Area’s housing market remains cool
The Daily Progress/Megan Lovett
The Charlottesville area’s real-estate market is experiencing its slowest sales pace since 2001. Excessive inventory is especially apparent in the condominium and townhouse market, where 621 properties are currently for sale.
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How is the Charlottesville area’s real estate market performing? A bit hellish.
There were 666 fewer houses sold in the region by the end of August than were sold during the same time period in 2007.
“It’s the mark of the beast,” said Dave Phillips, CEO of the Charlottesville Area Association of Realtors. “That is the actual number. I didn’t make that up.”
At the end of August, there were 2,129 homes sold in the greater Charlottesville region, marking the area’s slowest pace of real estate sales since 2001.
Roughly 3,600 homes are currently up for sale, a high level of inventory that continues to give homebuyers the upper hand over sellers when it comes to negotiating a home purchase.
The local real estate market is considered balanced between buyers and sellers when it has an inventory of somewhere between 2,000 and 2,500 homes for sale, Phillips said. At the start of the housing boom, there were 1,000 houses for sale in the Charlottesville area.
The excessive inventory is especially apparent in the condominium and townhouse market, Phillips said. There are 621 such properties for sale, mostly located in Charlottesville, Albemarle County and Wintergreen. That compares with 438 in the fall of 2007.
“Right now, we’ve got too much supply. Way too much supply,” he said. “It’s as simple as that.”
The median sales price for houses in the region is $270,000, which is down slightly from the $275,000 median sales price in fall 2007. And the market average price per square foot of residential real estate is $161, which is down from the market’s peak in 2006, when it was $174 per square foot.
“That, to me, says prices have come down,” Phillips said, speaking Tuesday morning at a Charlottes-ville Regional Chamber of Commerce breakfast at the Doubletree Hotel Charlottesville.
Though real estate sales have been slow lately, Phillips said, a properly priced house will still sell. Houses are staying on the market for an average of 120 days.
As the market has grown sluggish, Phillips added, real estate agents have left the business. At the market’s zenith, there were 1,200 real estate agents in the Charlottesville area. There are some 1,100 agents now, Phillips said, and that number is likely to drop by another 100 in the next few months.
Phillips’ remarks previewed his forthcoming third quarter report on the local real estate market’s conditions. He also offered his predictions for the coming year, suggesting that better days lie ahead.
“I see an improvement coming,” he said. “A very slight improvement.”
In 2009, he said, the region’s housing inventory will continue its gradual shift down to a more balanced level. He also predicted that the economy would improve following the presidential race. And he expects interest rates to tick upward, as banks seek to generate revenue amidst the financial industry’s mess.
The turmoil on Wall Street will not affect Charlottesville’s housing market, Phillips said.
“Unless you’re in the financial business, it’s not going to affect you,” he said.
He also recommended ignoring what he sees as the media’s negative spin on the economy.
“You can’t believe anything they say,” he said. “They’re trying to drag the economy down because that makes good news.”
Ivo Romenesko, a real estate consultant and appraiser, said he views the Charlottesville area’s economic downturn as a cyclical event that occurs every seven to 10 years. The region is a couple years into its current slowdown, he said, so he predicts a recovery in a year or so.
“We’re probably pretty close to the settling point,” he said.
Jeff Gaffney, chairman of the new homes division of Real Estate III, said that first-time homebuyers will play an important role in the local real estate market’s recovery.
New federal tax credits of up to $7,500 are available for first-time homebuyers, he said.
These tax credits are being offered to single people earning up to $75,000 per year and to couples earning up to $150,000 per year. As word gets out about such opportunities, he said, more first-time buyers could get into the market.
“It has to happen with the first-time homebuyers,” he said. “If they start buying, it’ll fuel the market’s recovery.”
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Reader Reactions
I would like to chime in on the real estate discussion. I do believe it is a good time to buy, especially for the first time homebuyer and the seller of a property. Will it cause sellers to get the usual winfall for our area, no. The buying and selling must go on. In Charlottesville and the surrounding areas the potential first time homebuyers need to call the Regional Home Ownership Center at Piedmont Housing Alliance and see if they qualify for the thousands of dollars of downpayment funds. If those funds are not used, they will leave our area. Spread the word.
I think this article proves my point about not being able to believe what you see in the press 
While I fully admit that my statements in this article “sound” silly, I would suggest that you would have needed hear my 40 minute presentation to understand the context. This was a presentation to a group of business leaders and not a press interview. If I had been speaking for the press, I would have given them a soundbite such as:
“While the current financial crisis is real and significant, it is more appropriate for those of us on main street to concern ourselves with jobs and mortage rates when making a decison to buy or sell real estate.“
Dave Phillips
A quick note regarding the tax credit to first time home-buyers: From IRS’s web-page: Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years
yea, negative spin? while i’ll acknowledge that the media often does this, there is no spin in saying that the treasury and fed are pleading with congress to pass an emergency bill in an attempt to basically save the economy.
charlottesville’s real estate market isn’t going to get hit as hard as Miami or the Inland Empire, but the only spin i’m seeing right now is this guy saying everything is fine and only people in the “financial business” will be affected.
maybe it won’t be a full blown disaster, but the vast majority of people in the country will feel the effects.
You can’t believe anything the media says, Mr. Philips? How about not believing anything you and your CAAR members say. Last I checked, they were running around in 2006 and early 2007 saying “Now is a GREAT time to buy a house,“ when in truth it was anything but!
Realtors aren’t economists, yet the media continues to quote them as such.
Re: the media is making up the economic downturn. That’s cute. Is that what you learned on Faux News? Thousands of folks are now out of work, and anyone who has their retirement funds invested in the stock market is feeling the pain of this very real recession. To dismiss that is as a media creation is to dismiss the pain of those like me who have lost their job and seen their savings erode into dust. A little caution, if not compassion, before you speak next time, please.
“The turmoil on Wall Street will not affect Charlottesville’s housing market, Phillips said.
“Unless you’re in the financial business, it’s not going to affect you,” he said. He also recommended ignoring what he sees as the media’s negative spin on the economy.
“You can’t believe anything they say,” he said.
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