Western Albemarle 2023 Fourth Quarter Real Estate Report
At this time last year, we reported that the local and national real estate markets were “anything but normal.” This year that perhaps changes to “welcome to the new normal.” Elevated though easing mortgage rates continue to put a crimp on market inventory, as current homeowners/potential sellers are reluctant to give up their current low mortgage rate by putting their homes up for sale. This so-called “lock-in effect” is forcing more home buyers to purchase new construction. So, while inventory is low and buyers currently abound, factors such as persistent inflation, dwindling consumer savings, and a nationwide credit card balance in excess of $1 trillion could all influence the economy and real estate markets going forward.
Some of these factors weighed on the local market last year, but sales actually picked up in 2023, rising almost 10% to 327 sales. And while sales rose, average selling price and construction costs softened slightly, a pleasant reprieve from their strong and steady advance since the start of Covid. In Crozet in 2023, new construction sales accounted for 46% of all sales, the highest percentage ever of total home sales. And while new construction isn’t for everyone, it does provide a buyer with a done deal that can be counted on, a reasonably solid move-in date, and a warranty to boot! So, with easing costs, plenty of available new construction, and rates off their 8% high, the local market seems poised to have a strong year—as long as current homeowners who want to sell can afford to.
There were 327 sales in 2023, up from 309 in 2022. Of these sales, 14 sold for $1.25m or more; these will be excluded from the statistics for this article. The average price for a home across all categories dropped 5.5% to $567,000. There were 143 new construction sales during the year, up 22% over the prior year. The average sales price for all new construction homes was $588,000, down 13% in price due to the large number of less expensive townhomes that sold during the year. The price to build these new construction homes dropped 6% to $244/sqft. There were 170 resale properties sold during the year, down slightly from the 175 sold in 2022. These resale properties spent a median of seven days on the market, a seemingly short period but actually up from five days in 2022. Of these sales, 59% were for the list price or higher. There were 20 land sales during the year, down from 28 in 2022. There were two distressed sales during the year, a figure that should stay low as long as buyers abound.
There were 172 detached home sales during the year, down from 208 in 2022. Seventy-seven of these sales were for new construction. These newly built homes sold for an average of $729,000, down a touch from last year. The cost to build drifted slightly downward as well to $256/sqft. Glenbrook was the sales leader, with Pleasant Green and Old Trail following up. There were 113 resale homes sold during the year, down 14% from last year. The average sales price was unchanged at $600,000, and they sold in a median time of seven days. Sixty percent of these sales were at the list price or higher. Twelve percent of all detached transactions were for properties on an acre or more, a percentage that continues to slip slowly as more sales occur in subdivisions rather than in outlying areas. Going forward, sales will probably be limited only by the number of available resale listings and the amount of inventory builders can deliver.
There were 141 attached homes sales during 2023, a huge 68% increase over 2022. Of these, 94 were for new construction, more than double the 40 that sold in 2022. Attached homes are typically more affordable, and there is a good amount of permitted inventory that builders can deliver on. The average price of these new builds dropped 7%, but still remained above the half-million-dollar mark at $516,000. Pleasant Green led the sales pack with 37 total sales, Glenbrook followed with 33 and Old Trail had 24. There were 47 attached resale homes sold during the year, up a couple from 2022. The average price rose 5.5% to $414,000. These sold in a median of eight days, with 59% going for the list price or higher.
Looking into 2024, we are faced with divergent issues. On the plus side, mortgage rates are falling, which could help to loosen the lock-in effect that is keeping many home sellers on the sidelines. In fact, the Economic and Strategic Research Group of Fannie Mae expects rates to be sub 6% by year’s end. Home prices should rise at a more modest 3.2% rate compared with 7.1% last year according to the ESR Group. And wages are starting to rise. All three of these factors should help with affordability, but other issues remain. This year’s presidential election probably won’t directly impact the real estate market, but it almost certainly will cause additional societal disquiet. Whether inflation can be tamed to near the Fed’s 2% target remains to be seen. If it isn’t, higher rates could persist longer than previously expected. Add to that a dysfunctional Congress and continuing wars in the Middle East and Ukraine and it’s anyone’s guess where the economy and real estate could head. In any case buckle in for the ride!