2016 KEPT US ON OUR TOES!
It was very much a “price adjusting” year, with foreclosures being flushed out, inventory running historically low, instability associated with a presidential election year, and wondering when those darn mortgage rates were going to finally rise! A more detailed, localized look below…
**Looking for a broader point-of-view? I got ya covered, VIRGINIA HOME SALES REPORT – 4Q 2016.
INCREASE IN SALES TRANSACTIONS
According to the US Census, (see below), the Greater Augusta County Area has seen little growth in the 2000’s. So, I was delighted to see the 6% increase in closed transactions, (1511 sales) when compared to the 2015 number, (1426 sales). Highest number of sales occurred during 3Q, (463 total transactions.); with the highest selling month being August, (162 sales transactions.) Aside from the natural recycling of households upsizing & downsizing, we have noticed a segment of folks from our neighboring larger, faster growing cities discovering the easy commute & less expensive real estate this area has to offer. (*Count my household as an example… My husband works in Ch’ville, but Waynesboro’s more laid-back & small town ambiance is a better fit for us.)
- Augusta County’s population growth, from 4/2010 – 6/2015 was, 0.8%
- Staunton’s……. 2.8%
- Waynesboro…… 2.2%
- Harrisonburg…… 7.4%
Projected Population Growth by the Decade – UVA Weldon Cooper Center
(*Visit the Virginia Labor Market Information website for additional specific community profiles, featuring demographic, economic, and educational data.)
So, the big story for 2016 was the ever depleting supply of available residential inventory. The diminished supply began to affect several facets of our market here, (more on that below). The decrease began in Fall of 2015, and became historic in March of 2016. (You can see below, the dramatic increase in Spring 2014, the unfortunate bi-products of defaulted loans were pumped into the market, and continued to be replenished into Q1 2015.)
Foreclosures, et al. represented approximately 20% or more of transactions in 2011-Q1 2015.) Though we noted a slight increase of their presence in December’s sales, REO’s & foreclosures have been relatively flushed-out & stabilized, (representing ~10% of 2016 total sales.)
Another contributor to the low housing supply, are the homeowners that, (even after a decade or more of homeownership), have little-to-no equity in their properties. According to an extensive 2013 NAHB study, the average residence turnover time is 13 years. If we use that statistic, a large segment of potential sellers purchased their home around the height of the market. Would YOU sell your home if you knew you were going to lose money? Ummmm, no-thankyouverymuch.
Low inventory means not-a-thang if you don’t have buyers…Fortunately, we DO have buyers in the Greater Augusta County and surrounding areas…(I mean, who wouldn’t want to live here!?) A great way to visualize this, is with something called an absorption rate chart…it’s a handy calculation using actual sales and available housing supply data, it’s measured in months. Of course, it isn’t that “black & white”, but it’s a helpful tool for checking the pulse.
This measurement tool can be focused to compare neighborhoods, price ranges, etc. and can totally vary depending on data set. For instance, if you were getting ready to put your own home on the market…the absorption rate for properties in your neighborhood & price range are both VERY IMPORTANT items to know. It will help both, you and your agent strategically price your home. As a buyer, (let’s say you were looking for a home last December.) Your preferred price range was $150k to $200k. The absorption rate for that price range was an average of 2.9 months…With that rate, you need to get your sweetlittletushy out to see the property ASAP. With that said, if your price range was $600k-$650k, the absorption rate in Dec. was 24 months, not quite as urgent. I think you get the jist of it…
INCREASE IN LAND SALES
So, how did buyers react to restricted choice?…They started purchasing stale inventory at cheaper prices, (thus a huge jump in Average Days on Market back in the Spring.) – AND – they decided the alternative to purchasing existing homes, they decided to BUILD. Check out the stats to the left, s’il vous plais…
INCREASE IN MEDIAN & AVERAGE SALES PRICE
This year we noticed an overall increase of 3% in Average Sales Price. The chart below illustrates the increase, continuing into fourth quarter. *In 2015 & 2014, that line dipped in 4Q, creating more of an arc. I look forward to seeing what happens in 1Q 2017…will it continue to rise? (There is usually a pretty dramatic drop-off in first quarter…the holidays wear people out! But maybe 2017 has something different in-mind…)
DAYS ON MARKET
2016’s Average DOM was a negligible 1.3% less days than 2015. On the surface, this seems nothing to write home about…the real story is 2016’s whopping decrease in median days by 24%. Remember when I mentioned buyers tapping into stale inventory that was overlooked in the past? That inventory has been on the market for several months, in some cases, years. That is a lot of days skewing into the yearly DOM average. The numbers below are another way to view the higher demand…
WHAT TO LOOK FORWARD TO IN 2017…
I’m really, really, really curious to see what happens in First Quarter …Will low-inventory, and the threat of more rate increases, motivate buyers during the usual “slow-down” period? Will the higher interest rates lower sales prices during our high season in 3Q? – OR – Will the lack of supply continue to drop, keeping the demand high? Only time will tell…
Before I leave you with the National Association of Realtor’s 2017 Prediction infographic below, I would like to thank all of those who encouraged me this first year as a real estate agent. I have stepped out of my “homebody” comfort zone, and met some truly wonderful people. Honestly, the word, “clientele” seems so stiff. The families I have met, have become new friends, and what a joy & honor it has been to work with them as a consultant in their home buying/selling process. Its been somewhat of a Mary Tyler Moore moment for me; as I twirl off, throwing my hat in the air…
Ciao – Katherine
* This report was prepared by and for the use of Katherine McNicholas, Westhills Ltd. REALTORS. It is not to be copied in whole or in part without explicit permission of author.*
* All data based on information from the Greater Augusta Association of REALTORS®, Inc. or Multiple Listing Service for the period 01.1.16 through 12.31.16. All information is believed to be accurate, but cannot be guaranteed.*