Home prices in South Hampton Roads hit 8-year low

Home prices in Hampton Roads fell last month to the lowest point in nearly eight years, figures released Friday showed.

The Real Estate Information Network, the Virginia Beach-based multiple-listing service, reported that the median price for an existing home in January was $160,000, down 11 percent from the year-ago price of $180,000.

January marked the 14th consecutive month of year-over-year declines in median home prices, and it was the lowest since May 2004, when the median price was $155,000, according to the report and figures compiled by economists at Old Dominion University.

"Prices are falling not just at the lower end, but prices have decreased in almost all price ranges," said Vinod Agarwal, an economist at the university.

Despite the steadily declining number of homes on the market, sales of foreclosures and distressed properties are driving prices down across the region, Agarwal said. Such sales accounted for 37 percent of all sales across Hampton Roads last month.

"Most people think that distressed sales are occurring just in the lower price ranges, but they are in all sectors of the market," he said.

Agarwal predicted that home prices will continue to fall at least through the middle of the year.

"Whether prices stabilize all depends on what happens with distressed sales," he said. "If they clear up, then we could see an improvement."

Ron Foresta, president of Rose & Womble Realty Co.'s resale division, said some of the price declines could be attributed to a flurry of sales for less expensive homes, which would bring down the region's median price.

The median is the point at which half of all sales are higher and half lower.

"Most of the activity last month was in the lower price ranges," Foresta said. "My agents are telling me that they have buyers in the under-$300,000 price point having to put in multiple offers."

While foreclosures and distressed sales as a portion of all sales have been elevated in recent months, they are still below the 42 percent high reached in May.

The median price for homes just in South Hampton Roads in January was only marginally higher than the overall region at $165,000, down nearly 11 percent from a year earlier.

In addition to driving down prices, foreclosures and distressed sales have stoked buying activity. The number of homes sold in South Hampton Roads last month was higher compared with last year.

The multiple listing service reported 719 homes sold last month, up 6.2 percent from January 2011 but down about 23 percent from the 938 that sold in December. It was the seventh consecutive month of year-over-year increases in sales.

For home sellers, the report brought a bit of good news. In recent months the number of homes for sale across the region has been falling compared with year-earlier levels.

Last month, 11,394 homes were on the market in Hampton Roads, up 2.7 percent from December but down 18.8 percent from a year earlier.

During the past two months, the number of homes on the market has been at the lowest point in more than four years. At the current sales pace, it would take about 7-1/2 months to sell the backlog of homes. Economists consider six months of inventory normal.

Foresta sees the shrinking inventory as a sign of improvement in the market.

"I'm thinking there's a stabilization coming," he said. "At some point, supply and demand has to kick in."

Josh Brown, 757-446-2318,josh.brown@pilotonline.com