We wrapped up our Q2 market report for the Charlottesville area real estate market. You can view the full report here. Here’s a recap:
Depending on what indicators you look at, the Charlottesville real estate market has been on the mend for somewhere between 12-18 months. There have been quarters where sales were up, but prices were down. And there were periods where prices were up, but sales were down. In fact, over the last 24 months, we’ve noticed a direct correlation between sales numbers and median prices: when one was up, the other was almost always down. Why? Buyers have been extremely price sensitive in recent years. When buyers saw value in a neighborhood or County, they bought homes. When median prices rose, buyers looked elsewhere.
Things were different in Q2 2013. In almost every major segment of the Charlottesville area real estate market, total sales and median prices edged higher in Q2. The only segments of the market that didn’t see increases in both sales and median prices were single family homes in Charlottesville City, Nelson County, and Greene County, and condominiums.
Albemarle County had an extremely strong quarter with year-over-year sales up 6.6% (450 vs. 422) and median prices up 13%. Single family homes and attached homes within Albemarle also performed well, seeing increases in median prices and sales. Even with rising prices, demand stayed strong for both single family and attached homes, as contracts written were up for both in Q2 – single family contracts were up 25.3% and attached homes were up 35.3%. So, we expect sales to continue to be strong in Albemarle in Q3.
Home sales by price range also showed some interesting trends. In the previous 24 months, there has definitely been a shift towards more homes in the sub-$250k selling. However, this changed dramatically in Q2 2013. Almost half (48%) of the home sales in Albemarle County were between $250,000 – $500,000. Only 29% of the total sales were in the sub-$250k range. This is clearly a result of increased buyer confidence and buyers feeling better about not just the real estate market, but the economy overall.
Charlottesville City performed relatively well in Q2, although it did not have as strong a quarter as Albemarle. Overall sales were up slightly (167 vs. 164) and median prices were up in two of the three market segments. Median prices for single family homes fell 3.4%, but attached (+9.7%) and condominiums (+14.8%) were up. Contracts written for single family (+6.84%) and attached (+76.92%) were both up for Charlottesville. Strong sales success in Longwood, Brookwood and McGinnis Row led to high sales numbers for attached homes in the City.
While prices and sales were strong, inventory levels are starting to rise again. As predicted, the increase in market activity has brought sellers back to the market as they attempt to sell their homes. Inventory levels were up in almost every major market segment. Fortunately, the increase in sales has kept the Months of Inventory (a basic supply-and-demand indicator) in check. A balanced market (neither a buyers’ or sellers’ market) is considered to be 6 months of inventory. We are now seeing market segments with consistent inventory shortage:
Albemarle attached (3.83 months), Charlottesville City attached (4.33 months), and Charlottesville single family (4.13 months) are a few examples. Even if you look at the average monthly sales totals over the last 12 months as compared to current inventory levels, Charlottesville City is at 6.8 months of inventory.
Foreclosure and short sale activity has been slowing locally and nationally for the last three quarters and we expect this will bring additional sellers back to the market. In addition, new construction activity has picked up dramatically throughout Charlottesville and Albemarle County. The inventory shortage in the City of Charlottesville may be eased a bit by development and construction starting in several new neighborhoods over the coming 6 months.
Moving forward, interest rates pose the biggest question to the local and national real estate market. As rates begin to rise (as they did in Q2) and costs increase, it will put more pressure on active buyers to make purchase decisions. To this point, the recent rate increases have not negatively affected sales in the Charlottesville MSA (as indicated by strong numbers for contracts written in Q2). We anticipate sales to continue to be strong through the remainder of the year. In fact, rising rates may escalate sales in the short term.
There’s a good, strong (but not overconfident) vibe in the local marketplace right now. As always, consult your Nest agent for more insight and interpretation of the data.