Even with fewer sales, home prices in Central Virginia have continued to “surge at double-digit rates” and are selling fast, according to a new real estate report.
The Charlottesville Area Association of Realtors’ third-quarter report shows that median sales prices rose in July through September by $38,100, or 12%, compared with that time last year.
But inventory is still low, and there was about 1.5 months of supply at the end of the third quarter.
“What we’re saying is that at our current rate of sales, if no more houses came on the market, we would have sold the last house in 1.5 months, so six weeks,” said CAAR President Quinton Beckham, broker and owner of Keller Williams Alliance. “The general rule of thumb is that a healthy market, that has an even status for both buyers and sellers, is six months of supply.”
“But when you start getting down to three months of supply, the teeter totter that is the housing market has shifted so far out of alignment that it becomes really difficult for all parties, including realtors and the association, to navigate the very narrow pathways to homeownership,” he said.
CAAR covers the city of Charlottesville and Albemarle, Greene, Nelson, Louisa and Fluvanna counties.
According to the report, inventory in Albemarle County is now just a third of what it was five years ago and it’s down 45% from a year ago. Nelson County is down 42% from inventory numbers a year ago.
In Greene County inventory was down 15% compared to last year. Fluvanna County had a 17% decline, while Louisa County saw just a 2% decrease.
Inventory expanded in Charlottesville for the first time in two years, the report said. There were 77 active listings in Charlottesville at the end of the third quarter, which is up 3%, or two additional listings compared to a year ago.
Beckham said the area didn’t end up with low inventory overnight.
“What we have had is since 2009, a level of construction that is lower, whether that’s by 5%, or 30%, then the demand, so we’ve been slowly building this up,” he said “It was the pandemic that really hit the gas pedal on that and accelerated that separation between supply and demand to where we see it today.”
According to the report, home sales were down 4% compared to the third quarter of 2020, reflecting a drop of 54 sales. Last year, many spring sales were pushed into the summer due to the pandemic.
In Charlottesville, the number of homes sold rose 28% and Albemarle saw home sales increase by 3%. Fluvanna saw a 1% decrease.
Nelson saw the largest percent decrease, with 28% fewer homes sold in the third quarter of 2021 compared with the same time last year. Louisa saw an 18% decrease in homes sold, and Greene had a 15% decrease.
The report notes that demand could cool somewhat at the end of 2021 and into 2022 “as limited supply frustrates some buyers and rising prices puts homeownership out of reach for others.”
Homes in the region continued to sell quickly, the report shows, and homes that sold in the third quarter were on the market about 24 days, which is 38 days faster than a year ago.
“The average days on market in the CAAR region has been declining for five consecutive quarters and reflects tight market conditions,” the report said.
Nelson saw the highest increase in median sales prices, with prices increasing 54% from $237,000 in the third quarter of 2020 to $365,000 in 2021’s third quarter.
Charlottesville was the only locality in the region to see sales prices decrease compared to a year ago, from $392,000 in 2020’s third quarter to $385,628 this year.
“The third quarter drop likely reflects both a slowdown in upward pressure on prices and a change in the mix of homes sold in the city,” the report says.
Albemarle median sales prices rose 2%, from $408,000 in 2020’s third quarter to $416,852 this year
Fluvanna prices jumped 24%, to $305,500 this year from last year’s third-quarter price of $247,250. Greene saw a 16% price rise, from $290,00 to $335,000, and Louisa prices rose 13%, from 2020’s $280,000 to 2021’s third-quarter price of $316,150.
According to the report, compared with the first eight months of 2020, housing construction in the region is up 46%, with an increase of 27% in permits for new single-family homes and an increase of 115% in permits for units in multi-family buildings, including duplexes and townhomes. The report uses U.S. Census data for housing construction information.
Beckham said he hopes the updates of the Charlottesville and Albemarle Comprehensive Plans, which is nearing a city council vote in Charlottesville and just kicking off this year in Albemarle, can help provide more people with homes they can afford.
“We can use the reinstitution and relook at the Comprehensive Plans to really support and promote higher density housing to achieve a more affordable price for those new homes that doesn’t take away any value from the homes that people already own but provides greater options,” he said.