A number of people have asked me in the last few days whether the Charlottesville real estate market will see recovery during 2010.  There are certainly positive signs like more properties going under contract over the last quarter of 2009 than the previous year and increased showings on listings over these first weeks of the year.  There are even Realtors out there using the words rebound and on the mend as it pertains to home sales.  All that is well and good but my answer is the jury is still out.  I liken the market to what is happening with UVa basketball this year.  Everyone was expecting a lackluster year but they have started 3-0 in the ACC, are 12-4 overall, received enough votes to be ranked 30th in the country and lo and behold have even been added to mid-season picks to make the NCAA tournament.  It is way too early to go there in my opinion and I think it is still way to early to say the local real estate market is recovering just yet as well.  Because the last quarter of 2009 was much improved from the same period in 2008, I imagine the sold data after the 1st quarter of this year will give reason for optimism.  If that optimism motivates people to get off the sidelines and purchase homes then 2010 could mark the end of what has been a four year downturn.  The key number to watch is not pending sales or how many homes actually sold in a given period of time.  Instead, watch the number of how many homes are on the market for sale otherwise known as housing inventory.  We currently have 2877 vs 3086 last year.  About the same number of homes sold in 2009 which means we still have a year's worth of inventory to sell.  The spring market always brings more homes on the market and I think this year will bring more for several reasons. 

1) There are a number of sellers who took their homes off the market in the fall to wait for the spring market when "things will be better"

2)Banks will start releasing Foreclosures into the market

3) Sellers will think that things are better and decide "now is the time to sell".

All this being said, we are certainly much closer to the bottom than we are to what was the Top of the market in 2005 and interest rates still have a 4 in front of the % sign.  The $8,000 or $6,500 Tax Credit depending on which you qualify gives one a sense of urgency since that expires on 4/30 with no real signs that it will be extended.  Sellers seems to be getting more realistic with their pricing.  If enough buyers make the decision that they have waited long enough, 2010 could indeed be the dawn of the housing recovery.  If the inventory does not shrink, then my guess is 2010 will end up looking very much like 2009 with the difference being strong in the 1st half (because the end of 2008 was so bad) and not as strong as the second half of 2009.