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 Chesterfield County, VA. This does not include Henrico, Hanover and City of Richmond, which I have already talked about in the previous week.

Key Points

• In 2009, there were 3273 single family homes sold in the Chesterfield County. This was only a slight   decrease from the sales in 2008 (which was 3426 single family homes)

• Although the county as a whole saw the number of single family homes sold decline in 2009, Area 64 (the western side of Chesterfield County, between Midlothian Turnpike & the City of Richmond), had a slight increase in the number of homes sold this past year.

• Prices of homes have decreased. Again, this should not be a big surprise to anyone, as everyone has been made aware of the sluggishness of the real estate market. In 2009, prices declined significantly, by just under 10%, one of the smaller declines in prices in the metro area. In 2008, the average sales price had declined just over 3% from the 2007’s average sales price. Again, as in all other areas, much of the decline here can be attributed to the high number of homes sold that were priced under $200,000 (almost 55% of the sales in 2009 were of homes that were priced under $200,000), as well as the number of foreclosures that sold in the county (almost 13% of the total sales in the county were foreclosures).

• Going forward into 2010 how is the Chesterfield County poised? A look at the active listings on January 1, 2010 shows that there are 2544 single family homes on the market for sale. In 2009, Chesterfield County sales averaged 273/month, which means that in the Chesterfield just over 9 months of inventory. This means that if no other homes come on the market for sale, it would take almost 9 months for the existing inventory to be sold. This means that going into 2010 Chesterfield County will still be a strong buyer’s market, which will continue to add pressure onto the prices in the county.

• Breaking down the active listings, it should be noted that 849 (of the 2544 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.

• Again looking at the active listings, only 128 of the 2544 active listings are actually foreclosures. This is a very small percentage of homes; however, it is felt that in 2010 we will continue to see more and more foreclosures come on 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 pricing on the homes that come on the market in the county.

Area 52

• In this area, the average sales price of the single family homes sold decreased by almost 13% in 2009, after a almost negligible decrease in 2008 (over the 2007 average sales price). In 2009, the average sales price of homes in this area was $202,426. 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 $143,163-42% higher today than in 2002!)

• In this area, the number of homes which sold dropped significantly: from 861 homes sold in 2008, to 812 homes sold in 2009.

• As in all areas, the average days on the market increased in 2009-from 68 days in 2008, to 77 days in 2009.

• In 2009, almost 61% of the homes sold in this area were priced under $200,000, while only 15% of the homes sold in this area were foreclosures.

• Going into 2010, this area has 586 active listings. This equates to almost 9 months of inventory on the market. However, only 40 of these listings are foreclosures, while 281 (over half) of the active listings are priced under $200,000.

Area 54

• In this area, the average sales price of the single family homes sold decreased by 10% in 2009, following a very slight decrease in 2008 (over the 2007 average sales price). In 2009, the average sales price of homes in this area was $238,080. 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 $169,998-40% higher today than in 2002!)

• In this area, the number of homes sold dropped slightly: from 1091 homes sold in 2008, to 1030 homes sold in 2009.

• As in all areas, the average days on the market increased in 2009-from 70 days in 2008, to 77 days in 2009.

• In 2009, almost 47% of the homes sold in this area were priced under $200,000, while almost 11% of the homes sold in this area were foreclosures.

• Going into 2010, this area only has 707 active listings. This equates to a little more than 8 months of inventory on the market.

• Of the 707 active listings in this area, there is only 40 are foreclosures and 258 homes are priced under $200,000.

Area 62

• In this area, the average sales price of the single family homes sold decreased by almost 9%, followed by a smaller decrease in the average sales price in 2008 of almost 5%. This area had the smallest decrease in the average price of a home sold in 2009 of all the areas in Chesterfield County. Although prices have dropped significantly in the past few years, it should be noted that the average home price in 2009 was still well above the average home price in 2002 –in 2009 the average price of a home in this area was $255,889; in 2002, the average price of a home in this area was $171,298 – meaning that prices in 2009 were almost 50% above the price in 2002!

• In this area, the number of homes sold decreased – from 1102 homes sold in 2008 to 1035 homes sold in 2009.

• As in all other areas, the average days on the market increased in 2009-from 67 days in 2008 to 70 days in 2009.

• In 2009 in this area, almost 35% of the homes sold were priced under $200,000, while just under8% of the homes sold were foreclosures.

• Going into 2010, there are 522 active listings as of 1/1/10, which equates to just around 6 months of inventory, showing that this area’s real estate market seems to have stabilized. This means that, hopefully, prices will not continue to show sharp declines in 2010 as they did in the previous year.

• Of the 522 homes on the market, only 21 are foreclosures. This number may rise as we go into 2010. Additionally, only 142 of the active listings are priced under $200,000.

Area 64

• In this area, the average sales price of a single family home here decreased by a little over 11% over 2008. This followed a 7% decrease in price in 2008 over the 2007 average sales price. In 2009, the average price of a home was $371,477! Although the average sales price of a home here had a significant decrease, it was still well above the average price of a home in 2002, which was $249,415. Homes in 2009 were still almost 50% higher than they were in 2002!

• In this area the number of homes sold in this area was slightly higher than the number of homes sold in 2008. In 2008, there were 372 homes sold; in 2009 there were 396 homes sold.

• As in all areas, the average days on the market increased in 2009-from 73 days in 2008 to 92 days in 2009.

• In 2009 in this area, only about 23% of the homes sold in this area were priced under $200,000, while only 5% of the homes sold were foreclosures.

• Going into 2010, there are 207 active listings as of 1/1/10, which equates to a little over 6 months of inventory, showing that this area may also be stabilizing.

• Of the 207 homes on the market, only 6 are foreclosures. This number may rise as we go into 2010. Additionally, only 26 of these are foreclosures.

Based on the above, it would appear that some areas of the county are beginning to go into a more “normal real estate market” based on the fact that Areas 62 & 64 have only 6 months of inventory going into 2010! How much increasing foreclosures will impact the county overall and some neighborhoods will remain a question, although I do believe that this will have impact on areas within Chesterfield County. First time homebuyers will continue to be strong in the market, at least until April 30, 2010 because of the tax credit. If first time homebuyers begin to buy more of the move up home inventory, then I think the $6500 move up homebuyer tax credit will also help. In Areas 62 and 64 I think the bigger thing impacting pricing will be new home construction and how prices are set and the incentives that builders continue to offer to move their inventory. We also see that in these two areas, builders have cut way back on their standing inventory, which means that the incentives and motivations of the buyers may not be as high in 2010 as they were in 2009 and 2008!

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 the Chesterfield 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 Chesterfield County was $171,502; in 2009, the average sales price of a home in the county was $251,009 – this is an appreciation of almost 46%!