The pandemic that shuttered most of the nation between March and June shattered the local real estate market as uncertainty over the virus and job security led sellers to take homes off the market and buyers to be wary.
Efforts by state and federal governments to shore up both the market and consumers will likely help the market bounce back as economic restrictions put in place in March have eased, area realtors say.
“The COVID-19 outbreak led to an unprecedented economic downturn in both the U.S. and in Virginia,” the Charlottesville Area Association of Realtors report for the second quarter of 2020 states. “However, there is evidence that the economy has reached a turning point, and conditions should be improving over time.”
The report notes that the nation lost 22 million jobs in March and April, with 7.5 million coming back as economies reopened in May and June.
Second quarter figures for this year show that 33% fewer homes were on the market and 217 fewer homes sold in the area compared to the same April-to-June time frame as last year.
That drove the prices of homes sold in the area up 4%, figures show.
“Given the economic shutdown and the year we’ve had so far, it could be a lot worse,” said Tom Woolfolk, CAAR president and realtor with Keller Williams Alliance – Charlottesville. “It sounds funny to say, but it’s still a good market. The biggest problem is that we were already tight on inventory and the quarantine just exacerbated the problem.”
There were 1,181 sales across the region in April, May, and June, a 16% drop from the same time frame in 2019 and the sharpest decline in four years, the report states. Sales across Virginia declined by 10% in the quarter compared to last year.
Of the counties in CAAR’s area, only Louisa County saw an increase in sales with a 3% rise in the second quarter compared to last year, from 208 homes sold in 2019 to 215.
Albemarle County home sales fell from 652 in the second quarter of 2019 to 500 this year, a 23% drop. Charlottesville sales also fell with 163 home sales in the second quarter compared to 197 during the same time last year. That’s an estimated 17% fall.
Other counties in CAAR’s coverage area include Greene County, which had a 16% drop in sales from 111 in 2019’s second quarter to 93 this year; Nelson County, which fell 12% with 72 sales this year compared to 82 last year; and Fluvanna County, which dropped 7% in the second quarter with 138 sales compared to 148 in the same time frame of 2019.
Woolfolk said a general sense of anxiety squeezed the market in the second quarter. Looming furloughs and the specter of job losses led buyers to curb their enthusiasm. The same concerns led buyers to take homes off the market or not list them.
“There were so many uncertainties about the virus. How lethal is it? How contagious is it? Am I putting myself and my family at risk if potential buyers traipse through my house?” he said. “As more is known and more jobs come back, I think the market is likely to spring back in the third quarter. It may not be where it could have been, but it will likely improve.”
The CAAR report backs up his optimism. The report notes that through spring and into the summer, mortgage rates have fallen to 3.07% for the average 30-year fixed-rate mortgage. That’s down from 3.75% in 2019. Those record low rates have spurred refinancing and helped sustain the for-sale market.
Woolfolk also noted that a federal stimulus package passed to support commerce and citizens during the shutdown helped stabilize the market. Known as the CARES Act, the law provided funds to support independent contractors, small businesses, commercial and residential tenants and owners.
“We didn’t have anything similar back in 2008 or 2009 during the recession and the fundamentals of the economy were really good going into this,” he said. “Real Estate was lucky in some ways because some sections of the economy were shut down entirely and home sales were allowed to continue.”
The median sale price of a home sold in the region rose from $318,000 in 2019’s second quarter to $331,500 this year, the report states. The median price is the price point where exactly half of the houses sold for less and half sold for more.
Albemarle County’s median sale price of $397,750 was the highest in the CAAR area, about 3% higher than the $385,000 median cost in the second quarter of 2019. Charlottesville’s median sale price of $369,000 was the second highest in the area and 5% more than the 2019’s $349,900.
Nelson County saw the highest percentage increase in median sales price with a 17% hike between years with $260,000 this year compared to $222,500 in the second quarter of 2019.
Greene County median sales rose 16% to $301,500 from $260,000 in 2019; Louisa and Fluvanna counties both saw 11% rises with Louisa’s $260,000 median cost this year compared to 2019’s $235,000 and Fluvanna’s $257,500 median price for 2020 compared to last year’s $231,000 for the second quarter.
The prices of existing homes are often held in check by new construction coming onto the market, but the pandemic slowed the number of homes started during the second quarter, according to the report.
The figures show new residential construction activity slowed with 67 permits issued in May for new residential housing units in the Charlottesville metropolitan area, down 36% from May 2019.
During the first five months of 2020, 344 permits issued for new residential units, about 21% fewer than the same time in 2019. More than 80% of these new residential permits were for single-family homes, and less than 20% were for townhomes and units in multifamily buildings, both rental and condominium buildings, the report shows.
Woolfolk said the lingering concerns over the virus will likely hold back the housing market in some way for the rest of the year.
“I think eventually a lot of the anxiety will go away as there’s more known about it and maybe a vaccine, but we don’t have anything in our experience like this,” he said. “There are a whole lot of questions and not a whole lot of answers, yet.”