Western Albemarle Quarterly Real Estate Report: Data Show Sales and Prices Weakening

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by David Ferrall

As I roam around the neighborhood on beautiful fall days, I am reminded how lucky we all are to be living in such a beautiful area. With a backdrop of the Blue Ridge Mountains, Crozet and its environs offers a little bit of everything to its inhabitants. Now we get ready for winter and cold dark days, but when the solstice passes, marking the longest night of the year, we will begin to turn our hopes to spring, when all will be renewed and bloom again.

The real estate market has historically mirrored this natural progression. Spring and summer are often the times of most sales. Activity fades off in the fall, and the market is usually quite quiet around the holidays and New Year.

The figures for the third quarter bear this trend out. Total sales in Crozet were down slightly year-over-year from the same period in 2010, and down from the second quarter. There were 46 total sales in the third quarter of 2011, compared with 49 in 2010. But while in 2010 the sales were spread pretty evenly across the quarter, in 2011 the bulk of the sales were in July and August. And as of mid-October we have had only 2 sales to start quarter 4. In all of October 2010 there were 23! This breaks the trend I was hoping we started in the 2nd quarter when more year-over-year sales were recorded.

Of the 46 sales, 30 were for detached houses, the balance being for attached properties. The average selling price over all sales was down from $386,000 to $336,000, with the price for finished square footage also down from $151 to $144. Of the 30 detached sales, only five were “in the county,” the rest in growth area developments. Half of these were in Old Trail, 11 were new construction, and four were bank owned. The 16 attached homes were spread pretty evenly across The Highlands, Liberty Hall, and Old Trail.

Liberty Hall was not represented this time last year. The national builder responsible for this project has injected extremely competitive pricing for new construction into the Crozet market that will affect similar resale pricing in the future. New detached homes by this particular builder list for less than $95 per square foot in Liberty Hall and Westhall, and for as low as $106/sqft in Wickham Pond! Recent re-sales in Wickham Pond have been closer to $150/sqft, so the current new home pricing is very aggressive. This is probably the result of the builder getting below-market deals on foreclosed lots. This makes for excellent and more affordable choices for buyers, but poses more of a strategic challenge for sellers.

As of this writing, there are currently 36 transactions that are either contingent or pending that will close at some point in the future. Of these, six are not in developments, the balance spread mostly through Westhall, Foothill Crossing (Western Ridge), and Old Trail. Interestingly, 18 of the most expensive 19 of these contingent/pending transactions are all new construction. This reflects reduced pricing in lots due to foreclosure and reality, a savings that builders are happy to pass on to buyers. This makes their product more affordable and allows them to maintain their margins even with lower sales prices. A win-win for buyers and builders, but, again, more of a challenge for owners trying to sell.

While inventory is down overall in the greater Charlottesville area, it is actually up a bit in Crozet. In the 3rd quarter of 2010 there were and average of 198 active listings; this past quarter saw an average of 219 listings, an increase of greater than 10 percent. With a low number of sales in September, and even slower current activity this month, inventory levels in Crozet will stay high. This will remain the case for the foreseeable future as new construction opportunities continue for builders, and they can list properties without the obligation of building them out until they are sold.

The chart below shows price ranges in all of Albemarle County staying pretty consistent.

Chart courtesy Nest Realty
Chart courtesy Nest Realty

But the sweet selling spot remains constant across all price ranges: sellers have to price at or below current comparable sales to have a chance in this competitive market.

Will spring bring renewal to the real estate market? Some predict that early 2012 will be the market bottom, but only after continued softness in pricing. It is hard to tell. The backlog of foreclosed and short sale properties in the pipeline could make next spring a continuation of winter. But with borrowing costs low, and great inventory to chose from, it sure looks like a fantastic time to buy!