Real estate sales in Crozet for the third quarter of the year were down 26% compared to the same time last year. And total sales for 2022 are down 36% year-to-date over 2021. Why? At present, it’s all about the rates. According to Freddie Mac, the benchmark 30-year mortgage rate stood at 3.11% on the first day of 2022. As of October 20, the rate was 6.94%, up 123% in ten months. And, sadly, this unprecedented move probably isn’t over, as the Federal Reserve continues to indicate that higher rates will be needed to dampen continued elevated inflation that has touched every corner of the economy. Higher rates make homes more expensive to purchase, and they give sellers pause to weigh the advantages of themselves having to re-purchase at higher rates.
The 26% quarterly sales decline in Crozet was almost double the 14% decline in Albemarle County as a whole. Of the 93 total sales in the quarter in Crozet, 66 were for detached homes, and 27 were for attached townhomes/villas. Six of the sales were for properties over $1m. These sales will be excluded for statistical purposes, but as they are occurring now with greater frequency, some will be included in this report starting in 2023. Twenty-six of the sales were for new construction, a 52% drop from last year. Old Trail was the sales leader for attached sales, while Glenbrook lead the way for detached sales. Twelve of the total sales were for homes on an acre or more, which represents about 13% of total sales. This percentage has been going down over the years as more new construction sales on smaller lots outweigh Crozet ring area sales that typically are on larger parcels. There were six land sales in the quarter, including two that were under an acre in Foxchase. There were no distressed sales in the quarter, a figure to watch closely as inflation and other economic issues could weigh heavily on any over-leveraged properties.
The average price for a detached home in Crozet stayed relatively stable at $613,000, but the average square-footage price of these homes rose 13% to $237. Of the 60 detached sales, only 17 were for new construction. The cost of these homes rose 5% to $716,000, but they also shrunk 7% in size to an average of 2,736sqft. The cost to build these homes rose to $266sqft, a price that hopefully will be topping out soon. The average price of a resale home rose slightly to $572,000. They continue to sell fast, though, spending a median time of only 5 days on the market. Sixty-five percent of these sales were for the listing price or greater, down slightly from the 70% seen at the same time last year. Resale inventory remains tight, and could remain so as prices soften and sellers realize that if they move, they won’t be able to replace their current low mortgage rate.
There were 27 attached home sales in the quarter, down 47% from the 51 sales during the same period last year. Only 9% of these were for new construction, partially a reflection of dwindling land stock for such home types. This percentage should increase though in coming quarters as the second phase of building in Pleasant Green has started. The average price of these newly constructed homes exploded 57% to $649,000, reflecting the fact that the majority of these builds were larger and in more expensive Old Trail areas. The cost of these builds exploded as well, moving from $189sqft to $279sqft. There were 18 resales in the period, and even though the average cost rose 8% to $385,000, and 44% of them sold for list price or more, they stayed on the market a median of 20 days, up from five at the same time last year.
Moving forward, what is almost certain is that mortgage rates will continue to rise with Fed rate increases until core inflation is under control. Rising rates and other national/international uncertainties have certainly led to a cooling of the local and national real estate market. The Home Price Expectation Survey from Pulsenomics suggests some price depreciation in 2023, but further appreciation starting again in 2024. So, while we may increasingly experience growing inventory and decreasing purchasing power, this trend could be short-lived. What all industry experts agree on is that now, more than ever, if you are planning on buying or selling a home, consult with a trusted real estate professional first.