Property Report: Real estate sales and prices flatten in Rappahannock amid a national and regional housing slump
By James P. Gannon
The real estate boom and property buying frenzy that sent prices soaring in Rappahannock County in 2005 and much of 2006 is over, but the county is not experiencing the severe symptoms of national housing slump that are more evident in nearby Northern Virginia communities.
That’s the conclusion drawn from a study of property sales and prices so far in 2007 and talks with a range of real estate agents active in the Rappahannock County market. The picture that emerges is one of a cooling-down of the property market, marked by more cautious and picky buyers, a flattening to slight decline in selling prices, a modest rise in the number of properties on the market, and a longer wait and more negotiating on price by sellers.
“The market has slowed down from the frenzy it was in” from about mid-2004 through mid-2006, when multiple offers for attractive properties were common and homes sold above asking prices, said Alan Zuschlag, an agent with Armfield, Miller & Ripley in Washington, Va. “It is still a very robust and active market, however. There is no comparing Rappahannock County and the surrounding counties,” which are suffering a glut of homes for sale and falling prices, he added.
“We are still selling property at historically high prices,” said Cheri Woodard, an agent for Frank Hardy Realtors, also in Little Washington. “The rapid escalation of prices that we were seeing has stopped.” She expects prices to remain flat for the rest of 2007, as do most real estate agents interviewed by The Rappahannock Voice. Woodard said she had her best year ever in 2006 and she remains “really busy” in an active market currently.
Voicing a somewhat more downbeat view, Realtor Philip Strange said he sees more weakening of the market ahead. “My view is that prices will continue to go down, but not crash, in 2007,” he said. “I don’t think they have bottomed out yet and we are certainly not seeing the multiple offers of days past, unless it is a great property at a great price.” Strange recently closed up the small realty office he had rented in Little Washington, cutting his overhead costs while the market is slow. “I’m getting lean….I have my office in my home now,” he said.
Data show evidence of price softening
Industry statistics back up the agents’ characterization of the market in a slowdown with flattening prices.
The number of residential properties sold in Rappahannock County in the first quarter of 2007 remained about even with a year earlier, but there’s more evidence of price softness. According to data gathered by the Metropolitan Regional Information Service–the multi-listing service used by Realtors–13 residential properties sold in the county from January 1 through March 31, compared with 12 such properties last year. (These are land parcels with homes, as opposed to raw land sales.)
The 13 properties sold last quarter ranged in price from $180,000 to $800,000. In contrast to most of 2005 and 2006, sellers had to discount considerably from their asking prices to close the deals. Only one property–a four-bedroom home on eight acres along the Hazel River in southern Rappahannock–sold at the listing price ($759,000) in the first quarter this year.
All other sellers in the first quarter sold for prices that showed discounts ranging from 2.7% to 12.3% below their asking prices. The average discount was 7.2%. A 12-acre mini-farm near Scrabble sold for $620,000, or $59,000 below the list price. A three-bedroom home on 2.6 acres along Fodderstack Road near Flint Hill was listed at $285,000 and sold for $250,000. A home on 25 acres just off Ben Venue Road near Flint Hill was listed at $499,000 and sold for 451,000.
“If you are serious about selling, you have to price to this market,” said Philip Strange.
“There are more sellers in the market and a few less buyers,” commented Rick Kohler of Real Estate III in Washington. “Sellers need to be more competitive if they want to get the job done.”
Kohler said the spring sales season has gotten off to a somewhat slow start. “My personal experience is that the weather has held up things this year. We haven’t had a lot of buyers looking in April, which is when traffic usually picks up. Some of that is weather and some of it is other factors. The stock market is riding high, and people are keeping their money in the stock market.”
More properties are up for sale
Another factor is that “there is more inventory on the market,” notes Cheri Woodard. The huge escalation in prices during the last two years has tempted more owners to put their properties on the market. Woodard said she is advising sellers that “you can’t expect to sell as fast as before, and there is more negotiating on price.” Still, many sellers have unrealistically high expectations, and haven’t adjusted to the new reality of a flat market, she added.
Currently, there are 66 residential properties listed for sale in Rappahannock County, compared with 49 a year ago and just 36 in 2005 at this time, according to MRIS data. A breakdown of the 66 properties by price shows that the widespread belief that there are no affordable homes available in the county is a myth.
At present, there are 18 homes for sale in Rappahannock County at list prices under $300,000. A year ago, there were only four homes for sale in that price range.
Three of the 13 properties sold in the most recent quarter went for $265,000 or less. A home on Viewtown Road near Amissville, listed for $199,000, sold for $180,000 in January after 85 days on the market. Another Viewtown Road home sold in February for $265,000, down from its $299,000 listing price. Current active listings in the county include homes in Amissville, Sperryville, Little Washington and Chester Gap for sale at prices ranging from $139,500 to $299,000.
Properties that are actually selling are not spending too long on the market, but there are many others who have been up for sale for six months to a year or more and still aren’t selling. The 13 properties sold in the first quarter spent an average 71 days on the market; that was actually down from an average of 101 days last year. But many more are simply languishing in a slow market.
“Some of the stuff on the market is getting stale,” said Philip Strange. “Properties stay on the market because they are vastly overpriced,” said Alan Zuschlag, “or they are not what people want.”
Sellers sometimes wait….and wait….
The multilist realty data, which shows the number of days on the market for every property, tells some tales of agonizing waits for buyers–else that, or very patient sellers. A four-bedroom home on 21 acres on Round Hill Road near Boston has been on the market since last August 4 at $750,000. A Huntly home listed at $799,000 has been on the market for just over a year. An Amissville property listed for $940,000 has spent 413 days on the market, and other in Sperryville, at $779,000 has racked up 433 days–nearly 15 months–waiting for a buyer.
It’s interesting that all of these properties fall in the middle wedge of the Rappahannock market–well above the more affordable places under $500,000, but also below the upper bracket that is the playground of the very rich, the cash buyers who don’t have to worry about financing. Alan Zuschlag finds that this middle-range of the market is the soft spot now. “It’s more robust at the upper and lower ranges, rather than in the middle,” which he defines as the $500,000 to $1.5 million bracket.
One change affecting the market here–though probably less than in surrounding counties–is a tightening of credit standards for home loans, said Zuschlag. “Lenders have gotten a little more stringent” in scrutinizing buyers’ credit-worthiness, he said. “Banks are not throwing money around like they were a couple of years ago.”
Most agents here say the credit tightening has not had a major impact in Rappahannock, as it has in nearby counties where it’s affecting sales of developers’ new home projects. One local couple with their finger on the pulse of the mortgage market is Mike and Barbara Cioffi of Castleton, mortgage brokers with Pinnacle Financial Corp.
“We don’t believe the tightening of lending standards–which is definitely happening–has had much affect if any on sales in the county,” they said in a message to RappVoice. “We have had no deals in the county fall through due to financing not being available, or because buyers can no longer qualify.”
However, they added, “some sales are falling through because borrowers have a contingency to sell their current property to obtain money for a down payment, and their current houses are not selling.” Thus, the market slump in Northern Virginia suburbs can have an impact on Rappahannock, because many buyers from there can’t get their suburban homes sold to provide the cash for the dream home in Rappahannock.
The Cioffis said the tightening of lending standards is having more impact in surrounding counties. “We have had several applicants who could not purchase homes–usually first-time buyers–in the immediate surrounding areas” because they failed to meet tightened credit criteria.
It’s worse almost everywhere else
For all the signs of a cooling in the Rappahannock real estate market, it appears to be in far better shape than in places such as Fauquier, Culpeper, Loudoun counties or the near-in suburbs of Washington DC. Inventories in those areas are rising sharply, sales are slowing, and prices falling. Nationally, home sales fell 8.4% in March, the largest drop in 18 years, and home prices fell at the fastest rate in 13 years. Average prices in the Washington DC market were down 4.3% from a year ago.
That’s prompting some potential buyers from the DC area to come to Rappahannock County with the expectation that they can scoop up a country property at a bargain price now, Realtors say. They figure if the value of their home in the DC suburbs has fallen, so must the value of properties here. But they are disappointed to find prices here only flattening–at very high levels.
“Buyers see a decline in their own areas and expect to buy at low prices here, but can’t” said Zuschlag. “Buyers come out here now with that mentalitiy.”
But Rappahannock, in his view “is an island when it comes to real estate.” He explains: “Rappahannock is its own brand. A Rappahannock address means something entirely different from an address in Culpeper or Fauquier counties. You have to look at Rappahannock as a separate market because people place a different value on that name. If they are looking for a weekend home, they want Rappahannock, and only Rappahannock. This results in a premium in pricing.”
Zuschlag said he currently is working with 45 would-be buyers who all want a Rappahannock property, and there are only 66 properties in the market–most of them not the ideal country place that these wealthy, choosy buyers are seeking. He sees the current cooling of the market as a mere pause in a long upward trend in property values here.
Editor’s Note: This is the first of a series of occasional RappVoice reports that will track real estate trends in the local market. For an ongoing commentary on real estate in the area, check out Amissville Realtor Julie Emery’s blog.
-- James P. GannonComments
Comment from gracereynolds
Time: April 26, 2007, 11:29 am
I can’t resist a quick comment on the above quote, “A breakdown of the 66 properties by price shows that the widespread belief that there are no affordable homes available in the county is a myth.”
I think “affordable” is the key word here; it is completely subjective. I think that a study done on the average incomes of those residents who, in surrounding counties, would be buying at the low end of the housing market, would reveal that $300,000 or even $250,000 is hardly “affordable.” I have looked at many of the homes in this bracket, and, while the price may seem low in comparison to the rest of the county, the houses themselves are often hardly even in liveable condition.
While it is nice for me as a lower-income local to see the prices flatten out or even lower slightly, I can’t say that I feel relieved that my own experiences searching for a decent quality, affordable home have turned out to be mythical.
Comment from chris
Time: April 26, 2007, 11:32 am
Affordable to whom ????
Re: “A breakdown of the 66 properties by price shows that the widespread belief
that there are no affordable homes available in the county is a myth.
At present, there are 18 homes for sale in Rappahannock County at list prices
under $300,000. A year ago, there were only four homes for sale in that price
range.”
Here’s the math on “affordable mortgages” following your assumption that $300,000
is “affordable”:
30 years - 5.8 percent fixed mortgage
$300,000 -
monthly payment - $1760.26
at 33% of monthly income = $5280.78 min monthly salary
or $33.01 an hour at a 40 hour a week job
$250,000 -
monthly payment - $1466.88
at 33% of income - $4400.64 min monthly salary
or $27.50 an hour at a 40 hour a week job
$200,000 -
monthly payment - $1173.51
at 33% of income - $3520.53 min monthly salary
or $22.00 an hour at a 40 hour a week job
These figure do not count taxes, or the doubling of fuel costs
to an average 20% of monthly family income, food costs, as well as fuel
costs are also not included in the inflation index.
mortgage calculations from:
http://www.bankrate.com
Chris Moyles
E.D. Fauquier Housing Corp
Rappahannock Community Housing Partnership
chris@fauquierhousing.org
Comment from jnmillerjr
Time: April 26, 2007, 7:19 pm
Your housing data is flawed since it only includes MRIS sales. The only way to accurately depict this data is through an analysis of property transfers at the Clerk’s office. There are many, many transfers that are not entered into the MRIS data base.I think that data should be included before you add to “the perception” of the market.
Additionally interest rates have crept up two points or more, as for the asking prices
many sellers insist on a certain price initially only to become more market savy over time.
The big developers are saying they have fewer projected housing starts but if you examine the statistics housing starts are up from 2006. Toll brothers for example is building approximately 1000 more new homes in 2007 than they constructed in 2006. So you know that they are still profitable just not as profitable as the recent real estate boom. Those profits were obscene.
The market has softened and inventory is up but good property in this area does not last long in my inventory.
I have had three six figure full price sales in three different counties since January 1, 2007 none of which made the database.
Jay Miller
Write a comment