Rappahannock County may be a leader in some ways, but in terms of real estate trends it is often playing catch-up. Comparisons to jurisdictions further east, where real estate sales are said to be rebounding, can also be tricky, due to Rappahannock’s smaller real-estate universe and higher price tags.
“What people read about in the newspapers is what’s going on in Northern Virginia, Fairfax, D.C. and Prince William. It starts there then works its way along [Interstate] 66, into Fauquier, Culpeper and then Rappahannock. There’s a seven- to eight-month lag behind the recovery that’s going on in Northern Virginia,” explains Tom Campbell, a Long & Foster real estate agent in Warrenton and the current president of the Greater Piedmont Area Association of Realtors (GPAAR). The association includes the counties of Rappahannock, Madison, Orange, Fauquier and Culpeper.
Campbell and other agents who do business in Rappahannock County were asked for their views on the latest snapshot of the region’s housing market: the fourth-quarter 2013 report on the region’s real estate activity, drawn from multiple-listing service data released by RealEstate Business Intelligence, LLC, and analyzed by GPAAR.
Median sale prices from September through December, the report says, rose in Madison by 21.1 percent (compared to the fourth quarter of 2012), by 3.8 percent in Orange, 10.3 percent in Culpeper and 8 percent in Fauquier. Rappahannock was the only jurisdiction with a decrease in median sales price; that price, $333,250, was a 4.8 percent drop from the last quarter of 2012.
“Our values have gone down,” Campbell said, looking at the state of the housing market in Rappahannock. The segment of the sales market with the most activity, Campbell said, is the lower-price end — $350,000 and below, he said. Buyers seeking lower-priced homes can avail themselves of “grant programs and FHA financing for first-time homeowners and those who are moving up” into higher-priced homes.
There are fewer lower-priced properties for sale in Rappahannock than surrounding counties, Campbell said. In addition, owners of higher-priced properties tend to be “more guarded” about selling, and more likely to wait for a better market.
The report also noted a 34.1 percent decrease in the median sale price of detached properties in Rappahannock County from the third quarter to the fourth quarter of 2013.
“What’s happened is that the lower end of the market is active,” said Butch Zindel, owner-broker at Rappahannock Real Estate Resources in Washington. Properties are naturally fetching lower prices in that segment of the housing market. Action in properties priced at $600,000 and above is basically “dead” at the moment, he said.
“That stuff needs to get sold” for the median sale price figure in the county to rise, he added. “That’s why Congress needs to get its head out of its rear end. We need to stabilize enough that people understand what’s going to happen and are more confident about investing in real estate. They can sell and move up a bit” to a higher-priced property.
Zindel said he finds the Piedmont realtors association’s take on the housing market to be “pretty accurate. There was a rise in interest rates and prices came down a touch and now they’ve come back a bit.”
“We’re a year behind the D.C. market,” Zindel said. Many people “retire to homes here. It’s not like the city. People don’t need to buy something before school starts.”
In addition, “sellers generally have unrealistic expectations” when pricing their homes, Zindel said, touching on another figure in the fourth-quarter report (a decrease in the average sold-to-original-list-price ratio from 88.9 percent in third quarter 2013 to 85.7 percent, “indicating an increase in the negotiating power of the buyer,” according to the Greater Piedmont group’s analysis).
“It’s a slower market here than in D.C. People are more willing to negotiate here and there are not as many buyers chasing properties,” Zindel said. “People willing to sell are willing to negotiate.”
Given its size in land mass and population compared to its neighbors, Rappahannock “translates to a much, much smaller real estate market and thus, with very small transactions in any fiscal quarter, a much wider swing in values, prices and number of properties sold,” said Alan Zuschlag, realtor at Washington Fine Properties’ office in the town of Washington, in an email response to questions about the quarterly report.
With that in mind, what appears to be a “steep drop” in the median price of detached properties in Rappahannock County from fourth-quarter 2012 to 2013 “wasn’t really a drop at all . . . [I]n a market with only a few sales per year (69 residential sales total in 2013 in Rappahannock), those few high-ticket transactions massively skew the data, year to year, thus showing a wide variation in average sales price on a per annum basis. That figure is meaningless when looking at the overall health and trend in the Rappahannock market.”
The median sales price — where half of the sales are above, and half below — is actually a better indicator of sales pricing and trends overall, Zuschlag said, than the average sales price — which is also tabulated by the Piedmont realtors group and is the average of all properties sold from the very expensive to the very cheap, divided by the number of sales.
The median sales price is a better indicator because “it will not swing wildly based on the sale of a $10 million estate one year, and then no sales of such big estates the next,” Zuschlag said. The median sales price did not change much between 2012 and 2013. He added that while Fauquier County’s median sales price for 2013 was slightly higher than Rappahannock’s, “on the whole Rappahannock has had, and will have even more so in the future, the highest median sales price of any of the surrounding jurisdictions.”
Looking at Rappahannock’s higher percentage of seller discounts — 16.4 percent — compared to other counties can also be deceiving. In a seller discount, the seller agrees to provide some of the closing costs or other transactional fees to the buyer. “It doesn’t reflect so much on the buyer or the seller in any significant way, but it generally is indicative of more lower end activity in a relatively higher priced market. This is definitively the case in Rappahannock,” Zuschlag said.
In summing up, Zuschlag said he expects Rappahannock to remain a “destination” real estate market — one based on the “wants” of people who choose to live her rather than “needs” that drive the buying of a house in Culpeper, for example, based on affordability or proximity to jobs, schools or shopping.
“I am very bullish on the real estate market in Rappahannock. If I had any extra cash, I would be investing it in Rappahannock real estate,” he said. But presently “our inventory of properties on the market is slowly dwindling and eventually (probably in a year or two) we will start to see the shift from a buyer’s market to a seller’s market and eventual upward pressure on prices.”