There was little to celebrate in the second quarter of 2020 in the local real estate market. But this year it was different. Sales in Crozet were up 50% last quarter over the same period last year, and year-over-year sales were 67% higher than in 2020.
This quarterly sales growth was seen in Albemarle County as a whole, where sales were up 35% (as shown in the county’s sales graph provided by Nest Realty). There were 141 sales in Crozet during the quarter, two of which were worth more than $ 1 million (these will be excluded for statistical purposes). New construction sales rose 34% quarter-on-quarter to 51 total sales. Sales of pre-built homes rose 76% over the same period in 2020, largely due to a lack of resale inventory at the start of the Covid pandemic last year. During the quarter, 14 land plots were sold. This is three times more than was sold in the same period last year and underlines the excitement of land development in the area. In fact, four of those deals were sold to Handley Farm Estates, where about a dozen properties were listed for sale for most of the decade. There were no problem sales this quarter. We hope this figure will remain at zero, but may change due to foreclosure and mortgage foreclosure programs, which currently end on July 31 and September 30, respectively.
The average home price for the quarter fell 2% to $ 516,000. But the average size of these homes fell more than 11%. 27 new developments were sold in the quarter, with the Westlake and Old Trail quarters sold for nine sales each. The average new home price was $ 610,000, down 6% from the same period last year, but the size of those homes fell 11%. Actual construction costs rose 4% to $ 216 per square foot. This figure may be higher in the third quarter, but will soon level off and possibly begin to decline as suppliers of building materials catch up with demand. A 50% increase in previously built homes were sold during the quarter, reflecting the fact that homeowners were not inclined to list their properties at the same time last year. These homes were sold for an average of $ 489,000, up 10% over the same period last year. And heck, they were selling fast, with an average of five days, up from 38 days in 2020.
There were 42 additional sales this quarter, up 50% over the same period last year. Twenty-four are for new construction. Of these, 11 were in Pleasant Green, where sales were halted in the second quarter due to sold-out inventories before the next stage opened. The average price for all new builds fell 12% to $ 437,000 as only a handful of villas were sold this quarter. This pushes the average price up as they tend to be more expensive, as evidenced by some new offerings on Old Trail promoting $ 900,000. During this period, there were 18 resales at an average price of $ 378,000. On average, these resales sold within $ 600 of their asking price and sold on average in just eight days.
The question most often asked to real estate professionals today is, “Are we in a real estate bubble?” Probably not. While we are certainly faced with an imbalanced market that favors sellers, this is largely due to a lack of supply. Freddie Mac’s chief economist, Sam Hatar, said: “The main driver of the housing shortage has been the long-term decline in single-family home construction.” As builders try to catch up and build with more expensive materials, largely due to supply shortages due to Covid, prices are rising. This leads to an increase in prices for secondary housing. But this time, unlike during the Great Recession of 2007-2009, the practice of risky lending has been limited, homeowners do not take on excessive loans and do not use their homes as ATMs. So, while current price levels may face hurdles like raising interest rates or scaring off buyers, the bursting bubble with falling prices and increasing inventories, as it did during the Great Recession, probably won’t happen.