By David Ferrall
With this issue of the Gazette, we begin a quarterly report covering real estate trends and issues in Crozet specifically, in Albemarle generally, and national issues that are relevant to our area. When referring to Crozet, we include all those properties that feed into Brownsville and Crozet elementary schools. Occasionally we will touch on the Murray and Meriwether school districts as well.
There were 33 residential sales in Crozet in the first quarter of 2011. This compares to 21 in the first quarter of 2010, and is a far cry from the go-go year of 2006 when 66 transactions occurred. Two-thirds of the sales were for detached homes, the balance being townhouses. This 2 to 1 property-type ratio has been stable over the past year, though it was closer to 1 to 1 in 2006 when the townhouses in Old Trail and Waylands Grant were new and selling well. Average days on the market for these 33 sales was 170 days.
While we are a long way from the lofty sales figures of five years ago, we seem on a more stable sales footing. But sadly (for current owners anyway), prices have not stabilized. The average cost per finished square foot in the first quarter was $130. This compares to $137 for 2010, and almost $170 in 2006. In real dollars, this translates to a $48,000 decline in the average home selling price in the past year (quarter to quarter), and an $88,000 decrease in the average price since 2006. This represents a 23 percent decline over the past five years.
The good news is that sales are up since this time last year. Interest rates remain low, property prices are more affordable, and surveys such as the recent Pew Research study on home ownership show that more than 80 percent of all adults believe that home ownership is still the best long-term investment. While your home may not sell for as much as it may have a few years ago, the home you will be buying will probably have experienced a similar price decline. If you are moving up in house size and price, this works to your advantage.
But storm clouds remain on the horizon, if not overhead. Foreclosures and short sales (when the asking price of the property is less than the borrower owes on their mortgage and/or other property backed loans and lender approval is needed to complete the sale) continue to affect local pricing and inventory. There is no reliable indicator of when this may end. Pending government regulations regarding QRMs (quality residential mortgages) may make borrowing more difficult and expensive, and the threat of rising interest rates could also make houses less affordable.
With current interest rates near historic lows, inventory at high levels, and compelling prices, people are able to buy more selectively and more affordably then at anytime in recent years. Agents report that showings are up and that open house traffic has increased. In Crozet, 63 residential properties are currently under contract or pending (waiting to close). Of these, 18 are new construction in developments including Liberty Hall, Western Ridge and Old Trail. Thirteen of the resale properties were active on the market for 40 days or less, several for 10 days or less.
How is this possible? It is all about pricing. While the old adage “location, location, location” still holds the throne, pricing is the queen of the court. If you are a seller, you must be better priced than your nearest competitors, meaning level with or slightly below comparable properties. This is why it is crucial to consult a realtor who can provide statistical analysis of active and sold properties to help price your house.
While the five-year trend of sales activity in Albemarle is solidly down, an encouraging sign is improved sales numbers over the past four quarters when compared to year-earlier levels. It is very difficult to predict a market bottom without the benefit of hindsight. There is one positive sign: Donald Trump, the Art of the Deal master and known bottom feeder, has chosen this moment to become a property owner in Albemarle County. That has to count for something!
David Ferrall can be reached at 434-882-LAND.