As we begin 2011 I would like to take the opportunity to thank each of you for your friendship and support making 2010 a fabulous year. As we move forward into 2011, I wish all of you the best in the coming New Year. I, for one, am excited about the possibilities, and I hope that you are too.
At this time I am pleased to share with you that I have made a move to Montague Miller & Company. This is not a move “away” but rather a move “toward” new opportunities. I am honored to be a part of one of the oldest and most respected real estate firms in the area. I will continue to help clients buy and sell residential homes, townhomes and condos, and also to purchase foreclosed properties. However importantly, I will have the opportunity to expand my presence in farms and estates, an area of the real estate market that is my “first love”. My years in the horse business not only provided me with specific knowledge to equip me to deal with these special properties but also instilled in me a deep and abiding love of farms and country life. Montague Miller and its affiliation with Leading Real Estate Companies of the World allows me to present a new level of customer service. In addition, if you are planning to remodel or just need to do some general home repairs give me a call so that I can connect you with our concierge who will set you up with the perfect professional for the task.
This is the appropriate time to reflect on the state of the local real estate market. In some ways this year has been more of the same. Interest rates continued to drop for most of the year, bottoming out at historic lows, probably never to be seen again in our lifetimes. As the year drew to a close we have seen those rates begin to rise and it is predicted that they will continue to rise in the coming year. This interest rate rise will offset any value to waiting for prices to drop further before purchasing and prices are predicted to drop further. In fact, the higher rate will make monthly payments higher. As our local market struggles to reset, home values and resulting prices have continued to drop. In certain neighborhoods and price ranges, this drop has been accelerated by the flow of foreclosures and bank owned homes onto the market. The Central Virginia real estate market is lucky in that, unlike many areas, foreclosures are still a relatively small percentage of our overall market, but they have an influence even if only in consumer’s minds.
What was the specific result of these facts on Central Virginia real estate in 2010? For the year as a whole sales are up, though not necessarily dramatically, for almost all of Central Virginia. However, sales of single family detached homes were down in the city of Charlottesville. Unfortunately the increase in sales was accompanied by a decrease in prices. Some of this reflects a decline in home values, but some of the figures are a reflection of the price that the consumer is prepared to pay. We should bear in mind that 2009 sales started out strong, driven by the $8000.00 First Time Home Buyers Tax Credit. It is hard to determine whether the tax credit actually prompted people to buy homes who ordinarily would not have, but I think that we can say that sales that would have been spread throughout the year were compressed into the spring. As a result we saw a greater than normal slow down after the expiration of the $8,000 Tax Credit.
If you would like to see monthly or year end real estate sales figures for Central Virginia broken down by county, visit my blog at http://www.CharlottesvilleRealEstateTalk.com to stay up to date on the local real estate market.
Moving forward, dusting off the crystal ball, what can we expect in 2011? What are the experts saying?
I think it is fair to say that we will see more of the same. It is very likely that we will see a further drop in home values throughout 2011. Many experts are now saying that we will not see a recovery begin until the third quarter of 2012. Interest rates will continue to rise, though not necessarily skyrocket. Foreclosures are continuing to come on the market.
How does this translate on a personal level to you?
If you will need to buy a home this year and will be using a mortgage, it may be a good idea to purchase early in the year before interest rates rise further. Purchasers will need to get back to the traditional mindset of thinking of a house as a home in which to raise their family and grow equity over time, rather than as a short term investment. On a positive note, there is a large inventory of homes from which to choose and there are many great deals. At the same time don’t forget that many homes are already on the market at a discounted price or under assessed value; the homeowner may not be able to accept a “lowball” offer way under list price. Foreclosures will continue to come on the market and present opportunities for the savvy investor or allow purchasers to find a great deal.
If you are thinking of selling a Central Virginia home, it is noteworthy that properly priced homes are selling. Personally, I have received contracts on two of my listings in the first week of 2011. It is absolutely crucial to have your home priced correctly. Home values are determined by the market, not by how much you owe, how much you paid for the home, the assessed value or by what you need to get out of the home. No amount of marketing will sell an overpriced home. In addition, with the large amount of inventory available for buyers to search, your home will need to be in the best possible condition to stand out over all of the comparable homes.
The other issue that many people are struggling with is “should I sell now or should I wait?” My answer to that is “how long are you prepared to wait?” Sellers who decided at the beginning of 2010 to wait until 2011 now have to face the reality that their home values have declined over the past year. If we look at the current predictions, we see that many experts are calling for home prices to continue to fall in 2011. Realistically it could be several years before home prices start up again and by then they will need to rise before they reach our current levels. This decision will depend on your time frame and motivation to sell and move.
In local real estate this is a time of great challenges but also of great opportunities. Please don’t hesitate to call me at 434 960-0161 or email me at [email protected] to discuss any of your real estate concerns or questions. I have included some graphs that you might find of interest.
I hope that the coming year will be the best year ever for you and your families.
Happy New Year!