesville, the median price decreased to $262,810 from $281,250 in 2008, but increased from $249,500 in 2007. In Albemarle, median prices decreased 13 percent, from $335,000 to $290,000. Fluvanna was hit the hardest with a drop of 17.2 percent to $200,450, lower than 2005 data. On a positive note, two markets that saw a slight increase in median price were Greene with 10.7 percent and Nelson with almost 9 percent.
In terms of foreclosures, the local market is faring well compared to national stats. According to data released by RealtyTrac, foreclosure filings in the nation are up 24 percent in the first quarter, and 46 percent in March alone compared to last year.
According to Guthrie, the number of foreclosures in the area fluctuates. “It’s really hard to track them, because not all of them are in the MLS and some other foreclosures haven’t come back on the market yet,” he says. But, with 3,600 properties currently on the market, Guthrie estimates the percentage of foreclosures to be between 5 and 10 percent. “I will say that they have increased and because the market picked up, I think we are understanding that there are more short sales out there,” says Guthrie.
In fact, Jason Crigler, Certified Residential Mortgage Specialist for Crown Mortgage Services, has seen an increase in the demand of real estate-owned financing (REO), that is, when a bank owns the property. He’s seen an increase in refinancings, too. “Ever since the Federal Reserve has been pumping money into the system and artificially brings rates really low, below 5 percent, people have been continually trying to finance,” says Crigler. Refinancing in the first quarter of 2008 accounted for approximately 40-50 percent of Crigler’s business. “The percentage of our business that’s refinance right now is probably 70 percent. We do more refinancing than we do purchases,” he says.
Home inventory is another contributing factor in a healthy market. According to the CAAR report, the local inventory remains too high. “With that many homes in the market there are not enough buyers to buy them, so you have an inventory of homes, which creates a downward pressure on pricing and increases the number of days properties are on the market,” says Guthrie. “It’s going to take a while for that to adjust itself.”
According to the people behind local real estate blog, the Bubble Blog, it has been a buyer’s market since 2007, “meaning more than five months of supply,” they write in an e-mail. “It’s currently up to 20 months in the region.” For these bloggers, “this area has at least 12 more months of rising foreclosures and falling prices before it might start to achieve a normalized level of inventory.”
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