Though the housing market has slowed during the third quarter of the year, median home prices continue to increase, according to the Charlottesville Area Association of Realtors’ third quarter report.
“The market is moderating. The sky is not falling; people still need to buy and sell homes,” said CAAR president Pam Dent.
The median sales price in the region is $405,000, an 11% increase from this time a year ago. The median price has risen at a double-digit rate for three quarters in a row, even though fewer homes are being sold. That nearly doubles the statewide increase in home prices, which sits at 5.6%.
In Charlottesville, the median cost of a home rose 5%. But Albemarle County saw prices jack up by 13%.
“That is being driven by the fact that we still have low inventory,” Dent said.
Currently, CAAR has a little more than two months of inventory, meaning that if no more homes came onto the market, all of the listings would be gone in about two months.
“That is still very, very low inventory,” Dent said. A more balanced market would see around six months of inventory, she said.
But that low inventory is still up from the third quarter of 2021, when 603 homes were on the market. At the end of the third quarter of 2022, there were 829.
“We have had a 37% change in active listings in the third quarter compared to a year ago, but it’s still not back to the numbers that we need to truly impact prices,” said CAAR president-elect S. Lisa Herndon.
Association officials said they first started noticing a shortage of for-sale houses and apartments 10 years ago. At current rates, it’ll be another two or three years before the market stabilizes, officials said.
Higher mortgage rates have put the brakes on rapidly rising housing prices, but they’re not the sole reason the market has slowed down.
“We’ve got inflation, we’ve got gas prices, oil prices coming into winter, all kinds of things that are affecting people’s buying power,” Dent said.
Inflation is forcing buyers to look further away from Charlottesville and Albemarle County than they once did. Now, many people who want to purchase a house go to the outlying counties.
Median sales prices in Louisa and Fluvanna Counties climbed 19% and 18% respectively. That’s the highest increase of all the jurisdictions in the region.
“That’s still very affordable compared to the $400,000’s we had in the Charlottesville and Albemarle area,” Herndon said.
Houses in Charlottesville now go for about $405,000. In Albemarle, the median home price is $472,000. Statewide, the median home price was $365,000 in September, according to a report from the Virginia Association of Realtors.
“We’re an area where perhaps our workforce can’t afford to live in the immediate area,” Dent said.
Fluvanna, Louisa and Nelson Counties have also attracted more homebuyers as broadband access there expands. That enables remote workers, as well as families with kids in school, to live there.
The way to make housing more affordable, association officials said, was to increase the inventory of housing.
More building permits had been issued by August of this year than at the same point last year. According to CAAR’s market report, local officials have granted 37% more permits, mostly for duplexes and multifamily homes. Housing advocates say that multifamily housing is key to resolving the shortage, because more people can get a roof over their heads in the same amount of land.
“Particularly within the city of Charlottesville, they’re asking: Where you can build more houses? Can you build more multifamily in those areas? Can you increase density?” Dent said.
Still, officials said it will be a while before those building permits turn into units ready for buyers. Buyers might still be unhappy even when new units do come to market.
“We’re not expecting a major decrease in price,” Herndon said.
Instead, they expect the rate of increase to slow down.
“Rather than seeing median prices go up by 20% or 11%, like we did last year, I think we’ll see more in the three to four percent yearly appreciation,” Dent said.
CAAR expects that the market will start reflecting higher interest rates in the fourth quarter of the year.