There was little to celebrate during the second quarter of the local real estate market in 2020. But this year has been a different story. Sales for the past quarter in Crozet were up 50% over the same time last year, and for the year, sales are 67% ahead of 2020.
This quarterly sales increase was evidenced in Albemarle County as a whole, where sales rose 35% (as shown on the county sales chart provided courtesy of Nest Realty). There were a total of 141 sales in Crozet during the quarter, two of which were more than $1m (these will be excluded for statistical purposes). New construction sales rose 34% during the quarter to 51 total sales. Sales of pre-existing homes exploded 76% over the same period in 2020, in large part due to the lack of re-sale inventory in the early part of the Covid pandemic last year. There were 14 land sales during the quarter. This is triple the amount of land sold at the same time last year, and highlights the rush for buildable land in the area. In fact, four of these sales were in Handley Farm Estates, where a dozen or so properties have been for sale for the better part of a decade. There were no distressed sales in the quarter, a figure that hopefully will stay at zero but could change due to CARES Act foreclosure and mortgage forbearance programs currently ending 7/31 and 9/30 respectively.
The average price for a detached home in the quarter actually fell 2% to $516,000. But the average size of these homes dropped over 11%. There were 27 new construction properties sold in the quarter, with the Westlake and Old Trail neighborhoods tied at nine sales each. The average new home price was $610,000, down 6% from the same time last year, but the size of these homes dropped 11%. The actual cost of construction was up 4% to $216 per sqft. This figure could be higher in the third quarter but should soon level off and perhaps start to slip as construction suppliers catch up with demand. There were 50% more sales of pre-existing homes during the quarter, reflecting the fact that home owners were not inclined to list their properties at the same time last year. These homes sold for an average of $489,000, 10% higher than the same time last year. And gosh they sold fast, selling in a median of five days, compared with 38 days in 2020.
There were 42 attached sales in the quarter, up 50% from the same time last year. Twenty-four were for new construction. Of these, 11 were in Pleasant Green, where sales were halted during the second quarter due to sold-out inventory before the next phase opens. The average price for all new constructions homes was down 12% to $437,000, as there were only a few villa-type homes sold in the quarter. These nudge up the average price as they tend to be more expensive, as evidenced by some new proposed listings in Old Trail pushing $900,000. There were 18 resales in the period, the average price being $378,000. On average, these resales sold for within $600 of their asking price, and sold in a median time of only eight days.
The question currently most asked of real estate professionals seems to be, “Are we in a real estate bubble?” The answer is probably not. While we are certainly experiencing an out-of-balance market that favors sellers, this is due in large part to lack of supply. One of the chief economists at Freddie Mac, Sam Khatar, stated, “The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.” As builders play catch-up and build with higher-priced materials, in large part a result of supply shortages due to Covid, prices are going up. That drives up resale home prices. But this time, unlike during the Great Recession of 2007-2009, risky lending practices have been curbed, homeowners are not over-borrowing, nor are they using their homes as ATMs. So, while current pricing levels may run into headwinds like rising interest rates or discouraged buyers backing off, a bursting bubble with tumbling prices and increased inventory such as we experienced during the Great Recession probably isn’t going to happen.
