Home sales in area fall 24 percent in 2008

Home sales in the Charlottesville region fell by 23.7 percent in 2008, marking the slowest real estate market in a decade, according to a year-end report to be released today by the Charlottesville Area Association of Realtors.

“Time will tell if the market will improve in 2009,” the report says, “but putting 2008 in the past and the promise of a new year gives the local real estate market some hope — and maybe relief.”

During 2008, there were 2,371 homes sold in the Charlottesville area, which includes the city and the counties of Albemarle, Fluvanna, Greene, Louisa and Nelson. That figure represents 737 fewer sales than in 2007.

Not since 1998 has the Charlottesville region seen so little sales activity.

Home sales were down a whopping 42.4 percent last year when compared with the peak of the local real estate market in 2005.

Every locality in the Charlottesville area saw fewer sales in 2008. Albemarle sales fell by 31.8 percent, while Charlottesville dropped 14 percent, Fluvanna 26.2 percent, Greene 17.7 percent and Nelson 19.6 percent. Louisa County fell by only 2.4 percent.

“Extremely low” sales in October and November dragged down the market’s overall performance in 2008, according to the report. Prior to those months, which were marked by a huge drop in the stock market and an overall financial industry meltdown, the local real estate market had been on pace with its 2001 sales level.

Yet the report was not entirely dreary. Local home sales activity began to pick up slightly in December, the report said, in large part because interest rates fell to historic lows in the middle of the month.

“Something has been happening recently that feels positive. There’s been a lot of interest,” said Greg Slater, an agent with Real Estate III. “I don’t know if it’s sustainable, but a lot of people are looking right now.”

The median sales price in 2008 was $265,000, down from $279,500 in 2007.

Slater acknowledged that 2008 was a bruising year for the Charlottesville-area real estate market, and he admits he has no idea if the market will turn around in 2009.

“All I know is that I’m encouraged by what I’m seeing right now,” he said.

Inventory of homes for sale continues to be high, though it has declined for the past six consecutive months, according to the report. “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,” it says.

There are 3,086 homes for sale in the region, down from 4,050 in May.

Of the homes currently for sale, 697 are priced below $200,000 and have been on the market for an average 154 days. Meanwhile, 259 homes are for sale for more than $1 million and have been on the market an average of 260 days.

New home sales continued to slow in 2008, marking the second straight year of sluggish new construction sales. There were only 478 new home sales recorded in 2008, compared with 685 in 2007 and 811 in 2006.

Michael Guthrie, managing broker and CEO of Roy Wheeler Realty, said the Charlottesville area is a “price sensitive” market, meaning that properties will sell if priced “aggressively.” Buyers, he said, are out there, but only if the price is right.

Over the past 12 to 18 months, Guthrie said, there has been something stalemate between sellers and buyers over sales prices. Now, he said, things appear to be changing somewhat as sellers become increasingly willing to drop the price.

“For the first time in a couple years, sellers are realizing that we’re in a declining market,” he said. “I’ve seen it with the multi-million properties and I’ve seen it with the $250,000 to $300,000 properties.”

The decline in the new home market, Guthrie added, may bode well for the re-sale market. As homebuyers have fewer new homes to choose from, they may be more likely to buy an existing home.

Overall, however, Guthrie believes the market remains in a wait-and-see mode.

The report concludes that it is a favorable time to buy a home in the Charlottesville area, but only if it is the right time for the buyer’s personal circumstances. “If you are looking to move or invest or plan to hold the property at least three to five years, this market offers an extraordinary opportunity if you purchase a property that is priced correctly,” the report says. “In this type of market, sellers need to offer a better combination of location, amenities and pricing than the other 50 sellers in the same price range with whom they are competing for buyers.”