First-time home buyers are leaving the Charlottesville market while sellers are adjusting to a more cautious purchasing style, according to the Charlottesville Association of Realtors’ second-quarter report of the area’s real estate market.
The CAAR report, released on Wednesday reflects, shows a transition in today’s housing market that is reflective of the entire country, association officials said.
Buyers are leaving the Charlottesville market entirely in search of smaller markets with more single-family home inventory at more affordable rates.
In the last quarter, Nelson County saw a 49% increase in sales, according to report.
CAAR officials say a natural solution when the housing market cannot accommodate a buyer’s needs may be to rent until the market stabilizes. In Charlottesville, that is simply not the case, at least for now.
“One thing that may ease some of our affordability problems into the future is the fact that building permits for multifamily and duplex houses so far this year are up by 61%,” said Pam Dent, president of CAAR. “We need to remember that it could be a year or more before those properties come onto the market.”
As Virginians continue to recover from the job market crash triggered by the pandemic, buyers are now taking more time to consider inflationary impacts. With unemployment at 2.7% and 30-year mortgage rates increased 5.5% in the last quarter, leaving buyers wondering if they are shopping in a recession, officials said.
The reality of aggressive inflation is causing buyers to pause their search or leave the Charlottesville market altogether, the report indicates and CAAR anticipates that decreased inflation will have a domino effect that will also decrease loan interest rates and mortgage rates.
The more inflation rises, they said, the longer buyers will take to purchase a home.
“Some buyers, typically in the lower-to-mid price points, are putting a pause on their search or changing their expectations,” said S. Lisa Hendon, president-elect of CAAR. “It’s important for them to talk to their lender because they may not be able to buy as much home as they had been qualified for a couple of months ago. Their payments are going to be more.”
As mortgage and living expenses rise, so are home prices. According to the report, the average home cost in the city during the second quarter was $464,000, an 11 percent increase, or a $44,000 jump since last year.
Buyers looking for homes in the $350,000 to $450,000 price range are practicing more caution about finding their place in the Charlottesville market. Fewer buys have left more active listings than usual still on the market.
Today, there are 163 more active listings on the market, a 28% inventory increase since last year. But while there are more homes available for purchase, they are not affordable, according to CAAR.
“Some people are having to adjust their expectations,” Hendon said.
As buyers take their time rather than rush into purchasing a home that does not match their preferences or budget, sellers should also change, officials said. Many homes in the city are staying on the market longer because of prices are pricing their listings too high. Still, some sellers are taking full advantage of buyers with big budgets.
“We’re still in a seller’s market,” Hendon said. “There are buyers still in the market but they’re being more cautious, so it may take a little longer to sell the home.”
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