Well, here we are on April 1 - April Fool's Day! I promise you that the information contained here is not a joke - although I am sure that there are many good things floating around today that will give us all a good chuckle! But since it is also the beginning of the 2nd quarter in Richmond's turbulent real estate market, I thought I would write a little bit about our real estate activity during the first quarter!
I know that the television news & the newspapers continue to beat the drum of doom & gloom, and it is certainly hard not to get caught up in it - sometimes I find myself wondering if I am in the wrong business!!! But my gut tells me that we are on an upswing - although it is certainly not to the degree that we had 3 years ago! But there are buyers out there looking and they are buying homes, they are just not doing it quite as fast as they were several years ago. Richmond continues to be a great place to live - there are any number of publications that put Richmond up at the top of the different national rankings: Richmond is one of the nation's top 20 places to educate your child; one of the nation's top 20 real estate markets for expanding companies; and so on! But all that aside, I do believe that we in Richmond have it much better here than in many other parts of the country. So here are statistics that I hope you will find interesting when looking at Richmond's real estate market:
Foreclosure Rates: In Richmond, our foreclosure rate is 1 in 1103 households! In Virginia foreclosures are 1 in 758 households & the national average is 1 in 657 households! So even though foreclosures are up all over, even in Richmond, it is certainly not nearly as bad as it is in other parts of Virginia! In Northern Virginia foreclosures are up so high that many of our offices are having "foreclosure bus tours" where they are taking buyers out to see the foreclosures on buses!!! (Source: Realty Trac)
Average Price of a Single Family Home: Again, we are very fortunate. Per the Central Virginia MLS, in 2007, the average price of a single family home sold in Richmond was $272,606. In January 2008, this price was $260,930. Although this is a drop in the average price, it is a 5% drop, which is significantly smaller than price drops in other parts of the country.
Sales Price vs. Asking Price: Reviewing information in the Central Virginia MLS, I found that in all areas of Richmond, the sellers are still getting approximately 97% of their asking price. This assumes, of course, that the house was not overpriced when it went under contract. However, in order for the sellers to get close to their asking price, it took an average of around 65 days for the home to go under contract - this figure, however, does not include any previous listings that expired, withdrawn or were released!
2008 Inventory Levels: Looking at the inventory levels as of the end of March, 2008 shows that the total number of single family homes that are active on the market is approximately 52% of the total number of homes which sold in 2007. Additionally, the total of sales as of the end of March, 2008 is only around 12% of the total sales that happened in 2007. What does this all show? If sales were to keep pace with last year's sales, you would assume that as of the end of March, the sales in 2008 would be around 25% of last year's sales. So, what this tells me is that inventory levels are continuing to grow and that sales are very stagnant right now.
So If I Am A Buyer, What Does This All Mean? In this uncertain real estate market, if you are a buyer, do not automatically assume that what happens in California or even Northern Virginia. If you find a home you like and are contemplating making an offer, ask your agent to prepare a Competitive Market Analysis for the home you are looking at. This will tell you just how well the home is priced! If the home is priced well to begin with, then the seller may not be willing to accept or even counter an offer that is more than 4% to 5% below their asking price (& this should include any closing costs you are asking the seller to pay). This means that if you are a buyer looking at homes and you need the seller to pay some of your closing costs, then you should not be looking at homes at a price range that is above the price you are already qualified at. And when you do find a house that you want to make an offer on, and you will need the seller to pay closing costs, do not come much, if any, off the asking price.
So If I Am A Seller, What Does This All Mean? As you can see from the above, inventory levels continue to be very high in Richmond, with sales well below 2007's level. Will the sales level pick up in the spring? Historically, they have, but as you may be aware, this market is not like historical markets, so who knows if they will, and how much will they pick up in the spring. So if you are thinking of selling your home, and you want to sell it quickly, you may need to price your home below what you think it is worth! Look at the market analysis, and in particular, look at the pending sales in your neighborhood - this will tell you much about where the market is coming from when looking at houses! Many sellers are using gimmicks, such as paying HOA dues for a year, maid service for a year, etc. But the bottom line that is attractive to buyers is the pricing - the best price in the neighborhood will be the draw for the buyers that are out there. A new market analysis should be reviewed every few weeks, so you can see how homes are selling & what your new competition is. Overpricing to begin with will only cause your home to sit on the market a longer time, becoming shopworn and getting a "desperate" feel to it. Price well to begin with, even if you have to price below where you think your home is worth!
I hope that you have found the information here worthwhile! If you have any questions, or you are thinking of buying a home, or you are contemplating putting your home on the market and want a complimentary market analysis, please feel free to call or email me. I am happy to help and promise to give you an honest assessment of your property's value. Have a good day!
Barbara A. Reagan
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Cell Phone: 804-869-1191
Email: Barbara@YourRichmondHome.com