Inventory remains high; prices down

Home sales this year in Charlottesville have fallen by more than 27 percent from the same period in 2008, and average median prices for homes sold across Central Virginia have dropped about 20 percent, according to a new Charlottesville Area Association of Realtors market report.

CAAR this morning will release its 2009 third quarter housing market report, which officials say shows an excess of housing inventory and falling prices.

“The excess of inventory is causing many of the problems with our local housing market,” the study states. “Until we are able to reduce the number of homes for sale, we will continue to be in a strong buyer’s market with soft home prices and very creative incentives. That’s good for buyers, but it is not any better for the long-term housing market than the strong seller’s market we experienced just a few years ago.”

The median sale price for the region fell more than $20,000, from $269,900 in 2008 to $247,000, the study shows. Albemarle County sale prices dropped 9.5 percent and Charlottesville prices fell 6.8 percent.

Orange County prices plummeted this year, dropping 28.7 percent from last year. Fluvanna County prices fell by 17 percent and Louisa County prices dropped 16.7 percent. Greene County prices saw the smallest drop, 4.5 percent.

“The higher priced homes haven’t sold as well and those sales are down. It’s the homes selling for less than $300,000 that are moving well and that’s going to reflect a lower median price for housing,” said Barbara Murry, treasurer of CAAR and senior vice president of Montague Miller and Co. Realtors. “The houses that are selling are well priced and in good shape and are well presented by the sellers who have improved them.”

CAAR officials say the past three months have seen an uptick in sales as falling prices, low interest rates for mortgages and federal tax incentives lure more buyers off the sideline and into the market.

“The totals are behind last year when you compare year-to-year, but we’ve seen an increase in the number of sales in the third quarter,” Murry said. “We believe it’s because the prices have adjusted and buyers are coming into the market to take advantage of the $8,000 tax credit for first-time homebuyers.”

Murry said the tax credit is available to those who have never purchased a home or who have not owned a home for three years or more. The incentives are available for taxpayers earning $75,000 or less or $150,000 in earnings for those who file joint tax returns.

“There are buyers who sat on the sideline who have not been looking and are now stepping up,” she said. “The buyers are coming back into the market. There are more looking because of the incentives and that’s a good thing for sellers.”

The study bears that out. Figures show 879 homes, with a sale price of $200,000 or less, spent an average of 137 days on the market. Homes priced at $1 million or more — there are 270 available now — spent an average of 244 days on the market.

Homes sold in Charlottesville spent a median 120 days on the market compared with 112 last year, while homes in Albemarle County were on the market an average of 103 days, compared with 114 last year.

Although increased sales are welcome, the study indicates much of the improvement could be because of 2008’s record-setting lackluster performance.

“During the fourth quarter of 2009, we will likely see a year-to-year sales improvement, but only because the fourth quarter of 2008 was so bad it will be hard not to beat,” the study’s summary states. “2009 may even catch up with sales from 2008 by the end of the year. Additional declines in prices are possible, but it will be hard to tell if these price drops are a result of more sellers finally pricing their properties based on the current market, or a real decline in home values. Only time, and future market reports, will reveal this to us.”

The headline of this article was edited for accuracy.