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Local economy looking up, but stumbling blocks remain

After two years of pandemic-related business closures and social restrictions followed by a Greek alphabet full of virus mutants, supply chain issues and odd product shortages from toilet paper to cat food, Central Virginia’s economy is looking up, at least by the numbers.

From home sales to employment, the region has seen some strong and solid growth. According to the U.S. Department of Labor’s Bureau of Labor Statistics, the Charlottesville metropolitan statistical area saw 1,200 more hires in nonfarm labor jobs between Oct. 2020 and Oct. 2021.

During the spring of 2020, when Gov. Ralph Northam ordered restaurants and businesses to close to help stem the spread of the COVID-19 virus, the region had an unemployment rate of nearly 10%.

For November, the region’s unemployment rate was 3.4%. Although just a short drop from October’s 3.6% rate, it is a considerable 2.4% drop from November 2020’s 5.8% unemployment rate.

According to information from the Charlottesville Economic Development department, hotel occupancy has returned to pre-pandemic levels and city meals, hotel and sales taxes have exceeded pre-pandemic levels, as have home sales and prices.

Information from the Virginia Realtors Association shows a 13.6% increase in homes sold from 2020 to November 2021 in Albemarle County and a 15.7% increase in the city of Charlottesville.

Home prices rose in the third quarter in the Charlottesville region, according to the Charlottesville Area Association of Realtors, or CAAR, with the median sales price hitting $365,000. That’s about 12% over the previous year.

Although the indicators show promise, the local economy is not without its troubles, especially for Charlottesville’s once-booming restaurant industry, especially as the omicron variant threatens to keep people at home.

“A lot of businesses are concerned with staffing, rising costs and the whole supply issue,” said Elizabeth Cromwell, president and chief executive officer of the Charlottesville Regional Chamber of Commerce. “A lot of restaurants are feeling the pinch of rising costs in food and trying to decide whether to raise prices to meet those costs.”

“It is still very tough for restaurants,” said Eric Terry, president of Virginia Restaurant, Lodging and Travel Association. “[With] staffing issues, supply chain issues, COVID restrictions and such, most are closing at least one to two days a week due to staffing.”

Terry said many cities and counties across the state have made federal recovery funds available to hotels and restaurants. In Albemarle County, he noted, the Board of Supervisors recently supported an increase in taxes on hotels and restaurant meals.

Currently, 4% is added to a meal tab in Albemarle County whereas 6% is added to the cost of a meal, whether sit-down or take-out, in Charlottesville. The supervisors, at a Dec. 15 work session, expressed support for increasing the meals tax by as much as 2% to meet the city’s rate.

The city adds 8% to the cost of a day’s stay in a hotel or motel while the county adds 5% to the bill’s bottom line. The state legislature in 2020 repealed the maximum amount a county can charge for a hotel tax, known as transient occupancy tax.

Terry said the proposed tax hike bodes ill for area restaurants and lodging.

“These economic challenges coincide with an exponential growth in labor, as well as food and supply costs, which are leading to higher expenditures for businesses already in pandemic induced deficits,” Terry wrote in a Dec. 17 letter to the board.

“While some jobs have been regained, approximately 90,000 jobs in the hospitality industry remain unfilled,” he wrote. “This represents 44% of the total unfilled jobs in Virginia.”

For housing, prices and demand are up but there are fewer homes being put on the market, which could push prices even higher.

“Like everything else, it’s been a mixed couple of years in the housing market and a lot of it has been COVID-driven,” said Pam Dent, CAAR’s 2022 president and a Realtor with Gayle Harvey Real Estate, Inc. “When we started to get the delta (variant) under control, it seemed like things would get back to normal.”

2020 altered the real estate market, taking away much of the seasonal aspects of home sales and creating a steady demand.

“It looks like we could get back to a more typical seasonal pattern, but we’re still down to a 1.2-month supply of homes on the market for November. In October we were at 1.3 months, so supply is not rising,” Dent said.

Although she expects some changes in the housing market, Dent said most research shows that it should remain strong.

“With inflation, there’s a concern that the [Federal Reserve] could raise mortgage rates, but our Virginia Realtors economists don’t see a major increase in the rates,” she said. “Time will tell how it goes.”

Dent said other economic issues, such as material costs, inflation and busted links in the supply chain are slowing down new construction that could provide affordable and first-time homes.

“The costs are rising for developers and builders and the price points that they have to have at sale to pay for building the house are rising,” she said. “For right now, it’s a good market to be selling your house.”

Source: www.dailyprogress.com

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