Will 2011 mark the beginning of a rebound for the local real estate market? A few recent numbers suggest so. For some local experts, shifts in the behavior of both buyers and sellers point towards a more stable and calculated market.
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Last week, both the Charlottesville Area Association of Realtors (CAAR) and Nest Realty Group released their mid-year real estate reports. Although sales for the second quarter of 2011 do not match those of the same period last year, there are some indicators that the market might be showing signs of stability.
“I think we are improving compared to where we have been,” says Barbara McMurry, CAAR’s president.
Annual area sales to date are down 5.9 percent—to 1,368 from 1,454. That decline says McMurry, is attributable to the $8,000 federal tax-credit for first-time homebuyers, which contributed to a surge in sales during the second quarter of 2010.
Pending sales are up considerably—even higher than 2010—but they are unpredictable. “One of the warnings about watching the pending sales only is, ‘Will they ever close?’” says McMurry. The number of days on the market is a more stable indicator of progress. “That’s what I call the sellers’ success figure,” says McMurry. “Sellers are being successful in fewer days, and I view that as a good thing.” The current average days on the market is 115, a 13.5 percent decline from 133 during the first quarter of 2011, but up from 107 in 2010.
Condo sales have also increased significantly in Charlottesville—by 48 percent, according to the Nest Realty report. “The bulk of that is tied to Walker Square,” says Jim Duncan with Nest Realty. “They dropped the prices and the volume there really shot up.”
The median sales price still lags behind 2010 values. Currently, the median price of homes sold this year is $234,950, a 5.5 percent decrease from 2010. McMurry tells C-VILLE that in 2010, 54 percent of sales at this time of year were for properties priced below $260,000. In 2011, that number jumped to 58 percent. “We know that less expensive houses are selling,” she says.
Duncan calls it a positive sign. “We saw a shift that more of the homes in the city are moving to the sub $250,000 price point, which is good because we need that in order to have the next phase and cycle of real estate,” he says.
A greater number of people are deciding to rent, according to Duncan.
“More and more people are saving their money, [and] are putting 20 percent down,” he says. “A lot of people are choosing to rent, to bide their time. And if there are 10 homes on the market and none of them fit, they’ll wait. Whereas six years ago, if there were 10 homes on the market, they were buying one.” McMurry agrees that the rental market is “strong.”
The numbers might not show a complete market rebound; the active real estate inventory is down nearly 6 percent to 3,626 homes, but people are reprioritizing their wants and needs, says Duncan. “People won’t live above their means, but also I think homeownership matters, because people who buy their homes tend to be more invested in the neighborhood and the community.”
Ultimately, the active real estate inventory remains far from what local experts consider to be a more balanced number of 2,000. “We are not there yet,” says McMurry, but she says she continues to be optimistic.