August 2010 Central Virginia Homes Sales Drop…But Not As Much as July.

So, we’ve had a lot of negative real estate news recently.  Over the last month, we’ve looked at dismal home sales in Charlottesville, Albemarle and Central Virginia in July.  Last week, we got the NAR report on July home sales.  And now, as we turn the calendar to September, we see the home sales continue to slide as compared to last year.  But, let’s look on the bright side: they didn’t drop as much as they did in July.

July 2010 year-over-year sales plummeted across all categories…sometimes 40, 50, 60%…as compared with July 2009.  While we’re seeing drops across the board, they haven’t backed off as much as they did last month.  Hopefully, this turns out to be a positive (b/c we need some positive news).

(Disclaimer: the Aug 2010 sales numbers likely will increase slightly over the next week.  It sometimes takes Realtors a few days to enter in final sales numbers in the Charlottesville Area MLS system…so there is a slight delay in the actual numbers.  While I do expect the sales numbers to bump a little, it’s not going to be a significant jump…maybe just a few sales here or there.)

Overall, total August 2010 sales in the Charlottesville MSA (which Nest considers to be Charlottesville, Albemarle, Fluvanna, Louisa, Greene, and Nelson) were off about 30% from last August (233 vs 162) .  Compare that with the approximate 38% drop in July.  Total inventory increased from 2809 to 2906 – a modest 3% increase.  However, combined with the drop in sales, the total market inventory is almost 6 months higher than it was in August 2009 (12.05 months vs. 17.93 months).

Yet, the increase of inventory between July and Aug 2010 is less (on a percentage basis) than what we saw in July/Aug 2009.  Here’s the stats:

INVENTORY LEVELS

July 2009: 8.89 months
Aug 2009: 12.05 months (35.5% monthly jump)

July 2010: 14.89 months
Aug 2010: 17.93 months (20% monthly jump)

TOTAL MSA DETACHED SALES

Total sales dropped from 169 to 127 year-over-year.  The biggest concern is that inventory popped from 11.48 months in 2009 to 16.11 in 2010 – that’s a 40% increase in monthly inventory levels.

I’m not going to keep re-iterating the same thing in this post.  (We’ll visit some specific sub-categories of the Charlottesville real estate market over the next few days.) Here’s the gist: sales are still down.  We’re suffering a major hangover from the tax credit.  We need to be glad that the tax credit wasn’t extended and the market will continue to correct itself.  How long will it take?  We wish we knew.  But the recovery hinges on a couple of different factors:

1. We need positive employment numbers. It’s going to take a couple of months of positive employment numbers for people to start feeling good about the economy again.  Until unemployment decreases, housing won’t bottom.

2. Inventory levels will need to come down…significantly. Inventory levels in the Charlottesville area are way too high.  14, 16, 18, etc months of inventory is definitely an oversupply.  And oversupply leads to downward pressure on prices/values.

For buyers, there are some values out there.  Admittedly, not all homes are priced according to the current market conditions.  You may have to dig a little, but there are values to be had.  And if you are selling your home, it’s simple: be realistic with price, make sure it’s in top-notch condition, and make sure your home is marketed well.  Houses that fit those criteria are selling.

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