2012 was a big year for local real estate. The Charlottesville MSA (metropolitan statistical area) saw a sales increase of 15% over 2011, and in the first quarter of this year experienced the 7th straight quarter of year-over-year sales increases. Reason to celebrate indeed, as a stabilized housing market is a bedrock foundation for local and national economies. Crozet real estate experienced the best sales numbers since 2006, in fact one of every five sales last year in Albemarle County occurred in Crozet! Sellers had the best chance in years to attract a buyer with a fair price, while buyers continued to enjoy historically low mortgage rates and good inventory. With an unusually active and strong fourth quarter the indicators were in place for a busy first quarter, the start to the traditionally active spring real estate market. So how did Crozet fare in the first quarter?
The answer actually is just okay, which is a bit of a surprise to market watchers and participants. The fourth quarter ended with 53 total sales, and 76 properties under contingent or pending contract. This latter number has risen to 103 at first quarter’s end, but the number of quarter sales at the end of March totaled only 45. This figure is a slight drop quarter to quarter from 2012, when 47 sales were recorded. No doubt some new construction settlements have been delayed into the second quarter due to wet weather and power outages that slowed construction over the past few months, but the number of total quarter sales is still a head scratcher. A quick drive around town would suggest otherwise as well, with new houses and developments seemingly popping up everywhere. So while quarter sales may not have been as strong as they could have, local activity suggests 2013 should exceed 2012 in total area sales.
Of the 45 total sales in the quarter, 29 were detached properties, 16 being attached. This ratio is pretty consistent quarter to quarter. Among attached properties, the majority were in Old Trail and in Highlands. Coming quarters should see a shift more towards Old Trail, as a whole development block has been dedicated to a local townhome builder, and they seem to be going up at a rapid pace. Haden Place has also broken ground, attached houses there are already under contract to close later in the year. Of the 103 contingent and pending deals, 60 are for new construction which has local builders quite pleased. Among the detached properties there were 3 sales over $1m, the most in any quarter since the second quarter of 2007 (5 sales over $1m.). 9 of the sales were on an acre or more, the balance being for the most part in developments. Old Trail sales represented 25% of these, but new ground breaking for single family houses in Wickham Pond and Grayrock North holds potential for their national builder.
For the most part price numbers have held the line quarter to quarter. This is somewhat surprising given persistent inflation in building material cost and decreasing inventory. Excluding the 3 sales over $1m, total sales figures for price per square foot ($136), average ($324K) and median ($296) prices were all within 2% quarter to quarter. This holds pretty true across detached sales, while attached sales saw a slightly larger 6% increases in price per square foot to $140, and a 10% increase in average price to $275K. The average price of a detached property was $322K. The one unpleasant number that is up quarter to quarter is for distressed sale properties. Lender owned (7) and short sale (1) transactions represented almost 18% of total sales for the quarter, up from just under 11% last year. This is a trend that we hope to see reversed, and should as prices continue to stabilize and banks/lenders work through their inventory. And speaking of inventory, there is currently a bit over 9 months available, down from 11 1/2 months at first quarter’s end last year.
And inventory is important. According to the folks at the KCM Blog, diminishing inventory is one of the reasons that now is a great time to sell a property. Other factors are strong demand and limited new construction inventory. This last factor is interesting, since real estate watchers note that as real estate gains traction, more builders will emerge to take advantage of renewed opportunity. More new home availability could increase supply and over balance demand, favoring the buyer once again. While this doesn’t seem likely anytime soon, and certainly not locally, there are more new home builders in Crozet today than there were this time last year.
But most agree, housing prices should continue to rise through the year. Strong demand and continued low interest rates will result in price increases of 3-7% this year, according to Ivy Zelman of Zelman and Associates. And Fannie Mae supports this view, predicting strong demand pushing the number of homes sales up 10 1/2% this year, and by 6.2% in 2014. But they go on to predict a slow creep in mortgage rates, from a current rate of around 3.5% for a 30 year fixed mortgage, to 4.5% by the end of 2014. Still quite low by historic standards, but that jump of almost 30% will diminish consumer buying power.
For sellers who have been on the sidelines, today represents their best chance in years to sell their property for a fair market price. And buyers continue to enjoy low borrowing costs and reasonable inventory. It would seem there is something for everyone as we head into the second quarter!