The buying frenzy of the pandemic housing market is coming to an end as unemployment and interest rates start to creep toward more balanced rates, according to the latest figures from the Charlottesville Area Association of Realtors.
House sales are off to a “slow start,” having sold 688 homes since the end of the first three months of the year, a 23% decrease from this time last year and the lowest number of homes sold in the area since 2016. Still, Charlottesville-area homes are selling for a median price of $401,200; that is $11,320 higher than the median sale price at the same point last year.
Association President S. Lisa Herndon and President-Elect Anne Burroughs described the current housing market in and around Charlottesville as a seller’s market — meaning there is more demand than supply — as it has been over the past two years. But an increase from one month of inventory to two months, a 48% increase, indicates that buyers are taking more time to find their dream home rather than rushing for fear of losing it, they said in a Wednesday call to discuss their first-quarter figures with The Daily Progress.
“When the inventory increases, it creates a balanced market, which means there is a power differential between buyers and sellers,” Burroughs said. “When you have six months of inventory it means that, if no other home came on the market today, it would take six months for the buyers’ demand to absorb the existing inventory.”
Although the Charlottesville area’s market is not balanced yet, the 48% increase in home inventory is “good news” compared to the overall 11% inventory increase across Virginia, Burroughs said.
While it is good news for a market trending toward stabilization, the unbalanced market is driving the median home price up as several buyers try to outbid each other on the same property.
Herndon clarified that a seller’s market does not indicate a shortage of buyers, but rather more homes are staying on the market for longer periods of time. The homes may be spending more time on the market because buyers are not rushing to buy without closing costs or proper inspection — as they were more likely to do last year — and some sellers are asking for more than the market’s median price, Herndon said.
“Because if it’s priced right in the condition, then it’s going to move and it’s going to move quickly,” Herndon said. “But if homes are staying on the market longer, then you’ve got to analyze the pricing and condition, because buyers have the opportunity now to take a little more time to go out and make that decision.”
With roughly 3,200 jobs added to Virginia’s economy between January and February of this year, the state job market has nearly returned to pre-pandemic levels. More employment opportunities are already attracting cautious potential buyers to the area, Herndon said.
More University of Virginia employees are coming into the area, but fewer sellers are putting their homes on the market, which further constricts the home inventory and creates an even more acute seller’s market Burrough said.
“We’re still historically low for unemployment so buyers are being cautious,” Herndon said. “I have had more buyers coming in from outside of the area to work at UVa or in the military and they’re having to interact with this market where they see these prices that they’re not familiar with because they see a smaller demographic expecting lesser prices, but the buyers are still out there.”
While the current housing market is not for everyone, the city of Charlottesville has received about 94 new permits to construct duplexes and multifamily homes near the urban ring of Charlottesville which includes Crozet, Rivanna and Hollymead. Increased diversity in the types of homes on the market will likely make homeownership in the area more attainable for more families.