Posts Tagged ‘charlottesville virginia’

If I’ve said it once, I have said it 1000 times. Follow the new home market for insight on the overall market. Understanding what is being spent on a new homes is valuable information. There is a relationship between the value of new homes and resale homes.

That being said, there is some very interesting information coming out of the new home market right now. When it comes to new home values, there are many angles to consider.  Overall residential supply, availability of land, short sales and foreclosures, and cost of construction all have impact on values.  For some time now, lack of confidence and declining housing starts have kept construction costs down.  That may have just changed.

From Drew Holzwarth of Piedmont Realty and Construction: 

“This has been an interesting week for a variety of reasons.  The positive industry news in the media, with several industry analysts calling the bottom of the housing market, has led to a building production manufacturer reaction that I expected.  Anemic margins have been achieved by suppliers, contractors and builders alike the past few years in the real estate market.  The fourth quarter of 2011 has been highlighted with attractive corporate profits in other industries that  have lifted the equities  markets and increased consumer confidence.  This positive global news has led to Analysts who follow our industry to say that we have hit the bottom and there should be a slow climb from this point.   I fully expected our national building material suppliers to pounce on this news and they have.  On Wednesday, all 3 national drywall suppliers – the only ones left that produce drywall in the United States announced price increases – all the same – all 35% increases, Effective immediately.   In my career of following pricing of building products, I have never seen this level of a price increase.  The bumps are historically 5%  to a maximum of 10%.  Their only competition is Chinese Drywall…..pass.    On Friday, Timberline and Tamko announced a 15% increase on roofing products.  This week, I expect, similar increases from Fiberglass insulation, PVC plumbing pipe, lumber, and cement – raising concrete prices.  Crazy and frustrating.  The market remains challenging and homebuilders will have to continues to stay relevant and sell value in order to justify building new vs. the value in buying resale homes.”

Holzwarth’s company is the largest privately held home builder in our area. Piedmont Realty and Construction closed 72 sales for just over $29 million in sales volume in 2011.

This is a very interesting development for certain and some builders will react faster than others. I read somewhere that builders will need to absorb these additional costs themselves. I don’t see that happening. From the builder’s I talk to, there really isn’t room. Over the last few months, new homes sales have been steady in our area with renewed, yet cautious, optimism going forward. Hopefully, the market can absorb these price increases and keep moving. We will see.

New home sales have represented roughly 20% of all sales in Albemarle County for the last 2 years. In many segments of the market, buyers are evaluating their choices and finding that  a new home, exactly the way they want with energy efficiency features, is a better value than their resale options. Today’s buyer is far more deliberate and long term minded than the buyer from just a few years ago.

It will be very interesting to monitor new home prices and their impact on sales in both the new home and resale markets. But as you can see from above, the builders and developers are working hard to be relevant in the market and respond to demand.  If you are considering a purchase in the coming months, be sure and get out there to see what is available new, even if for no other reason that the context it provides.

If you’d like to have a conversation about this market and your goals for buying or selling in 2012, feel free to contact me.

A little over a week ago when I heard NAR was revising their national data, my immediate reaction was… so what? I commented to a colleague that if I challenged them to find an agent with a client that referenced national data when making a home buying or selling decision, they would have a difficult time locating one. I have never had a client reference this data.  I assume there is going to be a lot press surrounding these numbers. While these numbers are going to change, and the numbers of sales is going to decrease, I don’t think it really matters to the overall market. This conversation is far too local and we have far better data available to us in our local MLS. For example, when we tally the numbers, we are going to see more homes sold in 2011 in Albemarle and Charlottesville than did in 2010.

Here is some commentary on this topic from VAR and CNBC for reference.  The data will be release on December 21. (Tomorrow at the time of this post.)

It’s important to understand your segment of the market. I gain a lot of my insight into the marketplace through my relationship with Piedmont Realty and Construction. Understanding the new home market is vital to understanding the overall market. 2011 is going to go down as the worst year in homebuilding since they started keeping records 48 years ago. The number of homes built in 2011 will be just 14% of the number of homes built in 2004. 6 out of 10 privately held home building business that were in operation in 2004 no longer exist.

Piedmont Realty and Construction launched in 2009. In 2011, they will contract for over 70 homes and close over 70 homes in this calendar year. This is truly remarkable and incredibly relevant to our market.

A lot has changed since 2004. The business model is different. Demand has changed. Construction methods to achieve energy efficiency is here to stay. We take orders for new homes now and speculative building is all but gone. I think this is a good thing. I gain an incredible amount of knowledge and insight in to this market by being exposed to all of those sales. Each sale is a tremendous amount of market data. Why did they choose to build? What was the floor plan type chosen and why? What features are most important? What locations are in demand and why? I could go on and on. The order for a new home is the leading edge of demand in the market place. I balance that against my analysis of the resale market and my experience helping buyers in seller in the overall market.

If you are interested in buying or selling in the Charlottesville area real estate market, I am interested in that conversation. Feel free to contact me if you would like to learn more about my approach to helping my clients make the best decision possible in the context of their situation.

In 2005, I was on the front lines of the condominium conversion business model that swept through the Charlottesville area. I worked with the developer and attorney for Webland Park to convert those rental homes into condos. Mid-way through that project Hessian Hills was converted to a condominium community. Demand was strong and sales occurred at a rapid pace. Before the market cooled off many more apartments were converted to condos in the area. Several projects still have many units still available from their original conversion. During these years I learned a tremendous amount about condominium ownership, and maybe more importantly, condominium financing.

When somone purchases an attached or detached home, we refer to that as fee simple ownership. That is, you are buying the land and the home just happens to be attached to it. When purchasing a condominium, you are buying the “unit” as defined by the governing instrument and you collectively own the land as a member of the condominium. As I said, this is a very different type of real estate ownership.

I strongly encourage anyone considering purchasing a condominium to do their homework.   I would recommend staying informed if you currently own a condominium as well. The availability of financing has always been at the core of the conversation. The Virginia Association of Realtors has released a good article on this topic. Check it out here. 

This is a complex topic. Feel free to contact me if I can be of assistance.

The quarterly report on our area real estate market is out. CAAR 3rd Quarter Market Report

There is not a lot of big news in this report. Our market has been meandering along for a few quarters now and we are seeing a continuation of those trends.

1. Inventory continues its slow decline. It’s hard to identify a direct cause. Some are waiting, some are renting, etc.

2. The pace of sales year over year is relatively constant. See report for exact numbers.

3. Median price continues to be seasonal and trending lower year over year.

While we often refer to this market as the new normal, I personally believe there is still pent up demand in the marketplace and sales activity is lower than what I think will experience when we get past all of the hardship caused during the recession.   The tough part of the equation is determining the pent up need to sell. I meet a lot of people who would like to buy or sell but just can’t make it work right now.

 I continue to watch distressed sales and new home sales a percentage of the overall market. For the immediate Charlottesville area closed sales through September, short sales and foreclosures represent 16% and new homes represent 15%. Year over year the distressed sales have slightly increased (+2%)as a percentage of all sales and new homes (-2%) have slightly decreased.  Basically, the banks and builders are getting 3 out of 10 sales in the area. (Charlottesville, Albemarle, Fluvanna, and Greene) I think watching these percentages and they way they are trending is important to understanding our market. 

This market is very local and very personal. Whether you are considering buying or selling, take the time to fully understand your options in your segment of the market. I talk to people every day who think they know what is going on, but have not really looked closely at the data and/or comparable sales.

The following information is from the CAAR MLS 8/1/11 and the Charlottesville Area includes Cville, Albemarle, Fluvanna, and Greene.

July contracts were up 25% (152/190) year over year for July for the area. All areas sawan increase except Fluvanna. (Slight decrease)  For perspective: 2007=213 2008=173 2009=202 2010=152 2011=190

Year to date year over year, contracts for the area have pulled ahead 3%. (1353/1388)

Some key points to note:

1. 11% of these contracts were short sale or foreclosure. Up 50% since last July, but lower than the average from 1st half of the year.

2. Condo/attached sales were up 115%. (19/41)

3. I pull inventory numbers on the 7th of each month to eliminate the unnatural drop of listings expiring at month end and coming back to the market over the next several days.

This is just a snapshot of July.  I would imagine there will be more sales reported this week and  some of these won’t make it to settlement. Regardless, this is just to give you an idea of one of the many ways I evaluate this market. I customize analysis based on the needs and goals of my clients. This market looks very different to buyers and sellers and can vary across price points and locations in our area.

I visited Avinity and Belvedere today and took a quick video to show the progress of the Piedmont Realty and Construction town home offering in both communities.  These two communities both offer the opportunity to live in an Earth Friendly Piedmont town home.

I am going to go on the air on Saturday morning with Michael Guthrie to discuss the first half of 2011 real estate market data. I’ve checked out the CAAR Market Report and prepared my own analysis that I follow to guide me in assisting my clients.

At this level, I like to keep it simple. Here are my take-aways from the broad overview this data represents. My analysis is for Albemarle, Charlottesville, Fluvanna and Greene combined.

The inventory is continuing to decline year over year. Slowly. Closed sales year over year are off by 9% but the gap is closing. By the end of the year I think closed sales will be on pace with last year. Contracts were a dead heat for both resales and new homes this year over last.  This is all just more evidence the tax credit last year rearranged some of the sales. Median price year over year has declined. Foreclosure and short sale activity as a percentage of sales is up about 5% year over year.

What does all of this mean? It means we’ve had two first halves of the last two years with relatively consistent activity. There’s still supply that favors buyers. Short sales and foreclosures are still having a significant impact on our area. But all of this is just general information. There are areas that are seeing stronger sales and more stable pricing than others. There are homes that have been updated or very well maintained that are doing better than the market. The builders are finding success with new orders for energy efficient homes.

The point is this. You need to get information pertinent to your situation to make good decisions.  If you are considering a purchase, take the time to understand the market. Take the time to understand renting vs. owning and the affordability available to you now. If you are considering selling or need to sell, get trusted advice and follow it.

 If I can be of assistance, don’t hesitate to contact me.

In the last video, we discussed the structure and how it was insulated. In this video, we talk about what I like to think of as the “engine” of the home.  Piedmont has partnered with Trane for their HVAC equipment. Very important.

The conversation regarding energy efficiency and how to improve the Piedmont Realty and Construction  “Earth Friendly” home is on going. Since Piedmont launched in 2009, their offering has improved along the way. (That’s one of the things I like most about working with Piedmont. They are constantly looking to innovate and improve their standard specifications.) Drew Holzwarth and I have made a series of videos to try and explain some of the core components they use to create an energy efficient home.

Here’s Part 1.

I keep a variety of spreadsheets in which I monitor components of our market that are important indicators to me.  All information is derived from the CAAR MLS.

The Charlottesville Area in these stats is defined as Albemarle, Charlottesville, Fluvanna, and Greene combined.

Active Inventory Area All Types:  JUNE 7.  2010: 1878   2011: 1786 

Active Inventory Short Sale/Lender Owned: JUNE 7.  2010: 114  2011: 130

Contracts YTD Thru May Area: 

2010: 1028   (18% New Construction) (12% Short Sale/Foreclosure)

2011: 983       (17% New Construction) (19% Short Sale/Foreclosure)

We are  a few months away from seeing data that won’t be compared to tax credit influenced activity. Year over  year, contracts in April were off 32%. May was up 49%. But if you look at YTD comparison, contracts were within 4%. Sales activity could possibly be up as compared to 2010 by the end of June. Year over year, inventory has edged down slightly. Contracts for new homes are roughly flat. However, short sales and foreclosures as a percentage of sales activity increased.  16%  of contracts reported to the MLS for 2010 were flagged short sale or foreclosure. Year to date, 19% of contracts reported are flagged this way.

If you are on the market to sell your home or thinking of selling your home, these statistics are important to consider in your segment of the market. This market is still very price sensitive. Roughly 2 out of every 5 sales is a new home or a distressed sale. Sales activity seems to be leveling off with the tax credit securely in the rear view mirror. Inventory is still in favor of the buyer.  A comparative sales analysis is important, but an absorption rate analysis is just as vital to creating a successful plan to sell your home.