2020 2nd quarter Market Report from Michael Guthrie
Sometimes you hate to be correct with your projections. Covid19 as expected took a toll. The second quarter has ended and as we promised in April, the number of sales dropped dramatically (15%) in comparison to the same time period in 2019. What was also discouraging but again expected, there was only
a 50% increase (1207 vs 861) of homes sold in the 2nd quarter versus the 1st 3 months of 2020. This pales in comparison to a 100% increase (1421 vs 772) between the same time periods in 2019. There was a nice surprise in that the median sales price rose from $314K in 2019 to $330K with only a slight change (57 in 2020 vs 53) in days on market. This refutes the theory that prices would drop because of the pandemic. Homes sold over $1,000,000 remained steady with 46 selling in the 2nd quarter compared to 49 during the same time period in 2019.
Another interesting fact to note is 19% of the homes sold in the months of April through June were new construction. This is a 4% increase from the same months of 2019. The reason for this is twofold. 1) It takes an average of 4 to 5 months for the home to be built. Therefore, these closings resulted from contracts written prior to the Coronavirus in the months of December 2019 through February 2020. 2) We project builder closings will once again be strong in the 3rd quarter because some of the contracts were signed in March and April before tighter restri
ctions were put in place. Additionally, model homes were easier to show because they are vacant and many of the builders already had the virtual online showing feature in place.
We expect the 3rd quarter of 2020 number to look more like a normal 2nd quarter spring market. The buyer demand is strong especially because of the continuing low interest rates. What could prove this projection wrong is lack of homes to buy. For example, in June, 508 new listings hit the market compared to 613 in June of 2019. We are seeing a few open houses which means sellers are becoming more comfortable with having their homes on the market. This should result in buyers having more inventory from which to choose. The wild card will be Covid19 cases spiking again which would obviously have a detrimental effect as well.
Nelson and Augusta County sales will be one thing to watch over these next few months. Now that the dark cloud of the Pipeline has been removed the sun should begin to shine on these counties with more buyers not being worried about its effect. Hopefully, Wintergreen Resort sales will benefit especially because the gas line construction was going to wreak havoc at the main entrance into the community.
Here is to our accurate projections allowing us to experience a renewed housing market over these next few months. The Charlottesville area is dependent on tourism and hospitality. A spike in Covid19 cases could put a damper on things especially if we begin to see people not being able to pay their mortgages due to not being able to work. Only time will tell………
What to look for: another spike in cases causing more restrictions to be put back in place, Folks not going back to work which could put some to not be able to pay their mortgage.
Michael Guthrie, Broker/CEO
Roy Wheeler Realty Company
The CAAR 2020 2nd Quarter Home Sales Report
In addition to providing housing metrics, this report provides an in-depth look into local, state, and national economic conditions including unemployment rate comparisons, job change by industry, monthly permits for new residential construction, and more! It’s a great way to understand the real estate market in a holistic way.
Think Twice Before Signing That Rental Lease
It’s a source of constant discussion. Does it make sense to buy or should I rent? This is truly an extraordinary time where the mortgage rates are historically low and it might cost you the same per month to buy as to rent. Also, the main perceived obstacle for First Time Homebuyers is that they don’t have a large downpayment. Usually, people mistakenly believe that they need 10% or 20% of the Sale Price in downpayment and I hear this myth perpetuated in the media. In actuality, there are some fantastic mortgage programs available that require little or no downpayment! One can also negotiate for the seller to pay some or all of their closing costs.
For example, a rental payment of $1400 might be the equivalent of buying a $250,000 home even with no downpayment. A $1600 rental would be closer to a $300,000 home.
You may not realize this but in many cases when you rent, you’re actually paying a mortgage payment…just not yours. So when your landlord’s mortgage balance gets paid down thanks to your rent payments, they get the benefit of that equity building. Suppose you read that properties appreciated 5% last year. If we’re talking about a $250,000 home, that’s $12,500 more in equity that went to your landlord instead of you.
If you interested in owning your own home, the first place to start is to talk to a lender. Find out what programs you are eligible and what payment/sale price you may get preapproved for. Given the very low rates, you may find that owning a home makes much more sense right now than continuing to rent. It’s certainly worth considering before you sign that new lease.
Published on 2020-07-14 15:01:34