2008 Year-End Market Report
Charlottesville Area Association of REALTORS®

Overview
It probably comes as no surprise that the 2008 Charlottesville area real estate market had a bad year. If you have read any of the 2008 quarterly reports we produced, you know all about the decreases in home prices and the oversupply of homes for sale. The 4th quarter - thanks to phenomenal stock market declines, credit crunches, and bail-out mania – took the slow market we had experienced for the first 9 months down another notch. Sales in October and November were particularly bad as consumers froze in the face of amazing national and world-wide events. In December, the market rebounded a bit thanks to very low interest rates and the relief that the elections were indeed over.

All told, many homeowners and REALTORS® are glad to be finished with 2008. The small December market rally, the Stock Market possibly stabilizing, low interest rates, and the new hope that follows a regime change in Washington DC may give the market the momentum it needs. Time will tell if the market will improve in 2009, but putting 2008 in the past and the promise of the New Year gives the local real estate market some hope – or maybe relief.

Homes Sold
There were 2923 homes sold in the Charlottesville area during 2008, which was down 22% (-824 sales) from 2007. All local areas were down from last year: Albemarle -31.8%, Charlottesville -14%, Fluvanna -26.2%, Greene -17.7%, Louisa -2.4% and Nelson -19.6%. The extremely low sales in October and November dragged the year-end sales number down to a level we have not seen since 1998.

New to the 2008 CAAR Market Reports are numbers from the other side of Afton Mountain. The Staunton/Waynesboro real estate market, referred to as the Central Valley in the charts below, now overlaps with the Charlottesville area market to such an extent that we need to report separate numbers for that area. These numbers were generated from the Greater Augusta MLS, which has more complete data on the Valley market than the CAAR MLS. Based on the total number of sales, the Valley is the second largest market area in the report. Sales were down in the Valley by 18.9% compared to last year.

Median Sales Price
How much have home prices slipped in this area? Most would agree that local home prices have slipped from their high in 2006, but each area – and arguably each property - is distinct. Although the area median price of homes is an important statistic, you should not compare a change in the median price of homes that sold with an actual increase or decrease in home prices. The median prices listed below are the middle of the market of properties that sold. Simply put, this is an indication of what buyers were willing to pay and is not a true reflection of individual home prices. It is probably safe to assume that a steady, year-to-year increase in the median price is a good sign, but it does not necessarily mean prices are up and vice versa if the median price decreases.

The only way to know what your home will sell for is to have a REALTOR® or appraiser prepare a comparative market analysis (CMA) for your property. This market is changing very quickly and to be up-to-date, you need to do a CMA every two weeks. Pricing a property correctly is the best way to sell it!

Overall, the median home price (including attached homes) declined $14,500 (-5.2%) from last year. Albemarle (+4.3%) was the only county to show an increase in median price, with all other areas showing declines. Median prices for other locales include: Charlottesville (-5.4%), Fluvanna (-6%), Greene (-9.5%), Louisa (-6.1%), and Nelson (-3.2%), and the Valley (-5.8%).

Inventory of Homes for Sale
The inventory of homes for sale in the Charlottesville area has declined slightly for the past 6 months in a row. There are still too many homes on the market right now, but at least this is a positive sign that the local market may be headed in the right direction. For the past 12 to 18 months, the excess inventory of homes on the market has been the most significant factor causing local home prices to soften.

Currently, we have 3,086 homes on the market, compared to 3,072 at this time last year (see chart below) and considerably less than the 4050 on the market at the end of May 2008. The median price of homes currently for sale is $299,900. The average DOM (days on market) of these homes is 189 days. It is a great time for first-time buyers, because there are 697 homes for sale under $200,000 with an average DOM of 154. There are 259 homes currently on the market priced at a million dollars or more with an average DOM of 260.

Days on Market (DOM)
DOM for homes that have sold is perhaps the best indicator of the true market condition. In a balanced market, the DOM should be around 90 days. In 2005, the market was a super-heated sellers’ market due to low inventory, and DOM dropped to 62 (see chart below). That was a significant sellers market. The 2008 market had a glut of inventory, so the 119 DOM is not a surprise. We continue to be in a fairly strong buyer’s market, so sellers will need to price their properties aggressively to beat the average DOM.

New Construction
It is important to note that many “new” homes are not included in CAAR MLS statistics. It is very common for a buyer to contact a builder directly to custom build a home. With that said, the historical perspective of the pace of new home sales gives us a reasonably good picture of the market for new construction. As the chart below shows, new home sales have declined sharply in the past 24 months.

Price Per Square Foot (Finished)
Looking at the average price per square foot of finished space in homes that have sold is interesting, but should not be relied on as a scientific number. The averages in this section of the report include the cost of the land, which varies greatly based on location and amenities. A lot at Wintergreen with fantastic views of the Valley costs much more than a lot in other parts of Nelson. With that said, the numbers in this section reflect a general sense of the cost of housing in the areas listed. The new Central Valley area is the lowest price per square foot section of the market. Not surprisingly, Fluvanna, Greene and Louisa are less costly than Charlottesville and Albemarle. Nelson is heavily influenced by Wintergreen building prices and lot costs.

Condos and Townhomes
The sale of attached homes is only reported in Charlottesville and Albemarle because very few properties in this category are located in other counties except Nelson. Since the condos in Nelson are primarily in the Wintergreen Resort market, we have decided not to include them in this report. Charlottesville condo sales are still reasonably strong, but Albemarle sales plummeted 45.4% compared to 2007. The chart below shows the attached homes sold in 2008 compared to past years. Inventory levels of attached homes for sale are still high, with 362 listed for sale in Charlottesville and Albemarle, but this number decreased significantly in 2008. This over-supply is presented in the 204 average DOM for the attached properties currently on the market. The median price of an attached home is $234,995.

Conclusions and Predictions
2008 will go down as one of the most interesting years in real estate. The market appeared to be stabilizing in September when monthly sales did not show a decline from the previous year. Then the Wall Street implosion slowed the market significantly heading into the already slow holiday season. The year ended with 5% mortgage rates and a small (but welcomed) surge in sales.

As we concluded in previous Market Reports, it is a GREAT time to be a buyer, if it is the right time based on your personal circumstances. If you are looking to move or invest and plan to hold the property at least 5 years, this market offers an extraordinary opportunity if you purchase a property that is priced correctly. In this type of market, sellers need to offer a better combination of location, amenities, and pricing than the 50 other sellers in the same price range with whom they are competing for buyers.

There are some indicators that the market may pick up at the mid-year point of 2009. The key to improvement in the market is a reduction in inventory. We need to reduce inventory by a third to get to a more balanced market. The Charlottesville Area Association of REALTORS® now has live statistics posted on the web at CAAR.com. Watch the inventory of homes on the market and hope that it continues to shrink to a stable level – around 2000 to 2500.

CAAR Market Report
2008 Year-End
Published by the Charlottesville Area Association of REALTORS®

FULL REPORT: Click Here

2007 4th Quarter Market Report

2007 3rd Quarter Market Report

2007 Mid Year Report

2007 1st Quarter Report

2006 Yearly Reports

2005 Yearly Reports

2004 Yearly Report

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Saturday, February 19, 2005; Page F01