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 the trend analysis & 2009 market conditions for real estate in Henrico County.  This does not include Hanover and Chesterfield Counties, which I will talk about over the next few days, or the City of Richmond, which I have already talked about in a previous post.

Key Points

• In 2009, there were 2627 single family homes sold in Henrico County.  This area includes Area 22 (the Far West End), Area 34 (Glen Allen & Nuckols Rd. areas), Area 32 (the Lakeside area and northside of Henrico Co), Area 40 (east end of Henrico including Varina) and Area 42 (east end of Henrico including Sandston & Highland Springs).
• Although Henrico County showed a decline in the number of homes sold in 2009 (vs. 2008), both of the east end areas showed slightly modest increases in the number of homes sold in 2009 (vs. 2008).  This could be partially due to the fact that both of these areas had the highest percentage of foreclosure sales in 2009 as well as the highest percentage of homes sold with a price point under $200,000, which seems to be the 2 things that have moved the real estate market in 2009.
• The average days on market continued to climb.  This has been an ongoing trend since 2006 and should not be a surprise since 2006 is around the time the market began to turn.
• Prices of homes decreased in 2009.  Again, this should not come as a big surprise to anyone, as everyone has been made aware of the sluggishness of the real estate market, and Henrico County, like all other areas, has been affected by the market slowdown.  In 2009, prices in the county declined by almost 12%.  This follows a slight decrease in 2008 of just over 3%. 
• Foreclosure sales in Henrico County were not as high as they were in the city of Richmond.  In Henrico County, only 11% of the total sales in the county were foreclosures. 
• In Henrico County, however, almost 53% of the sales in the county were of homes with a price point under $200,000.  This factor is most likely what caused the significant drop in price.
• Going forward into 2010 how is Henrico County poised?  A look at the active listings on January 1, 2010 shows that there are 1837 single family homes on the market for sale.  In 2009, Henrico County averaged 219 homes sold/month, which means that, for Henrico County, there is almost 8.5 months of inventory.  This means that if no other homes come on the market for sale, it would take about 8.5 months for the existing inventory to be sold.  This means that going into 2010 Henrico County will still be a strong buyer’s market, which will continue to add pressure onto the prices in the county.
• Again, looking at the active listings, only 70 of the 1837 active listings are actually foreclosures.  This is a very small percentage of the homes available for sale; however, it is felt that in 2010 we will continue to see more and more foreclosures come onto the market as we see banks putting more of the foreclosures that are currently held in inventory onto the market.  Additionally, we may see some new ARM mortgages adjusting and that may lead to foreclosures.  This will continue to put pressure on the homes that come on the market in Henrico County.
• Again, looking at the active listings, 662 of the 1837 active listings are priced under $200,000.  Again, we will continue to see more and more homes at the lower price points throughout 2010, I believe.

Area 22

• In this area, the average sales price of the single family homes sold decreased by a little bit over 10% in 2009, after a small decrease in 2008 and 2007.  In 2009, the average sales price of homes in this area was $303,280.  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 $245,662-over 23% higher today than in 2002).
• In this area, the number of homes sold dropped significantly:  from 913 homes sold in 2008 to 859 homes sold in 2009.
• As in all areas, the average days on the market increased in 2009-from 58 days in 2008 to 63 days in 2009.
• In 2009, only 24% of the homes sold in this area were priced under $200,000, while only 4% of the homes sold were foreclosures. 
• Going into 2010, this area has 352 active listings.  This equates to only 5 months of inventory, indicating that this area will be more of a seller’s market, although not like what we had in the early 2000’s.  This does mean that sellers will not be as likely to accept much lower offers as there will not be as much inventory for the buyers to choose from here.  However, that does assume that the homes are priced at market value to begin with.
• Of the 352 active listings, only 12 are foreclosures and only 62 of these homes are priced under $200,000.  These 2 things will not have as big an effect on pricing of homes here as they may have on homes in other areas.

Area 32

• In this area, the average sales price of the single family homes sold decreased by only 8% in 2009.  This was one of the smallest decreases in the entire metro area.  In 2009, the average sales price of homes in this area was $173,926.  This followed a small decline in prices in 2008.  It should be noted that although the prices have dropped from 2008, the home prices are still well above the average sales price of homes sold in 2002 (which was $128,532 in 2002 – a hefty 35% higher today than in 2002)!
• In this area, the number of homes sold dropped significantly in 2009:  from 368 homes in 2008 to 319 homes sold in 2009!
• As in all areas, the average days on the market increased in 2009-from 63 days in 2008 to 66 days in 2009!
• In 2009, almost 12% of the homes sold in this area were foreclosures.  Additionally, almost 77% of the homes sold in this area were priced under $200,000.  These 2 factors accounted for the decrease in this area of the average sales price.
• Going into 2010, this area has 194 active listings.  In 2009, this area averaged about 27 homes sold per month.  This means that this area has almost 7.5 months of inventory, meaning that this area will continue to be in a strong buyer’s market.  That will continue to add downward pressure to home prices in this area.
• Going into 2010, only 9 of the 194 active listings are foreclosures, however, 136 of the homes on the market have a price point under $200,000.  Although the foreclosures may not cause prices to stay at the lower price points, the fact that so many of the homes on the market in this area are priced under $200,000 means that this area should continue to see strong sales.

Area 34

• In this area, the average sales price of the single family homes sold decreased by almost 12% in 2009.  This was one of the higher price declines in Henrico County.  This followed a slight decrease in 2008 over the 2007 price.  In 2009, the average sales price of homes in this area was $304,507.  It should be noted that although the prices in 2009 declined, the average price of a home in this area is still well above the average price in 2002, which was $233,766 (a little over 30% higher today than in 2002).
• In this area, the number of homes dropped:  from 832 homes sold in 2008 to 748 homes sold in 2009.
• As in all area, the average days on the market increased in 2009-from 63 days in 2008 to 65 days in 2009.
• Going into 2010, this area has 382 active listings, which equates to around 6 months of inventory.  A traditional definition of a stabile real estate market is one in which there is 6 months of inventory.
• Going into 2010, of the 382 active listings, only 12 of these are foreclosures.  Additionally, only 71 of the active listings are priced under $200,000.  These 2 factors may impact pricing and sales in other areas, but possibly won’t be impacting pricing or sales in this area.

Area 40

• In this area, the average sales price of the single family homes sold decreased by almost 12% in 2009.  This was one of the higher price declines in Henrico County.  This followed a slight decrease in 2008 over the 2007 price.  In 2009, the average sales price of homes in this area was $174,342.  It should be noted that although the prices in 2009 declined, the average price of a home in this area is still well above the average price in 2002, which was $128,884 (a little over 35% higher today than in 2002).
• In this area, the number of homes sold increased slightly:  from 341 homes sold in 2008 to 344 homes sold in 2009.
• As in all areas, the average days on the market increased in 2009-from 74 days in 2008 to 75 days in 2009.
• Going into 2010, this area has 279 active listings, which equates to almost 10 months of inventory.  This area has the highest months of inventory of all the areas in Henrico County.  This will continue to put downward pressure on home sales and home prices in this area.
• Going into 2010, of the 279 active listings, only 12 of these are foreclosures.  Additionally, 127 of these are priced under $200,000.  These factors will continue to impact pricing in this area going into 2010.

Area 42

• In this area, the average sales price of the single family homes sold decreased by almost 15% in 2009, following a decline of almost 8% in 2008.  This was the highest price decline in Henrico County.  In 2009, the average sales price of a single family home in this area was $135,204.  This was still well above the average price of a single family home in this area in 2002, which was $98,532, making homes in this area still 37% above the price in 2002!
• In this area, the number of homes sold increased slightly:  from 352 homes in 2008 to 357 homes in 2009.
• As in all areas, the average days on the market increased in 2009-from 74 days in 2008 to 75 days in 2009.
• Going into 2010, this area has 248 active listings, which equates to a little over 8 months of inventory.  This will continue to put downward pressure on homes sales and home prices in this area.
• Going into 2010, of the 248 active listings, only 13 are foreclosures.  However, almost 79% of the active listings are priced under $200,000.  These factors will continue to impact pricing in this area going into 2010.

Based on the above, I still see Henrico County having a ways to go before the real estate market begins to settle down.  In 2010, I still see foreclosures rising and short sales rising, which is going to continue to impact the prices in this area.  We still have the $8,000 tax credit until April 30 and this will continue to bring first time homebuyers off the fence and will continue to see homes being sold at the lower price points, which will impact the average price of homes in the area.  Finally, although I think we will still continue to see a sluggish market in 2010, there are some glimmers of hope that the real estate market is turning – areas 22 & 34 appear to have moved away from being strong buyer’s markets and appear to be in a more balanced real estate market.

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 Henrico County (anywhere in the county), although you would have seen your value depreciate over the past couple of years, you home would still have appreciated well above what you had paid for it.  In 2002 the average sales price of a home in Henrico County was $194,460; in 2009, the average sales price of a home in Henrico County was $248,197 – this is an appreciation of almost 28%!