Seller’s Market Forecast for Crozet Real Estate
2016 had the potential to be another banner year for real estate in Crozet. And for the most part, it did not disappoint. The year started with 30-year mortgage rates hovering around four percent, and went on to spend the better part of the year under that level. In fact, summer and early fall saw rates at 3.5 percent, just about historic lows.
But with this financial tailwind, buyers ran into seemingly limited resale inventory and rising prices across the board. And they ran into other buyers! Increased competition led to quicker sales and fed a price rise.
When the construction dust settled, there were 282 total sales in Crozet in 2016, down slightly from 289 in 2015. Ninety of these sales were for new construction, down 14 percent from 2015. The average price for a new property in Crozet rose 10 percent to $452,000. The average time a property stayed on the market dropped 13 percent for all properties, but 15 percent for resale properties. The average resale price of $403,000 is the first time the yearly average has exceeded $400,000. There were 21 land sales for the year, matching last year’s total. Distressed sales dropped 50 percent.
Real estate in Albemarle County as a whole bucked our local trend, with total sales rising about six percent overall (see attached chart provided courtesy of Nest Realty). Conditions in Crozet were evident in the county as a whole as well, namely properties spending less time on the market, selling for a higher average price, and decreasing inventory. An inventory rate of just over four months and a dropping year-to-year trend warrant keeping in mind. The spring market will see sellers firmly in the driver’s seat, and able to ask prices that were unwarranted just a few months ago.
Fourth-quarter sales in Crozet matched pretty nearly the yearly figures. Sales dropped slightly to 66 for all properties. Fifty-four of these were for detached homes, 28 of these being new construction. These newly built homes were mostly sold in Old Trail, 15 in the quarter. Westlake and Foothills each had four sales, while Haden and Chesterfield Landing had two each. There was one new construction sale on St. George Ave.
The average construction cost in the quarter was up 13 percent to $202 per finished square foot, and the average price rose 15 percent to $585,000. The average size of the new construction rose only three percent to 2955sqft, so the price increase can probably be explained by pricier finishes and higher labor and material costs.
New construction in 2017 will probably be limited to the communities that are currently being built in. That suggests that finding a newly built detached home for less than $500,000 will be difficult. The West Glen neighborhood that sits between Crozet Crossing and Orchard Acres holds promise for some more affordable options, but it is still in the approval process and probably won’t be built on in 2017.
There were 12 attached homes sales in the quarter, down from 17 at the same time last year. For the year there were 20 percent fewer townhouse sales then in 2015. The average price for a new three bedroom townhome in 2016 was $394,000. Currently, there are 10 such properties under contract at an average price of $419,000. Townhouses have long been considered an affordable first or downsizing type home, but this is presently not the case in Crozet. While the local townhomes do cost less than similar sized and featured detached homes, their escalating price exceeds most definitions of affordable.
And in a nutshell, “affordability” will be the key heading into 2017. According to the crew at KCM, the Housing Affordability Index, which measures average affordability for a typical home for a typical family, remains at a better level than any of the prior 19 years before the Great Recession that started in 2009. This may be challenged in 2017 by rising interest rates, which Kiplinger and others expect to increase to close to 5 percent for 30-year mortgage rates by year’s end.
Time will tell if continued “affordability” applies to Crozet, as we are already seeing higher than expected prices for properties currently coming on the market, and lots of interest generated with each new listing. The coming months will almost certainly see a seller’s market in the area.