Prices move homes
Those selling well in Richmond area are between $100,000 and $300,000
Sunday, Nov 02, 2008 - 12:04 AMBy DOUG CHILDERS
SPECIAL CORRESPONDENT
Four buyers recently made offers on a three bedroom house in western Henrico County, driving the price up by $2,000.
A couple years ago, prospective buyers getting caught up in a bidding war was common. But most houses are staying on the market longer now, and bidding wars are few.
The average house for sale in the sale in the city of Richmond and the counties of Chesterfield, Henrico, Hanover, Goochland and Powhatan sits on the market for 66 days, twice as long as the area's average in 2005, according to data provided by Joyner Fine Properties.
So what made that ranch-style house in western Henrico different?
In a word: price.
The real estate agent's mantra traditionally has been location, location, location. And to some extent, it still applies to today's troubled housing market, local real estate experts say.
But location is no longer the dominant driver for home sales.
"It's the price," said Scott Shaheen, Long & Foster's vice president for the Richmond region and president of the Richmond Association of Realtors. "Houses priced from $100,000 to $300,000 are moving today. That's the majority of our sales. The higher the price, the harder it is to sell."
In 2005 and 2006, Shaheen said, the majority of house sales were in the $350,000 to $550,000 price range.
"Sellers who understand it's all pricing and condition will do well today," said Martha Durnett, a real estate agent with Keller Williams. "It has to be well-priced under the competition and be in excellent, move-in condition. That's where you have to position the house to attract the fewer buyers [who are] out there."
Durnett recently sold a house priced at $285,000, which sold within a week and closed in three weeks. Similar houses nearby were priced at $300,000.
Sales of modestly priced homes helped lift sales 1.6 percent in this year's third quarter over the same quarter last year in Richmond and the counties of Chesterfield, Hanover and Henrico, according to the Richmond Association of Realtors.
But in central Virginia, which includes Richmond and 15 surrounding localities, sales fell 3.8 percent in the third quarter from a year ago.
Homes with higher price tags have lingered on the market.
In this year's third quarter, 2,200 houses in the $100,000 to $300,000 price range were sold in the region, according to the Realtors group. An additional 2,181 houses in the $100,000 to $300,000 range were under contract.
By comparison, 24 properties in the $1 million range closed in central Virginia in the third quarter.
The higher the price, the fewer the buyers, said Laura Lafayette, senior vice president of the Richmond Association of Realtors. "If it's priced under $300,000, it's moving fairly quickly."
The competitive pricing rule applies to high-end properties as well, though.
"High-end houses that are priced appropriately can move," said David H. Downs, director of the Kornblau Institute of real estate at Virginia Commonwealth University. "Prices at the highest end in Richmond weren't as overinflated as they were in the Washington, D.C., market."
Still, multiple bids on high-end houses are rarer today than they were two years ago.
"You don't see it often -- once or twice a month," said Bill White, president of Joyner Fine Properties. "In 2006, we were seeing them at least weekly."
Joyner Fine Properties saw two high-end houses receive multiple offers in the past six weeks. Both were in the West Cary Street and Grove Avenue corridor in the West End. One was listed at $1.2 million, the other at $750,000.
"They were priced well, and they were impeccably staged and set up," White said. "Each was a diamond and a deal."
Location also is important, he said.
"Some corridors sell quicker than others and at a higher price," White said. "The near West End of the city, for example, has moved a little faster with less inventory than other areas of the market."
Houses in Richmond's West End sell on average in 49 days compared with 35 days in 2006. By comparison, houses in Goochland County, which has seen significant new house construction, currently stay on the market an average of 80 days, up from 58 in 2006.
"Days on market can be a misleading number because a house may be listed for three months and then taken off the market and relisted a year later," White said.
Even so, the average number of days on the market has increased, an indication of a slower housing market.
On the other hand, sales of new homes are improving, too, Shaheen said. "Builders are willing to negotiate now. Two years ago, prices were increasing on a daily basis. Now, spec inventory is starting to move."
Central Virginia's active inventory -- the number of houses that are on the market -- has declined for the first time in a year. The area had 10,100 active family homes on the market at the end of June, but that number dipped to 9,200 listings at the end of September.
That's not to say real estate is returning to its recent glories.
"I don't know how you could compare 2006 -- the best year in the history of real estate -- to this year," Shaheen said. "It's been a challenging year."
But central Virginia's real estate market has not seen the highs and lows that Northern Virginia has, and the Richmond area's house prices have remained flat.
Joyner's White expects that the next few months will see a continuation of the current market. "We won't see a large increase in sales per month," he said. "We'll see a stabilization in prices, but we won't see an increase for 12 to 18 months."
At some point, prices will return to where they once were, VCU's Downs said.
"But how we get there is important," he said. "When we return to those levels, I hope we're more comfortable with the leverage we've taken on."