Below are the real estate market conditions for the recent 9 months ending September 30 for Henrico County, VA.  If you would like to know what has been happening in your neighborhood or your market area, let me know and I would be happy to send you the information.  I hope you find the information helpful!

So what does the above show?

• For the first 9 months of 2009, there was a marked increase in the number of foreclosure homes sold.  As you can see, in 2008 only 77 of the 2279 homes sold were in foreclosure; this jumped significantly in 2009.  Generally, when there is a foreclosure sold, the banks have taken prices that are well below the market value of the homes not in foreclosure.  Many of these will need repairs and so they are priced well below market in order to entice buyers to make offers that will get the properties off their inventories.  The drop in the number of homes sold, coupled with the increase in the number of foreclosures sold in Henrico County have combined to impact the average sales prices of the homes sold here.
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• Additionally, you will also see that there was a significant increase in the number of homes sold under $200,000.  This is a price point in the Richmond area that I would consider a first time homebuyer level.  As you can see, in 2008 about 35% of the homes sold were to a "first time homebuyer"; in 2009, this represented around 44% of the total home sales in Henrico County.  Now this does not mean that all of these sales under $200,000 were to a first time homebuyer, but it does show that buyers are looking at the lower price points, whether or not they are a first time homebuyer.  Again, the decrease in the total number of homes sold in 2009, coupled with the increase in the sales under $200,000 have combined to impact the average sales price of homes sold here.

• Finally, a third item which is impacting sales prices in Henrico County will be the number of short sales we continue to see.  Although there is no firm number of homes that were sold as "short sales", since these are pre-foreclosure, and we have seen an increase in the number of foreclosures in Henrico County, this number is also rising.  Here again, buyers are making lower offers and many of these are being accepted & worked out with the lenders so that they aren't taken into foreclosure.  Again, combining this with the decrease in the number of homes sold has impacted the average sales price of homes sold here.

• Finally, look at the number of months of inventory, which continues to be quite high.  As of today, there are 1,724 active listings in Henrico County.  In 2009, for the first 9 months, the average # of homes sold/month was 211.  This means that if no additional homes were to come onto the market, it would take about 8 months for all the inventory to be sold.  A normal real estate market is one in which there is about 6 months of inventory available.  This figure is slightly better than last month's figure, but it still shows that we continue to have a lot of inventory for the buyers that are out in the marketplace.

The big question, then, is what will happen should the $8,000 tax credit not be extended beyond November 30?  The Richmond area itself was not hit quite as hard as others, but we are still seeing our share of bumpiness!  Our foreclosures continue, short sales continue and right now, it is mainly first time homebuyers that are in the marketplace.  Buyers today have a very different mindset than they did before the sellers market and the current market we are in - many of them are concerned about the continuing downturn in the economy and are also concerned that prices have not yet bottomed out in the market.  So when many buyers are deciding on a price to offer to a seller, they are not basing it on what the fair market value is today, but are trying to figure out how low they can go so that in a couple of years they are not upside down on their homes!  With this mindset, I think sellers need to be prepared for a continued bumpy real estate market!