By David H. Ferrall
In the second quarter of 2011 the country was facing a potential financial crisis over the debt ceiling. On July 31st of that year an agreement was reached that increased the debt ceiling with promises to decrease spending. Sound familiar? It should, as it is remarkably similar to the predicament we find ourselves in today. The federal government’s debt ceiling has been raised again temporarily with the end of the 16-day-long government shutdown. Sadly local real estate business is starting to be affected, as closings are being delayed due to furloughed workers and shuttered federal agencies. Popular loan programs like the USDA’s 100 percent loan, which accounted for financing of almost 10 percent of last quarter’s Crozet closings, stopped. And while federal VA and FHA loans are ongoing, some delays are being reported. The IRS is experiencing delays, which is slowing down some loan-required documents. But while coming real estate hiccups may be the result of Washington’s current indigestion, the third quarter market in Charlottesville overall (see the Five Year Sales Activity chart provided courtesy of Nest Realty) and in Crozet continued the year’s shining performance. In the Charlottesville area MLS sales were up almost 26 percent over the same period last year, and median sale price is now back up to about 2007 levels. In Crozet we are 8 percent ahead of last year’s total sales, with 207 sales to date (remember, this “Crozet area” is defined by the Crozet and Brownsville Elementary school districts). Sales in the third quarter were up almost 20 percent, from 62 sales in 2012 to 74 sales this year. Average price per finished square foot is up 11 percent to $149, average sale price is up 13 percent to $364,000, and the median sale price is up a whopping 25 percent to $368,000! And there were only four foreclosures/short sales in the quarter, down from seven in 2012. Twenty percent of total sales were paid for in cash.
Breaking down the numbers, there were 54 detached sales in the third quarter. The largest was Farfields on Rt. 250, a 155-acre property that sold for $2.2m in cash (note: this sale has been excluded from sales figures). The average selling price in the quarter was $403,000, up 14 percent from a year ago. Twenty-one properties were new construction, with five sales each in Wickham Pond and Old Trail, and the balance spread across Westhall, Foothills, and Haden Place. Westhall is currently sold out, and Haden Place and Grayrock West are new communities we will start hearing more about. Fifteen properties were sold on an acre or more, which generally puts these out in the county. New construction sales on Lanetown and White Hall Roads are interesting to note, in that one was a speculation build by its contractor/owner, the other a custom home on a piece of land purchased in the county. Both builds are types that have been generally missing from the market in the past few years. From a real estate point of view, it is good to see folks building again in the county, rather than choosing from depleting existing inventory. It is also good to see builders building spec homes to have new homes ready for immediate purchase and occupancy.
In the third quarter there were 21 attached properties sold. Nine of these sales were for new construction, the majority in Old Trail. Overall, 13 of the sales were in Old Trail, and three each in the Highlands and Haden Place. Average price per square foot was up 11 percent to $147, the average selling price of an attached property rose 16 percent to $276,000. Expect Old Trail and Haden Place to share the new construction spotlight as Wickham Pond is sold out for new attached houses.
As we enter the fourth quarter there are 52 properties under contract. Quite a bit below the 74 at the same time last year, but we should still exceed the 244 total sales we saw in 2012. Current inventory is actually up about 12 percent over the same time last year, but annualized inventory is down to below nine months. While a five to six month inventory level is closer to an ideal balance, achieving this may be hard as long as there exists un-built inventory in large developments, such as Old Trail.
Signs point to continuing strengthening in the housing market. Interests rates remain low and have actually fallen over the past quarter to a 4.33 percent average for a fixed 30-year note (Bankrate.com). Inventory continues to drop, and while properties have appreciated slightly over the year, they remain a bit lower when compared to prices before the Great Recession.