Crozet Housing Market Cools, But Prices Stay High
The national real estate market has been anything but normal over the past few years. It has been largely driven by inexpensive mortgage money combined with growing piles of consumer cash from an influx of pandemic-related government handouts and increased savings. These factors helped to push housing valuations to all-time highs. But mortgage money is no longer cheap, PPP loans and other government handouts have long been spent, and the national personal savings rate has dipped to near an all-time low according to the U.S. Bureau of Economic Analysis. So, while buyers may have less purchasing power, sellers may think twice about selling and losing a low-cost mortgage—which keeps inventory low.
These factors started weighing on the market from the second quarter on, leading to dramatically lower sales in Crozet in 2022. Total sales for the year crumbled 28% to 309, a level not seen since 2018. But other than sales, most every other related number rose, including average sales price, cost to build, etc. But now we are stuck in limbo: mortgage costs have more than doubled, seriously crippling consumer ability to pay elevated prices. Meanwhile, builders don’t want to reduce prices and thus “devalue” neighborhoods, and many current home owners can’t or don’t want to sell and potentially take on a much higher mortgage cost when they repurchase. How this will turn out only time will tell, but if Elon Musk is right, everyone who needs to or wants to sell may need to start cutting prices now.
There were 309 sales in Crozet in 2022, down from 429 in 2021. And 28 of these sales, 9% of the total, were for $1m or more (going forward the statistics in this article will be for properties priced at $1.25m or less. This is up from the $1m number used since this column’s inception in 2011). In 2021 there were 10 sales for over $1m, which represented only 2.3% of total sales. The average price for a home across all categories rose to $600,000. There were 117 new construction sales during 2022, down 31% from the prior year. The average sales price for all new construction homes was $678,000. The cost to build these new construction homes rose 24% to $260 per square foot. There were 175 resale properties sold during the year, down 30% from the 249 that sold in 2021. These resales spent a median 5 days on the market, with 70% of the sales occurring at the list price or higher. There was 1 distressed sale during the year, a number that could rise if buyers disappear or we slide into a recession. There were 28 land sales during the year, down from 39 in 2021.
Of the 208 detached sales during 2022, 77 were for new construction. These homes sold for an average price of $742,000, and the average cost to build these homes rose 15% to $262sqft. Glenbrook and Old Trail were the sales leaders with 36 and 32 sales respectively. There were 131 resale homes sold during the year, down 28% from 2021. The average price rose almost 20% to $600,000. These homes sold super quickly, spending only a median 5 days on the market. And 76% of these sales were for the listing price or higher! These two statistics indicate strong buyer demand, which in spite of many negative factors actually looks to continue. Seventeen percent of the sales were for homes on an acre or more, properties that tend to be in outlying areas. This figure continues to drift lower as more sales occur in subdivisions and surrounding buildable land becomes scarcer.
There were 84 attached home sales during 2022, down 41% from 2021. Forty of these were for new construction, down almost 50% from 2021. The average price rose an astonishing 29% to $555,000, breaking the half-million-dollar mark for the first time. Glenbrook and Old Trail were the sales leading neighborhoods, but with Phase 2 of Pleasant Green now open, expect renewed sales there in 2023. There were 44 resale homes sold, down a third from the prior year. The average sales price of $392,000 for these homes was up “only” 8.5% from 2021, showing the smallest price increase across all categories! But 59% of these sales did occur at the list price or higher.
Looking into 2023 we are faced with uncertainty. Current high and seemingly rising mortgage rates, high resale prices, and high building costs have driven the home buying affordability index close to an all-time high. And even though the national press projects doom and gloom for real estate, local professionals continue to feel we remain in a seller’s market. But it continues to be all about the rates. Mike Fratantoni, chief economist of the Mortgage Bankers Association, expects mortgage rates “to move lower for the year, and home price growth is expected to cool…” While this may seem optimistic, if rates do move lower, and home pricing stays relatively flat, regardless of the total number of sales Crozet will remain in a seller’s market. In any event now, more than ever, if you are considering buying or selling do consult with a real estate broker.