By now, everyone is well aware of how rough the real estate market was in 2009!  This was true throughout the nation, as well as the Richmond metro area.  Below is a trend analysis & 2009 market conditions for real estate in Hanover County.  This does not include Henrico or the City of Richmond, which I have already blogged about, or Chesterfield County, which I will talk about in the next few days.

Key Points

• In 2009, there were 777 single family homes sold in Hanover County.  This area includes Area 36 (western Hanover County) as well as Area 44 (eastern Hanover County).  This was a pretty significant decrease from 2008’s sales of 892 single family homes sold.
• Both areas of Hanover showed decreases in the number of homes sold in 2009, but most of the decrease was in the western side of the county.
• The average days on the market continued to climb.  This has been an ongoing trend since 2005 in Hanover County, as it seems that Hanover County started taking longer and longer times for homes to go under contract than the rest of the area seemed to take.
• Prices of homes also decreased in 2009.  Although prices in Hanover county had decreased by about 9% in 2009 (and decreased by 4% in 2008), this decrease appears to be one of the lower decreases in the area.
• Foreclosures in Hanover County remain very low- in 2009, a little more than 6% of the total sales in the county were foreclosure homes, one of the lowest percentages.
• Even sales of homes at the $200,000 or under price point are very low in the county – only 27% of the total sales were under $200,000 price point.
• Going forward into 2010 how is the county poised?  A look at the active listings on January 1, 2010 shows that there are 654 active listings.  In 2009, Hanover County averaged just under 65 homes sold/month, which means that there is a very high months of inventory (at 10 months).  This means that if no other homes come on the market, it will take about 10 months for the homes that are on the market now to be sold.  This means that the county will still remain in a very strong buyer’s market, which could impact pricing in this area.
• Breaking down the active listings, it should be noted that only 20 (of the 654) active listings are foreclosures, which is a very small percentage.  Additionally, only 98 (of the 654) active listings are priced under $200,000. 

Area 36 (Western Hanover County)

• In this area, the average sales price of a single family home sold decreased by almost 6% in 2009, after 2 years of even smaller decreases in price.  In 2009, the average sales price of homes in this area was $309,996.  It should be noted that although the prices have dropped significantly from 2008, the home prices are still well above the average sales price of homes sold in 2002 (which was $225,350-over 37% higher today than in 2002)!
• In this area, the number of homes sold dropped significantly:  from 416 homes sold in 2008 to 344 homes sold in 2009.
• As in all areas, the average days on the market increased in 2009 – from 77 days in 2008 to 96 days in 2009.
• In 2009, almost 18% of the homes sold in this area were priced under $200,000, a much smaller percentage than in most other areas of the metro Richmond area.
• In 2009, only 6% of the homes sold were foreclosures, again, a smaller percentage than in most of the other metro areas.
• Going into 2010, this area has 324 active listings.  This comes to just over 11 months of inventory.  However, only 11 of these are foreclosure listings and only 37 of these are priced under $200,000.
• Looking at the price points of the active listings on the market, it leads me to believe that many of the homes that are on the market right now will appeal to the move up buyer.  However, for those homes to sell, their buyer most likely has a home to sell.  Although first time homebuyers are out in the marketplace looking for homes, the homebuyers are also considering foreclosures and short sales, which will not result in a homeseller turning into a homebuyer.  This may be what drives the market in Hanover County, more than the number of foreclosures and homes priced under $200,000 will.  As long as there are high numbers of foreclosures and short sale listings throughout the Richmond area, Hanover County may continue to remain in a very strong buyer’s market.

Area 44

• In this area, the average sales price of a single family home in 2009 was $249,730, a decrease of almost 12% from 2008 (which had seen a slight decrease in price in 2008 vs. the 2007 average sales price).  It should be noted that although home prices had a pretty significant decline in price, they still remain well above the 2002 average sales price, which was $185,755 in 2002-over 34% higher in 2009 than in 2002!
• In this area, the number of homes sold dropped slightly in 2009-from 476 homes sold in 2008 to 433 homes sold in 2009.
• As in all areas, the average days on the market increased in 2009-from 67 days in 2008 to 78 days in 2008.
• In 2009, a little over 6% of the homes sold were foreclosures; however, about 34% of the homes sold were priced under $200,000, showing a greater number of first time homebuyers buying in this area of Hanover rather than on the western side of the county.
• Going into 2010, this area has 330 active listings as of January 1, which equates to around 9 months of inventory.  A real estate market with more than 6 months of inventory is considered to be a buyer’s market, so this area in 2010 will continue to be a strong buyer’s market, which will impact pricing in this area.
• Of the 330 active listings in this area of Hanover county, only 9 of them are foreclosures and only 61 of them are priced under $200,000.  As in the western Hanover County the fact that there are not as high a percentage of homes at the lower price points (which are the prices attracting most of the first time homebuyers) will continue to keep this area in a buyer’s market in 2010.

Based on the above, I still see Hanover County having a ways to go before the real estate market begins to settle down.  In 2010, I still see foreclosures and short sales rising throughout the entire Richmond area, which is going to impact the prices in this area as well as in all other areas.  We still have the $8,000 tax credit until April 30 and this will continue to bring first time homebuyers off the fence.  However, with so few foreclosures in Hanover county and such a small percentage of homes priced under $200,000, Hanover County will be attractive to first time homebuyers who will be buying homes at a higher price point or the move up homebuyers, who will have to get their current homes sold first. 

My final piece of advice is – buy a home as an investment for the long haul!  If you had purchased a home in 2002 in Hanover County,  although you would have seen your value depreciate over the past couple of years, your home would still have appreciated well above what you had paid for it.  In 2002 the average sales price of a home in Hanover county was $203,833; in 2009 it was $276,411 – this is an appreciation of almost 36%!