The Crozet real estate market finally took a breather in 2022. Interest rates started to go up, loose money started to dry up, and at year’s end area sales were down 28%. But prices remained stubbornly high even in the face of the fact that mortgage rates had doubled. So, the big question going into 2023 was, were prices going to remain elevated, held there by limited inventory and continued buyer demand?
If the first quarter is anything to go by, the answer is unequivocally yes.
There were 37 total sales in Crozet at the quarter’s end, a prodigious 43% drop from the same time last year. It was the slowest first quarter since 2011 when this column started. But it wasn’t for lack of buyers. In spite of 30-year mortgage rates hovering near levels not seen in two decades, there were at least several buyers for most re-sale properties that came on the market. At the same time rising rates are keeping many sellers off the market, as many potential sellers don’t want to take on larger mortgages if they don’t have to. With demand high and re-sale inventory low, many local buyers have been driven to new construction homes in neighborhoods like Pleasant Green and Glenbrook. And while some buyers might think waiting could bring better pricing, analysts such as Selma Hepp, the chief economist at CoreLogic, warn “…that most markets have already bottomed out.” It’s going to be an interesting year.
Of the 37 sales in the first quarter, four were for homes priced at $1.25M or more (these homes will be excluded for statistical purposes, and due to rising prices over the years this amount has risen from the $1M threshold of past reports). The 43% drop in local sales was way out of proportion to the 5.6% drop in Albemarle County. The overall construction price per square foot, average and median prices, and days on market for all home types were, surprisingly, fairly static. But new construction home prices continue to rise. There was one land sale in the quarter, down from four last year. This figure has been dropping as decent buildable land becomes scarcer. There are currently five pending land sales, also down from the 12 in 2022. There was one auction during the quarter, a country property that sold at a steep discount to its appraised value. In fact, during the past couple of years many sales have been “silent auctions” of sorts, with numerous properties getting multiple offers, but the bidders were usually blind to what other bidders were offering.
There were 21 detached sales in the quarter, down from 45 at the same time last year. Nine of these were for new construction, with most being in Old Trail. The average cost for these builds mitigated slightly, down 3% to $245 per square foot. But the average home size rose to 3,262sqft, so the average price in the quarter rose as well to $791,000. For the 12 re-sale transactions in the quarter, the average price dropped 15% to $456,000, and the median days on market was relatively high at 51 days. Both figures due in large part to the low number of sales, and almost complete lack of inventory in the category.
There were 12 attached home sales in the quarter, down slightly from the 13 at the same time last year. Nine of these were new construction, with five in Old Trail and four in Glenbrook. The average building cost of these rose 12% to $255/sqft, and the average price rose 27% to $618,000. There were only three re-sales transactions during the quarter, they sold almost immediately at an average price of $412,000. These homes all sold over their original list price.
According to the Case-Shiller national home price index, home prices across the country rose in February, breaking seven months of downward movement. In Crozet, really the only decline we’ve seen has been in inventory. Home prices have remained stubbornly high, due mostly to lack of inventory and continued buyer demand. As senior Zillow economist Jeff Tucker points out, “…buyers are going to see more competition than they might expect because there are not many homes on the market…” In Crozet, low inventory, continued high building costs, and persistent demand continue to support higher prices. Hopefully some increase in wages will help to mitigate this upward spiral, or at least help offset rising mortgage rates. If not, local affordability will continue to decline. It could be a long year for those hoping to buy in Crozet.