Western Albemarle Third Quarter Real Estate Report

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By David Ferrall 

Chart courtesy Nest Realty. Click to enlarge.

He’s back. For the second time in as many years Donald Trump has purchased property in Albemarle County. The notorious real estate developer and bottom-fishing investor recently scooped up Albemarle House, Patricia Kluge’s 23,500 square foot, 98-acre estate in Blenheim. Once the most expensively listed home in America at $100M, the property sold to The Donald for a relatively paltry $6.7M. Whether the property remains a “modest” family retreat or turns into a world-class 18-hole golf course remains to be seen. The important point is that Trump finds our area ripe for investment, and he has jumped in full bore.

But while Trump has not entered our Crozet market, enough new folks have to keep sales on a strong upswing. The 62 sales in the 3rd quarter of 2012 represent a 29 percent jump over the same period last year. And year-to-date sales are a whopping 33 percent ahead of 2011. In fact, Crozet has already seen more sales this year than for all of 2011. And there is a good chance we will surpass the total year sales figure for 2007, sale numbers we have not experienced in five years. Total sales figures in the county were up almost 21 percent, and as the Five Year Trend of Sales Activity chart (provided courtesy of Nest Realty) shows, sale numbers are building across the area. Good news indeed!

Looking at the numbers, we see the average selling price for all the third quarter sales in Crozet was $321,000. This was down four percent from the same period last year. The average price per square foot among all sales was $134, down 7.5 percent from 2011. Finished square foot prices for attached and detached homes were down seven percent and eight percent respectively, to $131 and $135 from $141 and $147. Both are a slight reversal in trends that we have been seeing through the year, but not at all worrying. Much of this price decline is due to continued sales in Westhall of some stupendously priced new homes, many of which have been selling for less than $100/sqft. As we continue to see the market work through short sale and bank-owned properties, new construction being built at lower cost, and foreclosed lots, we can expect some volatility in price and cost numbers. This is all part of a market looking for its footing, which many believe has been found and is holding. This helps to establish a floor for an upswing in sales and prices.

Of the 62 third-quarter sales, 27 percent (17) were attached houses. These were spread pretty evenly between re-sales in The Highlands and new construction in Wickham Pond, with several stray sales in Old Trail, Wayland’s Grant, Parkside and Clover Lawn. Of the 45 detached house sales, 33 percent were new home sales, which were concentrated pretty evenly between Westhall and Old Trail. The national builder currently building in Westhall is almost built out, and is offering pretty compelling prices as their Westhall lot costs have been relatively low. But going forward higher prices for lots in Wickham Pond and Old Trail will lead to higher new construction pricing. This will continue to help stabilize prices for all segments of the market. The number of bank owned and short sale properties sold is also down from around 15 percent last year to 11 percent this year. This will aid in price stabilization as well. Nine of the total detached sales were for properties on an acre or more, and only three of these were on parcels of five or more acres. This continues the trend we have been seeing in the county, where sales are concentrating on smaller parcels closer to Crozet and its convenient amenities.

The fourth quarter looks to continue the year’s sales successes. There are currently 72 properties under contingent or pending contract. Many of these will close before year’s end. Inventory at the end of the third quarter was down vs. the same period last year, and down 14 percent year-to-date. The number of days properties are on the market is pretty consistent at around 94 for the quarter-to-quarter period, but down almost 20 percent year-to-year. The ratio of sold price to list price is up .75 percent. Properties are selling faster and at prices closer to the original list price.

With a national election looming, and the ugly issue of the “fiscal cliff” not far behind, there are issues that could negatively affect the real estate market in coming months. But writing recently in the Financial Times, former deputy treasury secretary Roger Altman makes a pretty compelling case for why housing prices may have bottomed. Housing prices overall have gotten better, there is decreasing inventory, population is growing, and loan acquisition seems to be relaxing somewhat after an overreaction to the easy and abusive pre-Great Recession period. Add to the mix the Federal Reserve’s commitment to low interest/mortgage rates into at least 2014 and the recipe is there for continued housing strength.

“Real estate is always good, as far as I’m concerned,” The Donald once quipped. This author for one is happy to see him put his money where his famously oversized mouth is here in Albemarle County.