CAAR Blog

2009 Year-End

Where Are We Now?

Home sales, compared to 2008, continued to show improvement in the second half of 2009. At mid-year, sales were down 28%, but by year-end sales were only 8.7% below the 2008 levels. In the 4^th quarter of 2009, sales (696) were up 34.1% from the same period in 2008 (519). This is the first year-over-year increase in sales we have seen in several quarters in the Charlottesville area. While it is certainly exciting to see such a significant increase in sales, it is important to remember that the 4^th quarter of 2008 was the height of the economic and housing crisis. As predicted, the 4^th quarter of 2008 (and the 1^st quarter of 2009) appear to be the bottom of the housing downturn in the Charlottesville area.

As reported for the past two quarterly reports, significantly lower home prices (down 20% or more) are driving the pick-up in sales. In addition, the $8,000 tax credit for first time buyers supercharged the sale of starter homes (below $300,000) in 2009. 67.5% of home sales for the year were in this starter home category, which is approximately a 10% increase in this category.

To read the entire report, CLICK HERE!

Commercial real estate will see negative absorption, higher vacancies, and declining rents, NAR’s latest commercial analysis shows. Financing still poses the main challenge to stabilization. The market for commercial mortgage-backed securities (CMBS) has improved, but volume is insufficient to match maturing debt. Read more in an NAR Research commentary.

  Despite a slow market and a slight decrease in the resale value of most remodeling projects, the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale. On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. The annual survey is conducted through a partnership with Remodeling Magazine and REALTOR® Magazine, and is based on value estimates provided by REALTORS® around the country. Read the full report.

2009 After 3 Quarters

Published by the Charlottesville Area Association of REALTORS®

Home sales, compared to 2008, showed improvement in the 3^rd Quarter. At mid-year, sales were down 28%, but after the first 9 months of the year, sales are only 19% below the 2008 levels. In the third quarter, sales (845) were only down 6.2% from the same period in 2008 (901). This is the smallest year over year decline we have seen in several quarters in the Charlottesville area. July and August monthly sales were very close to 2008 levels, but September fell back a bit.

As reported in the CAAR Mid-Year Market Report, significantly lower home prices (down 20% or more) are driving the pick-up in sales. In addition, the $8,000 tax credit for first time buyers has supercharged the sale of starter homes (below $300,000). 65% of home sales in the third quarter were in this starter home category, which is consistent with the overall trend for the entire year. The surge in first-time buyers is also a national trend.

Link to full report

Existing-home sales in August gave back some of their strong gain in July but remain above year-ago levels, NAR says. Single-family, townhome, condominium, and co-op sales declined 2.7 percent to a seasonally adjusted annual rate of 5.10 million units in August from a pace of 5.24 million in July, but remain 3.4 percent above the 4.93 million-unit level in August 2008.  In the previous four months, sales had risen 15.2 percent. “Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus,” says NAR Chief Economist Lawrence Yun. “The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions. Some of the give-back in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can’t take a housing rebound for granted.” Watch and link to Yun’s press conference announcing the latest EHS numbers.

Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, NAR says. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008. “The recovery is broad-based across many parts of the country,” says NAR Chief Economist Lawrence Yun. “Housing affordability has been at record highs this year with the added stimulus of the first-time buyer tax credit.” Watch and link to a video of Yun on the latest data.

For the first time in five years, existing-home sales have increased for four months in a row, NAR says. The monthly increase in July is the largest in 23 years, rising 7.2 percent to an annual rate of 5.24 million units.  Watch and link to a video of the latest existing-home sales press conference with NAR Chief Economist Lawrence Yun.

The Economic Update held at CAAR on August 6th was a smashing, yet sobering, success. Barry Merchant of VHDA had a lot of outstanding information to share. If you missed it, you are still in luck. You can listen to the audio podcast and use the PowerPoint show below to follow along.

The media provided extensive coverage for the event which can be seen at:

NBC29 - http://www.nbc29.com/Global/story.asp?S=10858697

CBS19 - http://www.charlottesvillenewsplex.tv/home/headlines/52588042.html

Daily Progress - http://www2.dailyprogress.com/cdp/news/local/article/area_housing_market_said_closer_to_recovery/43754/

PowerPoint - CAAR Conference Presentation 6 August 2009

Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the latest survey. The Pending Home Sales Index increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004. Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”
Read the release >
View the video >
View Pending Home Sales Index >

By Greg Slater, CAAR President-elect

There is a general positive feeling among many Charlottesville REALTORS®. There is plenty of antidotal evidence to point to such as comments from fellow agents about how good it feels to be busy again. But what about real numbers to prove (or disprove) my perception of the mood of the market? Is this feeling for real, or is it just some sort of pent up euphoria that has been tamped down by a dreadful 4^th quarter in 2008?

Let’s look at some numbers that are not included in the CAAR Market Reports.

First Quarter Sales by CONTRACT DATE (note: these are accepted contracts, but not necessarily closed. Some will take months to close and some will never close)

Albemarle  2008   261           (119 or 33% under $300k)

Albemarle  2009   249 (off only 5%!)  (185 or 74% under 300k)

What I get from this is that with sales dramatically up under $300k, the first time homebuyer must be back.  Some of it is probably prices coming down too. I imagine the 2nd quarter will see the median price move down further.

Charlottesville   2008     145     (89 or 61% under $300k)

Charlottesville   2009     87  (off 40% and the worst market in the general area)  (78 under $300k or 90%)

If you look at the 4 largest local markets, (Albemarle, Charlottesville, Fluvanna, and Greene), here are the numbers

1st QTR  2008       554      (54% under $300k)

1st QTR  2009       452      (71%  under $300k)

This area is off only 18% compared to last year. It appears to me we are closing the gap on last year going forward but not reflected in “closed” sales yet. We still have a ways to go before we reach 2008 sales levels, but the data is pointing in the right direction.

The main point I take away from this is the first time home buyer is definitely back. I would argue the first time home buyer is more “market savvy” than ever and they are finding value in this market place. The tax incentive and interest rates are greasing the wheels. I would also point out that regardless of where you think this market is headed, any recovery is dependant on the first time home buyers.