A recent uptick in new building permits could help relieve the region’s tight housing market, according to the Charlottesville Area Association of Realtors.
There were 1,644 building permits issued in 2022 by the city of Charlottesville and the nearby counties of Albemarle, Fluvanna, Greene, Louisa and Nelson, according to the association’s fourth-quarter report. That’s a 24% increase over 2021, the group said.
It’s a surge driven by permits for duplex and multifamily permits. There were 242 more permits issued for multifamily housing in 2022 compared to 2021, and 75 more permits for single-family detached houses, according to the report.
“When you have a really tight inventory of homes, new buildings, new construction is really one of the key factors to kind of release that pressure,” CAAR President-elect Anne Burroughs told The Daily Progress on Monday.
The Charlottesville area was already trying to cope with what the city and surrounding Albemarle County had deemed a housing “crisis” in 2009. Since then, the population of both localities has only increased.
Charlottesville’s population reached 51,278 in 2022, according to the latest data from the Weldon Cooper Center at the University of Virginia, which studies population demographics. The 2022 figure is up only 0.4% from the 2020 census figures but is 16.5% higher than it was reported in 2010.
Albemarle County’s population today sits roughly at 115,495, according to the latest Weldon Cooper data. That’s 2.8% more than 2020 census figures and a full 16.4% more than 2010 census figures.
“It is absolutely necessary to have a wide variety of housing types to meet the needs of Albemarle County,” Albemarle Board of Supervisors Chair Donna Price said on Monday. “If all we had were detached single-family homes, we would not be meeting the needs of our population, and avoiding urban sprawl would be impossible.”
Those detached single-family homes have been fetching incredibly high prices of late. And the latest property assessments in Charlottesville and Albemarle County, which saw home values increase between 11% and 14% on average, could push prices up further.
But an influx of new builds and a diversity of housing construction could stymie that.
Burroughs said she expected buyers to start feeling the effects of all that new construction starting in the summer.
For now, the market continues to favor sellers. In the fourth quarter of 2022, 917 residences sold, according to the local real estate report. While that means house sales are down 25% year over year, the median sales price for a listing in the area rose $30,000 to $400,000 between the fourth quarter of 2022 and the fourth quarter of 2021, the report says.
“It’s not that the roof is on fire,” Burroughs said. “There’s still more buyers than there are sellers.”
“It’s really that we’re back at 2018 levels, she said, when there were 967 sales in the fourth quarter of the year.
Currently, Burroughs’ association has about 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. A “balanced market” is one that has six months’ worth of inventory.
“They’re still selling, but we’re seeing that there are more homes that are staying on the market longer,” Burroughs said.
The average house in the Charlottesville area remains on the market for about 31 days, according to the association’s fourth-quarter report. That means buyers are in less of a rush to make an offer, leading to fewer contracts falling through, Burroughs said. The buildup of active inventory is good news for anyone looking to buy a house, she said.
“That is a big indicator of a market stabilizing,” Burroughs said. “Sellers will drop their price if it hasn’t sold in a few weeks.”
The mortgage rate falling to 6.15%, down from 7% three months ago, is another factor that could make things easier for buyers, she said.
“Buyer confidence is increasing, but at the same time seller confidence is still kind of decreasing,” Burroughs said, since sellers are less confident they can sell their houses at the price they want.
That, in turn, makes people less inclined to sell property, since they’re not sure they can find a house in a competitive market.