The year in Charlottesville-Albemarle real estate

As the New Year approaches, questions about the future of the housing market are more abundant than ever. Has the market hit bottom? Are hopes of recovery realistic? Will prices continue to drop as inventory continues to rise? And what about interest rates– are they going to go up, come down, or remain the same? With conflicting indications from market reports and continuing uncertainty over recovery, professionals and laymen alike wonder what’s in store for our area in the coming year.

With December drawing to a close, a number of national and state forecasts are being released citing predictions for 2012. In most cases, however, these reports are subject to the same variance in interpretation that has characterized the market reports provided throughout 2011. Credit reporting agency TransUnion foresees a significant drop in the number of delinquent mortgages over the coming year. Analysts at Goldman Sachs predict that home prices will– finally– hit bottom by summer of 2012. Lawrence Yun, chief economist for the National Association of Realtors, provides a similarly optimistic outlook in his report, which forecasts increases in home prices, sales and industry commissions. 

These national reports are a good bit sunnier than local projections, however, perhaps due to the assertion that, as we’ve heard numerous realtors say numerous times, the Charlottesville market is unique and that what applies to the rest of the country doesn’t necessarily apply to us. This belief is certainly upheld by the Virginia Housing Development Authority’s forecast which states, among other things, that the combination of rising student loan debt and the number of recent university graduates in the area makes our local market particularly vulnerable.

Though fourth quarter and year-end market reports obviously have yet to be released, a brief recap of the most recent data for 2011 may be useful when considering these 2012 forecasts. 

The Charlottesville-Albemarle market saw a year-to-year decrease of 2.3% in sales and a 26.8% decrease in new listings. The regional median sales price dropped– both year-over-year and quarter-to-quarter– as did days on the market and active inventory, although the reasons for this final statistic may be due to factors that have little or nothing to do with recovery, as explained in a post on the widely-read Charlottesville Bubble Blog.

On a more positive note, having spiked during the summer, foreclosures have now returned to close to the same level they were in January, according to RealtyTrac, which publishes information about foreclosures, auctions, and bank-owned homes around the country. Despite the earlier increase, the foreclosure rate for the Charlottesville area remains below both state and national averages.

Prognostication is an inherently risky business, particularly when dealing with a subject as nebulous and unstable as the current housing market, and it’ll be interesting to see which forecasts (if any) come to fruition and which miss the mark entirely. 

Before we look too far forward, however, here’s a look back at some of 2011’s more memorable transactions.