by David Ferrall
I started my third quarter real estate report with the feeling of blessedness for living in such a beautiful area. The stunning fall foliage, temperate weather, and a moving real estate market had me in a great mood. Today the trees are bare of leaves, but the rest seems the same. The weather is temperate, and real estate continues to move. And this surprises me! I typically expect a downright frozen real estate market in January. But no, I continue to show property on an almost daily basis, and my colleagues report the same. This is attributable in some part to the weather (no one seems to want to look at homes in the snow, sleet, or bitter cold), but in larger part to historically low mortgage rates, and a wide range of properties and prices from which buyers can choose. And while the real estate market as a whole is down slightly year to year, Crozet is holding its own. Let’s look at the numbers.
Total sales in Crozet were down 22 percent in a quarter-to-quarter comparison. While this may seem dire, sales for the entire year were up 3.2 percent, and this takes into account the heavy federal home buying stimulus in the spring of 2010! Sales in 2011 were very evenly divided across the entire year, a consistency that should be heartening to buyers and sellers. There were 46 sales in the 4th quarter of 2011, compared with 59 in 2010. As of this writing in mid-January, there are already two sales, and a heady 59 properties that are under contingent (21) or pending (38) contract. A strong start to 2012 indeed!
Sales in the fourth quarter averaged $132sqft, a $288K average price, and 84 days on the market. This is against $133sqft, $316K average, and 66 days on the market in the last quarter of 2010. Of the 46 sales, 32 were for detached homes. The average price per square foot of these homes was $137, with an average price of $310K. The lowest new home price was $107sqft in Wickham Pond. The remaining sold properties (14) were attached homes, averaging $121sqft and a $238K average price. Five of these were in Liberty Hall and four were in Old Trail. Liberty Hall continued to be a cost leader, with one unit selling for $90sqft! The Old Trail properties averaged $150sqft. The most expensive property sold in the quarter, costing $781,000, was in Old Trail. In this time frame there were an average of 200 homes per month on the market, with 15 or so selling each month. These homes were mostly attached and proposed attached houses. A basic inventory model would suggest a little over 13 months of inventory in Crozet, but this figure has many variables.
The most interesting aspect I take away from the fourth quarter doesn’t really concern the quarter itself, but the whole year. Year to year, 2011 to 2010, there were six more properties sold in 2011, 189 vs. 183. There were 20 more new construction properties sold in 2011 (81 vs. 61), and the price of that new construction fell 2 percent. The average price for all properties sold in 2011 fell a touch under 3 percent. So while prices fell only slightly, the number of properties sold was up. This is heartening. What is also encouraging (for sellers anyway) is the current spike in construction supply prices. This will raise the cost of new construction, which will help re-balance the pricing of new vs. pre-existing properties. Some of the new-construction selling prices in 2011 were so far below the price of pre-existing houses that a buyer could either buy new, or really beat up a seller on the seller’s house price to make it fall in line with newly built offerings. And that made sense. But while this aspect of pricing will hopefully help stabilize re-sale prices, we still have to contend with discounts being offered on short sales and foreclosures. There were 43 short and lender sales in the area in 2010 and 44 in the past year. This figure is about a quarter of all sales! These numbers need to drop before any real price stabilization can take hold.
I may be thinking about spring a little too early weather-wise, but it is time to think about springtime from a real estate perspective. Typically the spring market wakes up after the doldrums of winter. Sellers are polishing their offerings and buyers are out looking. If you are planning on selling this year, get a jump and start planning now. Talk to realtors about what is involved in selling your property. If you are hoping to buy this year, inventory tends to build in the coming months. Mortgage rates are historically low, so talk to your lender about what you can afford and start your search online and/or with a realtor. Good things often come to those who wait, and current trends may indicate that the time to act could be now.
In 2003 John Talbott published The Coming Crash in the Housing Market. The former investment banker and economic and political commentator went on to forecast the housing peak in 2006 and the ensuing crash in real estate values. He knows his stuff. He recently offered the opinion that now is the time to run, not to walk, to your nearest lender and line up a 30 year mortgage for a home purchase. His conclusions are based on values relating to peak prices, replacement cost, income/rent, and real terms (not US dollar terms). He is pretty emphatic, and his track record is impressive. Perhaps all the runners in Crozet are heading somewhere after all!