Home Sales
After double digit increases in sales in the second quarter of 2010, sales were down in the third quarter of 2010 compared to the third quarter of 2009. (The uptick in sales in the fourth quarter of 2009 reflects sales activity driven by the original end date of the Federal tax credit.) In the Central Virginia MLS, there were a total of 2,464 sales in the third quarter of 2010, down 26 percent from 3,346 sales in the third quarter of 2009. Sales were down across the Central Virginia region. In the Richmond Metro Area, there were 2,006 sales in the third quarter of 2010, down 28 percent from the third quarter of 2009. In the Tri Cities Area, the number of sales was down 22 percent over the same quarter last year. Interestingly, the very low and very high ends of the region’s housing market seemed to be sustaining. In the third quarter of 2010, there were 372 sales for homes with sale prices under $100,000, an increase of nine percent over the number sold in this price range last year. These sales likely reflect a large number of foreclosures and short sales. The buyers of these homes also include first-time home buyers. At the other end of the price spectrum, the number of sales of homes with prices of $600,000 or greater was up 12 percent over last year (93 sales in third quarter of 2010 compared with 83 sales in the third quarter of 2009.) These are sales to buyers with good credit and sufficient down payments. This segment is a very small portion of the overall market, at less than four percent of total sales. In most price ranges, however, sales were down. The number of sales in the $100,000 – 299,999 range (which accounts for about half of all sales in the Central Virginia region) was down 36 percent in the third quarter of 2010 compared with the third quarter of 2009.

Home Prices
Despite continued lagging sales, prices were a bright spot in the third quarter 2010 housing market data. For the first time in nearly two years, average and median home prices in Central Virginia were up quarter-over-quarter. The average price of a home sold in the Central Virginia area was $239,059, up three percent over the third quarter 2009 average. The median sale prices was $203,680, an increase of two percent over third quarter 2009.1 The price improvements in the region largely were driven by increases in sales prices in the Richmond Metro Area. In Chesterfield County, average and median prices were relatively flat in the third quarter of 2010 compared to the third quarter of 2009. In Henrico County, however, the average sales price was up five percent and the median sales price was up 11 percent over the same quarter last year. The average sale price in the city of Richmond was up 14 percent, however the median price was down four percent compared to the third quarter of 2009. In Hanover County, prices were down slightly. The Tri Cities Area has not fared as well as the Richmond Metro Area. Prices are still falling in most communities, though there was some price appreciation in Prince George County. 1 The average price is the arithmetic average of all prices of homes sold. The median price is the middle price of all homes sold—that is, half of the homes sold for more than the median and half sold for less.

Pending Sales
Pending sales are an indicator of future sales. In the second quarter of 2010, the number of pending sales was lower than in the same quarter a year earlier, which predicted lower sales in the third quarter. (Of course, some pending sales become closed in the same quarter.) In the third quarter of 2010, the number of pending sales is down even further. In the Central Virginia region, there were a total of 2,796 pending sales, down from 3,609 in the third quarter of 2009. This drop represents a decline of 23 percent. Pending sales were down across the region, with only small increases in Charles City and Powhatan counties. This drop off in pending sales is largely due to the drop off in buyer activity after the expiration of the Federal homebuyer tax credit at the end of June. It is likely that the third quarter of 2010 will represent a low in the number of pending sales and that the trend will be upward (though still possibly off from last year) for the rest of 2010.

Active Listings
The number of active listings was up substantially in the first half of 2010, as potential sellers anticipated new buyers who were enticed by the tax credit. Even after the tax credit has expired, the number of active listings continues to increase modestly. At the end of the third quarter of 2010, there were a total of 9,968 homes on the market in the Central Virginia region, five percent more than in the third quarter of 2009. The increase in active listings was most apparent in the Richmond Metro Area, where the inventory was up by seven percent over a year ago. There was also an increase in the inventory in the Tri Cities Area, though much of that increase was due to a 36 percent increase (198 active listings compared to 146 active listings) in Dinwiddie County.

Outlook for 2011
There was concern that the housing market would fall into a deeper slump after the expiration of the Federal homebuyer tax credit. While sales nationally did fall off in July (compared to June), there has been some evidence of steady increase in sales activity in late summer and into fall. In the Central Virginia region, sales in the third quarter were down compared to the third quarter 2009. However, the third quarter of 2009 represented relatively high sales volume in anticipation of the Federal tax credit’s (first) expiration date. Prices across the region have begun to improve, which suggests increased confidence among buyers and provides a welcome sign for potential sellers. In addition, home price appreciation will reduce the number of homeowners who are underwater and at risk of foreclosure. The housing market will continue to improve slowly, though sales activity in the fourth quarter of 2010 will likely be lower than the fourth quarter of 2009. Prices, however, should continue to rise. In 2011, as the regional economy stabilizes and unemployment drops, the housing market will be better able to improve. The risks to the recovery include low levels of consumer confidence. Consumer confidence may continue to be low in the wake of the current foreclosure processing problems. The resolution of this issue will be a key element to restoring consumer confidence and allowing the housing market to head toward recovery in 2011.