Sales Slip Further as Prices Hold Firm
(Virginia Beach, Virginia – October 8, 2010)
The Hampton Roads real estate market saw home sales continue to tumble in September extending the recent trend downward since the expiration of the federal home buyers’ tax credit. The decline in sales has caused the local level of inventory to stay elevated, though it has come off of its all-time highs.
The end of the third quarter of 2010 exhibited an overall departure from the previous two quarters with year-over-year residential sales and median sales prices moving in opposite directions. Residential sales declined for the third quarter by 21% when compared to the third quarter of 2009. This is a stark contrast from the first two quarters of 2010 which saw year-over-year increases of 8.5% in Q1 and 14.3% in Q2. The median sales price of homes sold fared much better as it was lower by less than 0.5% in Q3 of 2010 continuing an upward trend from the previous two quarters. The median sales price for Q1 was down 3.3% and down 1.4% in Q2. The strength in the median sales price despite the sharp drop in sales could indicate that the local market is reaching its pricing bottom as Virginia Beach and Chesapeake each experienced median sales price increases.
Active residential listings climbed on a year-over-year basis 10.25%, though on a month-to-month measure the amount dropped by 1.9%. The continued high level of inventory and stagnating sales has resulted in the local months’ supply of inventory to remaining at 10 months for September 2010. There was no change from August 2010, but was 2.4% higher when compared to September 2009. The absorption rate, the average number of homes sold over the previous 12 month span, has dropped for 3 months straight since peaking in July. The current rate of 1,529 homes per month is the lowest since November 2009.
Distressed listings, bank owned and short sale homes, made up 27% of all residential settled sales in September 2010. This percentage is the highest for any month since tracking began in 2008. For the year 2010, distressed sales have made up 23.9% of residential sales in the Hampton Roads region. Distressed sales comprised at least 25% of home sales each month of the first and third quarters, whereas the second quarter experienced percentages of 20% to 23% each month. The nominal discount, the difference between the median sales price of non-distressed sales and distressedsales, fell to 31% after spiking to over 36% in August. This decline also bolsters the notion that prices may be hitting bottom, but a definitive trend downward is needed to fully support this thought.
September 2010 Highlights
Residential active listings increased, 10.25% year-over-year, to 15,467 (September 2010) from 14,029 (September 2009). On a month-to-month basis, the number decreased 1.9% from August 2010.
Under Contract (Pending) Residential Sales
Total residential under contract sales decreased by 21% as compared to September 2009 (1,401 vs. 1,770).
Total property sales and total residential sales declined when compared to September 2009 showing drops of 24% each.
There is currently 10 months’ inventory of residential homes on the market in the Hampton Roads area, the same as the previous month, but up 2.4% from September last year.