The Charlottesville Area Association of Realtors end of 2015 market report was released on January 11, 2016. Click here for the full report. https://www.caar.com/docs/default-source/press-releases/caar-ye2015_press-release.pdf?sfvrsn=2 This report was encouraging because there were really no surprises. The number of homes sold increased from 2014 and the median price showed a modest increase to $270,000. What this shows is the market continues to improve slowly as it has for the last 3 or 4 years. What is a bit misleading is the fact that it shows a 16.5% decrease in the number of homes on the market (active inventory). Normally that would result in a more dramatic increase in home prices but that is simply not the case. Even with this significant reduction, prices are only slightly increasing. Why is that? Simply put , as shown below, it is because the lack of inventory is mostly seen in homes under $400,000.
Price Active Listings Home sold in last 4 months
0-$400,000 1150 794
$400000-$600000 337 112
$750000-$1000000 87 21
> than $1million 182 21
The lesson learned by these statistics is we are still very much in a price sensitive market. Click on this link to see the Inman News’ 5 factors influencing home prices. https://www.inman.com/2016/01/11/the-five-factors-that-really-influence-home-prices/ Unless your home is valued at less than $400,000, there are many more homes on the market than there are buyers. This number will only increase as we enter the spring market. What will exacerbate this even farther is the increased competition new construction will bring especially to those existing neighborhoods where there are nearby new home communities. One only has to drive around the Central Virginia area to see the increase amount of building.
The market report also shows that folks who want and are able to buy should do so in the near future. The median price range in 2011 was $245,000. It is now $270,000 meaning someone who bought 5 years ago would have already experienced an almost 10% appreciation along with the mortgage interest deduction they received each year, and the reduction on their original loan amount vs the rent that is paid and gone forever. Here is a link to some interesting information on why it is time to stop renting. Rents increased faster in 2015 than at any time since 2007. Many are saying rental prices will increase at a higher rate than home appreciation over the next few years. https://www.keepingcurrentmatters.com/2016/01/12/when-is-it-a-good-time-to-rent-not-now/
I am usually one to say real estate is a local business one shouldn’t pay as much attention to what is happening statewide or nationally. This interview https://www.c-span.org/video/?402143-4/washington-journal-2016-housing-market&sf17988491=1&sf18479922=1 with NAR’s Lawrence Yun is worth watching if only for the 1st 5-10 minutes. His projections dove tail nicely with what the CAAR market report shows and therefore, provides expert advice as to what to expect in 2016. Particularly, his prediction that interest rates will rise to 4.5% means buyers would not be able to qualify for as much money as they could have in 2015. This coupled with the moderate price increase mentioned in the last paragraph will make it harder for those to find a home they can afford which could dampen homes sales going forward.
All in all, the numbers indicate that 2016 will be another year of recovery. Like the last few years, home sales will increase with new construction taking more of a role in those numbers. Expect to see home price appreciation in the 3-5% range. Well qualified buyers should be able to negotiate a bit and sellers will need to be competitively priced and have their homes in tip top shape.
Published on 2016-01-14 07:33:33
