2006 Second Quarter Market Report
By Dave Phillips, CAE, RCE
CEO, Charlottesville Area Association of REALTORS®
Charlottesville Goes Condo Crazy By Dave Phillips, CAE, RCECEO, Charlottesville Area Association of REALTORS®
Aaron Levenstein once said that “statistics are like bikinis – what they reveal is suggestive, but what they conceal is vital.” The numbers in the 2006 Second Quarter Market Report are very enticing, but to understand the full story of the changing real estate market, you have to dig a little deeper. There is no doubt that the local market has changed dramatically in the last twelve months – for better or worse, depending on your perspective – but the vital information about the health of this market is just below the surface of the numbers.
There are three significant changes that we must keep in mind when analyzing the current market. First, the current inventory of homes on the market is significantly higher than this time last year (2669 listings compared to 1368 last year). The law of supply and demand always rules the marketplace, so this giant leap in inventory has a dynamic affect on all of the numbers in this report. For the last several years, the rapid price increases of area homes and the shrinking number of days properties stayed on the market were directly related to the low inventory levels of homes on the market. The new high “supply” of homes for sale is starting to show in the market numbers in the form of slower price increases and a growing number of days it takes to sell a home.
The second major change that is affecting the market numbers is the explosion in condo sales. Even a casual observer of the local real estate market has probably noticed the number of condominiums for sale – either from new construction or from apartment conversions. This trend started hitting the market in early 2005 and has picked up significantly in 2006. While some of the new condos are higher priced “luxury” units designed for aging baby-boomers looking for a low maintenance lifestyle, most are affordable units being snapped up by investors, first-time home buyers and members of the Charlottesville work force.
The third change you should keep in mind while pondering this market report is a worldwide trend that is as true in Charlottesville as it is in Tokyo – people are moving back into the city. After decades of steady migration to the suburbs, people are starting to move back into cities. Charlottesville has shown a steady increase in population since the 2000 census and this trend is starting to show up in the market statistics.