By David Ferrall
2012 was a great year for real estate in Crozet. It marked a return to a more balanced market missing since the start of the Great Recession in 2009, and the year experienced the highest number of sales since 2006. That was a tough act to top for 2013, but the 256 sales in Crozet last year was a 5 percent increase over 2012 (see chart provided courtesy of Nest Realty).
Increases were across the board in 2013, with higher average and median prices across all categories, as well as higher finished square-foot cost. Demand remained strong through the year, and while fourth quarter sales numbers lagged slightly over the prior year, 2014 is poised to be another strong year in Crozet. There will be good choices for buyers, and sellers who price their homes in line with market comparables should be able to sell. There are overall market head and tail winds, and if neither gains an upper hand, Crozet should experience a healthy real estate market this year.
The good news was shared in the rest of the area as well. According to the Nest Realty annual report there was an 8.5 percent increase in sales in 2013 in the Charlottesville metropolitan statistical area. The median and average sales prices were both up over 6 percent, to the highest levels since 2008. Houses sold faster than in 2012, spending an average of 95 days on the market. Inventory ended the year 8 percent lower than in 2012. And all this at the highest sales price vs. list price ratio level since 2007.
There were 49 total sales last quarter, compared with 53 in 2012. Of the 49 sales, only three were for attached properties, down from 14 in 2012. This reflects the end of new unit sales in Wickham Pond and Liberty Hall, Haden Place and Old Trail now being the locations for new townhomes in Crozet. Of the 46 total detached properties sold in the quarter, 23 were new construction, with the bulk (13) in Old Trail. Wickham Pond (5) and Foothill Crossing (5) account for the balance. There were 11 sales on properties over an acre, which were all in surrounding Crozet areas. There were three sales over $1 million (these will be excluded for numerical cost statistics).
So though sales were down, every other measure was up. The average price for a house in Crozet in the quarter was $411,000, up 13.5 percent from 2012. The price per finished square foot of interior space was up 11 percent to $157. The average price for a detached house rose 3.5 percent to $425,000, while attached homes jumped to $399,000, up 38 percent from the $290,000 average in the fourth quarter of 2012. Price per finished square foot was up 12 percent to $151 for detached properties, and up 28 percent to $185 for attached properties. Advancing commodity prices on building materials continue to be a factor in rising prices, but so too is consumer demand for more costly finishes in new houses. As prices of new construction rise, the price of pre-existing housing goes with it. This is a reversal of the trend we saw in 2009-2011, when crumbling commodity costs and low-cost building lots kept new construction prices low, which in turn negatively affected pre-existing prices.
In the last quarter there were two distressed sales in Crozet, down from four in the last quarter of 2012. But while foreclosures and short sales decreased in number in Crozet, they were up 30 percent last quarter in Albemarle County as a whole. Hopefully continued price recovery will lessen the number of distressed sales.
Two other issues could present slight headwinds as we head into 2014. Housing inventory has stopped going down and is actually higher at 2013’s end compared to a year earlier here in Crozet. Inventory currently sits at a bit over nine months, still above the five to six month backlog that a traditionally balanced market exhibits. Second, interest rates are a large question mark for real estate and the economy as a whole. Not only do they affect mortgage rates, but rising rates will affect the nation’s economic growth and carrying cost for the national debt. Current 30-year mortgage rates at around 4.5 percent are up a full percentage point over a year ago. The five year high is 5.3 percent, a level both the National Association of Realtors and the Mortgage Bankers Association think we could touch this year. Doug Duncan, Fannie Mae’s chief economist, thinks the Federal Reserve wouldn’t “be troubled with a 6.5 percent mortgage rate.” Ouch. What this might do to our still recovering real estate market remains to be seen.
Despite some cold weather, inquiries are up and potential buyers are looking at properties of all sorts. So while there may be bumps in the road, 2014 is shaping up to be another excellent year for local real estate.