Inventory Up, Price Reductions Down in Charlottesville & Albemarle

Mike Simonsen’s weekly updates are must-reads for me, as they usually key in on trends and feelings that I am seeing and sensing in the Charlottesville – Albemarle real estate market.

I’ve been ruminating over his 6 June 2022 update, and watched it again to call out these points that while national, are relevant and applicable to our market: (bolding mine)

Everyone is worried about the real estate market
The percent of homes on the market that have had asking price reductions is up to 24.1% this week, that’s the highest level of 2022. As always with price reductions, it’s important to keep this in perspective. Normally across the country about a third of the homes on the market take a price cut before they sell. Right now we’re only at 24%
Price reductions peak in the fall before resetting with the holidays. Looking at this trajectory, you can see that by July we’ll be back to a normal 30% range price reductions. This will be normal but it will feel slow to sellers who were not properly prepared by their real estate agent.
2018 was the last time we had rising mortgage rates. As the market slowed, price reductions climbed.
There’s nothing in the data yet that shows any crash or any home price declines. Just a very notable shift.
I expect this percentage to resume its decline next week. Fewer bidding wars, more options for buyers. Still lots selling quickly. Immediate sales has really been the defining characteristic of this housing boom. And because there have been buyers looking for a long time, many are still jumping on their opportunity when they get it.
It’s a little weird to be talking about record home prices and rising price cuts at the same time. It’s a very scary time to be in this market. Agents when you’re counseling your sellers this is one way to communicate with them. Yes, the market is still strong, price reductions are fewer than normal, but it’s changing quickly, so let’s do this right, set the proper price so we don’t get behind this curve.

Whatever we’re seeing now is “normal.” It is what it is, and making projections about what’s next is almost impossible.

What I think:

I agree with everything Mike said above.
Until rates stabilize at whatever point they stabilize, we’re going to see market volatility
Gas prices are having significant impact on virtually every aspect of our lives, and it would be great if our society could capitalize on this shift to focus on better infrastructure and housing and area development that does not force people to drive cars everywhere.
More inventory is going to come on the market, and pricing correctly from the start is more important than ever.
The market from earlier in the pandemic that may be helping sellers set their own expectations is gone. As I’ve told clients, “What your neighbor got for their house four months ago, and how fast, and with however many offers, is irrelevant.”
Having the right professional guidance is crucial. If you’ve never seen a down/shifting market, it’s a lot different than the one we’ve had for the past few years.

This is a snapshot of the Charlottesville MLS as of about 1:30pm on 13 June 2022.