By Dave Phillips, CEO

Charlottesville Area Association of REALTORS®

If you’ve ever driven on Interstate 95, you may have noticed that traffic often moves much faster than the posted limit. You are almost forced to go along with the flow of cars zooming at 75 to 80 miles per hour. Then, just when you are getting used to speed-reading the road signs, the traffic slows back down to 65 for some unknown reason. Suddenly, you feel as though you are going in slow motion, even though you are still moving at a good clip. That same feeling is what we all felt from the local real estate market in 2007.

We entered January at just under 70 miles per hour and maintained that pace until July. Through the middle of the year, we were tracking sales very similar to the record market of 2004. Then the national mortgage crisis put the brakes on the real estate market, and we slowed down to 55 for the rest of the year. By the end of the year, we were back up to 60, but the second half slowdown pulled numbers back in line with sales from 2003. At the time, 2003 was a record year and was the last year we experienced what could be considered a normal speed limit. Starting in 2004, we moved over to the fast lane and accelerated to dangerous speeds – until the market hit the brakes in 2007.

There were 3,560 homes sold in 2007, which was down 835 (-19%) from 2006. All local areas (Albemarle -19.8%, Charlottesville -17.7%, Fluvanna -22.4%, Greene -33.3%, Louisa -16.8%, and Nelson -25.5%) posted lower sales than the same period last year. Looking at the past six years (see chart below), our region has returned to a sales level just above 2003 – which was a record at the time.

It is important to note that many “new” homes are not included in CAAR MLS statistics. It is very common for a buyer to contact a builder directly to custom build a home. With that said, the historical perspective of the pace of new home sales gives us a reasonably good picture of the market for new construction. As the chart below shows, new home sales followed the same path as the overall market in 2007. The number of sales in this category ended the year just above the 2003 level.