The Nest Report Q3 2012

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Q3 2012

New River Valley


The New River Valley Real Estate Market Continues to Improve.

We’ve been hearing for the last 12-18 months about how some of the larger real estate markets in the United States have experienced a drastic positive upside swing. Stories of low inventory levels, multiple offers, and increasing prices. While we still wouldn’t consider the New River Valley real estate market to be in the ‘hot’ category, signs continue to be positive in our region. Just as there was never a sharp upswing in the market back in the mid-2000s, there will not be an overnight recovery either. However, it looks like market is still trending in the right direction.

Overall, the New River Valley posted a slight increase in total sales. NRV real estate sales increased from 410 in Q3 2011 to 424 in Q3 2012 (+3.4%). While this is great news, the huge drop in inventory levels was even better news. Inventory levels fell drastically in every category in the New River Valley. Notably, single family home inventory fell by 14.9% and attached inventory fell 27.7%

As much as it’s great to see sales numbers increase, it’s even more beneficial to see the inventory levels fall back towards normal levels. We’ve been saying for years that until inventory levels and months of inventory drop significantly, there will be no chance for a recovery. The basic laws of supply and demand come into play when inventory levels are too high: high inventory levels lead to falling real estate prices. And buyers are less likely to purchase when prices are falling.

While we haven’t seen any across-the-board price increases in the region due to the inventory levels falling, today’s real estate buyer does have more confidence in the market than they did 18 months ago. That’s a good thing.

We were a bit surprised that Q3 sales in Blacksburg actually fell from 2011 by almost 10% (from 92 to 73). On the other hand, Christiansburg had a very strong quarter by posting a year-over-year increase in total sales by 26%. This drop in Blacksburg sales and the increase in Christiansburg sales could very well be linked to the quality of inventory in each market market and how well that quality inventory is priced. Contracts written on homes in Blacksburg and Christiansburg were up from Q3 2011. So, that proves there are still active buyers in the marketplace.

Moving forward, we expect inventory levels to continue to come down in the coming months. However, don’t be surprised if inventory spikes in the early Spring. We’re hearing evidence in not only Virginia, but throughout the country, that many sellers are targeting Spring 2013 as their chance to sell their homes. If this happens, and if the banks decide to release their ‘shadow inventory’ of bank-owned homes into the marketplace, we could see a flood of properties hitting the market. This could lead to a bit of a speed bump on the road to recovery if inventory levels get too high.

But interest rates remain low and all signs are pointing to the economy starting to gain a bit of steam. And, in reality, the foreclosure wave never hit the NRV hard so we do not expect the release of bank-owned shadow inventory to impact the local market here much at all.

We are hopeful that the New River Valley real estate market will continue to keep chugging along. If Q3 tells us anything, it tells us that the local market is continuing to move in the right direction.


Year-over-year residential real estate sales in the New River Valley MSA saw a slight uptick in the second quarter with a modest 3.4% gain. After

large sales increased from Q3 2010 to Q3 2011, overall sales across the board were relatively steady. Attached homes experienced a 4.8% gain, while single family home sales increased by 3.7%. Median sales prices for single family homes increased by 9.4% and attached home median

pricing fell by 5.3%.

New River Valley MSA Market Snapshot

The most positive news for New River Valley real estate sales lies in the inventory levels. Total year-over-year inventory fell sharply across the

board. Inventory for single family homes was reduced by 14.9% to 1833 total units. Total inventory for attached homes in Q3 fell by 27.7% to 125 units. Months of Inventory was also lower for both attached (down 31% to 8.52 months) and for single family homes (down 17.9% to 14.98

months). These lower inventory levels are a key determinant to leading us towards a more balanced real estate market in the New River Valley.

5 YEAR TREND

Total SoldVolume

AverageSale Price

MedianSale Price

TotalSales

TotalInventory

Months ofInventory

Q3 2012 $68,064,516 $185,462 $164,000 367 1833 14.98

Change 12.4% 8.4% 9.4% 3.7% -14.9% -17.9%

Q3 2011 $60,579,459 $171,128 $149,950 354 2153 18.24

Change 25.9% -4.7% -0.8% 32.1% -2.6% -26.3%

Q3 2010 $48,108,982 $179,511 $151,200 268 2210 24.74

AverageList Price

AverageSale Price

MedianSale Price

TotalSales

TotalInventory

Months ofInventory

Q3 2012 $6,755,125 $153,526 $156,500 44 125 8.52

Change -4.6% -9.0% -5.3% 4.8% -27.7% -31.0%

Q3 2011 $7,082,800 $168,638 $165,250 42 173 12.35

Change 57.7% -6.1% 3.3% 68.0% -27.0% -55.7%

Q3 2010 $4,490,690 $179,628 $159,900 25 237 27.88

Atta

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Five Year Trend of Sales Activity (Number of Sales)

MSA (Entire New River Valley MSA)

0

200

400

600

800

Q4 ’07 Q1 ’08 Q2 ’08 Q3 ’08 Q4 ’08 Q1 ’09 Q2 ’09 Q3 ’09 Q4 ’09 Q1 ’10 Q2 ’10 Q3 ’10 Q4 ’10 Q1 ’11 Q2 ’11 Q3 ’11 Q4 ’11 Q1 ’12 Q2 ’12 Q3 ’12

Sing

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0

25

50

75

100

125

150

175


Five Year Trend of Sales Activity (Total Number of Sales)

Year-over-year sales in Blacksburg dropped by 9.7% (from 92 to 73) in Q3. All three categories of real estate suffered this past quarter: single

family home sales were down 8.9%, attached homes were down 31.6%, and condominiums were down 28.6%. However, median prices for single family homes increased by 7.3% . Attached (-11.5%) and condominium (-15.6%) both experienced a drop in median prices. Total sales volume in

Blacksburg was also lower this past quarter. Single family (-5.4%), attached (-47.6%) and condominiums (-44.4%) also saw decreases.

Blacksburg (In Town Limits) Market Snapshot

TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 14,445,324 283,242 263,500 51

Change -5.4% 3.9% 7.3% -8.9%

Q2 2012 15,270,900 272,695 245,500 56

Q3 2012 14,445,324 283,242 263,500 51

Change -11.7% 3.9% 3.1% -15.0%

Q3 2011 16,361,434 272,691 255,500 60

Sing

le F

amily

TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 2,182,500 167,885 169,000 13

Change -47.6% -23.4% -11.5% -31.6%

Q2 2012 4,165,100 219,216 191,000 19

Q3 2012 2,182,500 167,885 169,000 13

Change -5.6% -12.8% -3.2% 8.3%

Q3 2011 2,311,500 192,625 174,500 12

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TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 1,155,050 115,505 115,000 10

Change -44.4% -22.1% -15.6% -28.6%

Q2 2012 2,076,800 148,343 136,250 14

Q3 2012 1,155,050 115,505 115,000 10

Change 728.0% 1.4% 5.0% 0.0%

Q3 2011 139,500 113,950 109,500 10

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Contracts Written Contracts Written

Q3 2011 Q3 2012 Change

Single Family 32 41 28.1%

Attached 11 10 -9.1%

Condos 6 6 0.0%

The overall 5-year trend line for Blacksburg continues to be down slightly. For the 3rd time in four quarters, the total year-over-year sales

numbers were down. On a positive note, contracts written on single family homes in Blacksburg were up 28.1%. Contracts written for attached and condominiums were relatively flat.

5 YEAR TREND


Q3 ’12

Q2 ’12

Q1 ’12

Q4 ’11

0% 25% 50% 75% 100%

0%

2%

2%

1%

9%

19%

18%

16%

35%

28%

43%

43%

50%

45%

36%

35%

6%

6%

1%

4%

Blacksburg In Town Limits Percent of Sales by Price Range

0-100K 100K-200K 200K-300K 300k-500k Over 500K

Blacksburg (In Town Limits) Market Snapshot (Part 2)

Single family homes continue to make up the largest percentage of sales within Blacksburg Town Limits. Approximately 7 out of every 10 sales in

Blacksburg was a single family home. The percentage of single family homes increased slightly from Q2 2012 when detached homes made up 63% of the market. The popularity of condominiums fell off slightly (from 16% to 14%) and also for attached homes ( from 21% to 18%) from the

second quarter.

The percentage of sales by price range tells an interesting story for the second straight quarter: more homes in higher price categories are selling

as compared to the previous year. Notice that the sub-$100,000 sales made up just 4% of the market: down from a range of 6-7% from the previous quarters. The most popular price category was the $200,000-$300,000 range, making up 43% of the marketplace.

14%

18%

69%

Blacksburg (In Town Limits) Sales by Type

Single Family Attached Condos


0

25

50

75

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125

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175


Five Year Trend of Sales Activity (Total Number of Sales)

The Christiansburg real estate market picked up in Q3. Total year-over-year sales increased by 26%. Total sales increased for both single family

homes, but were relatively flat for both condominiums (from 2 to 3) and for attached (from 26 to 24). Single family home sale volume increased by 15.1%, while sales volume for attached homes was off by 9.6%. Total sales volume for condominiums was up 27.9%, but there were only a total

of 3 sales. Overall, the total 5-year sales trend for Christiansburg continues on a downward trend. The past 4 quarters have been mixed: year-over-year sales have been up in two quarters and down for two quarters.

Christiansburg (In Town Limits) Market Snapshot

TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 11,973,174 184,203 175,000 65

Change 15.1% -2.6% 1.7% 18.2%

Q2 2012 10,400,000 189,091 172,000 55

Q3 2012 11,973,174 184,203 175,000 65

Change 32.4% 1.9% -0.1% 30.0%

Q3 2011 9,041,000 180,820 175,250 50

Sing

le F

amily

TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 3,405,450 141,894 139,900 24

Change -9.6% -2.0% 3.2% -7.7%

Q2 2012 3,765,200 144,815 135,500 26

Q3 2012 3,405,450 141,894 139,900 24

Change 20.2% 0.1% 4.8% 20.0%

Q3 2011 2,834,300 141,715 133,450 20

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TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 766,000 255,333 265,000 3

Change 27.9% -14.7% -11.5% 50.0%

Q2 2012 598,850 299,425 299,425 2

Q3 2012 766,000 255,333 265,000 3

Change 14.6% 14.6% 20.5% 0.0%

Q3 2011 668,200 222,733 220,000 3

Contracts Written Contracts Written

Q3 2011 Q3 2012 Change

Single Family 37 48 29.73%

Attached 19 18 -5.26%

Condos 2 2 NA

Con

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Median prices in Christiansburg were up slightly for single family homes (+1.7%) and attached homes (+3.2%). Condominium median prices were

down 11.5%. However, there were only 3 condominium sales in Christiansburg so the sample size is too small to come to any conclusions. In positive news, contracts written were up for single family (+29.73%) and relatively flat for attached and condominiums.

5 YEAR TREND


Christiansburg (In Town Limits) Market Snapshot (Part 2)

Q3 ’12

Q2 ’12

Q1 ’12

Q4 ’11

0% 25% 50% 75% 100%

0%

0%

0%

0%

4%

4%

6%

5%

20%

18%

24%

21%

64%

71%

66%

66%

13%

7%

5%

8%

Christiansburg (In Town Limits) Percent of Sales by Price Range

0-100K 100K-200K 200K-300K 300K-500K Over 500k

Nearly seven out of every 10 homes purchased in Christiansburg in Q3 was a single family home. This is up from 66% from Q2. Attached homes

represented 26% of the total Christiansburg market, a reduction from 31% in Q2.

The sub-$100k market saw a slight uptick in Q3. Sub-$100k homes made up approximately 8% of the market - more than either of the last two

quarters. The break down of homes by price in Christiansburg was mostly in-line as compared to previous quarters. Homes over $200,000 comprised approximately 26% of the marketplace: that represents a decrease over Q2, but an increase from Q1 2012 and Q4 2011.

3%

26%

71%

Christiansburg (In Town Limits) Sales by Type

Single Family Attached Condos


TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 $15,869,800 $236,863 $228,000 67

Change 14.4% 0.7% 11.2% 13.6%

Q3 2011 $13,871,315 $235,107 $205,000 59

Change 46.5% 6.8% 23.5% 37.2%

Q3 2010 $9,467,244 $220,168 $166,000 43

TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 $7,070,057 $130,927 $119,050 54

Change 19.6% 19.6% 22.7% 0.0%

Q3 2011 $5,910,795 $109,459 $97,000 54

Change -7.0% -19.0% -13.9% 14.9%

Q3 2010 $6,352,303 $135,155 $112,705 47

Montgomery County

Contracts WrittenContracts Written

Q3 2011 Q3 2012 Change

52 65 25.0%

Montgomery County real estate sales had another strong quarter in Q3. Total sales were up

13.6% (from 59 to 67) and total sales volume rose by 14.4% to $15,869,800. Median sales prices were off by 11.2%, which most likely helped to spur the increase in sales. That sales

increase trend seems to have continued with a 25% year-over-year increase in contracts written. Expect sales to be strong in Montgomery County in Q4.


Q3 2011 Q3 2012 Change

62 64 3.2%

Pulaski followed its strong Q2 2012 with a relatively strong Q3. While total sales were flat at 54,

total volume rose by 19.6%. Median prices even rose by 22.7% to $119,050. Those higher prices don’t seem to be deterring buyers in Pulaski as contracts written in Q3 increased again

by 3.2%.

Pulaski County

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TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 $4,699,081 $134,259 $131,031 35

Change 12.8% 6.3% 8.7% 6.1%

Q3 2011 $4,166,985 $126,272 $120,500 33

Change -3.4% -21.0% -10.7% 22.2%

Q3 2010 $4,314,900 $159,811 $134,900 27

TotalSales Volume

AverageSale Price

MedianSale Price

TotalSales #

Q3 2012 $3,655,150 $130,541 $117,200 28

Change 15.1% 15.1% 13.0% 0.0%

Q3 2011 $3,176,100 $113,432 $103,750 28

Change 178.9% 59.4% 62.7% 75.0%

Q3 2010 $1,138,800 $71,175 $63,750 16


Q3 2011 Q3 2012 Change

30 24 -20.0%

The City of Radford struggled through a tough Q1 2012, but continued its bounced back with a

strong Q3. Total sales were up 6.1%, as were median prices (+8.7%), average sale prices (+8.7%) and total sales volume (+12.8%). Radford’s recent stretch of falling median prices may

be attracting buyers back into the marketplace. However, contracts written in Q3 were down by 20%.


Q3 2011 Q3 2012 Change

27 31 14.8%

Like Pulaski, Giles County continued its steady real estate market with a strong Q3. Total year-

over-year sales were flat at 28. However, median prices rose 13% and total sales volume increased by over 15%. Those higher prices do not seem to be deterring buyers as contracts

written in Q3 were up by 14.8% over Q2.

City of Radford

Giles County

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*Some statistics in this report come courtesy of the New River Valley Area MLS as of 10/20/12. This report covers the entire New River Valley real estate market.

The Nest Report Q3 2012

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