Taking a Reddit question as a writing prompt.
“We just moved here and are sticker-shocked at the price of houses. I work in the city and don’t want a long commute, prefer good schools, and need 4 bedrooms. Do you think once inflation sets in, housing prices will drop? I’m scared to buy now and lose tons of money that we can’t afford to lose. Will housing prices drop, stabilize, continue to rise? Curious as to the trends you’ve all seen.”
The short answer is that Charlottesville real estate tends to hold value over time.
Fundamentals for the market are strong and most forecasts say that we are going to be in this sort of environment for the next 12 to 36 months.
While rates are rising, historically they are extremely low.
I really hope that we don’t see continued appreciation of 10% to 20% value every year as we have been seeing, because that is clearly not sustainable long-term.
Even shorter answer is that we don’t have enough houses on the market to sell, and we have too many buyers. More buyers, less supply, prices are going to be stable to increasing.
It’s an extremely difficult market. The sub $450,000 price point is so challenging for buyers that it’s hard to explain.
My advice to clients who are new to the area is to rent for a year, so you have exposure to more inventory then in a relatively short window, and you’re able to figure out where you want to live, and where you don’t want to live, and pounce on the houses that fit most of your needs, and some of your wants.
Has the Charlottesville real estate market been bad before?
Yes.
I wrote this in 2016.
A young person asked me that question a few months ago, and I was a bit taken aback. Now having lived through the okay, the bad, the really bad, and the better real estate markets in Charlottesville, I have learned just how crucial it is to hire the right Buyer Representation.
Some of what we’re seeing now in Charlottesville:
– Bidding wars
– Escalation clauses
– Seemingly low inventory
– Properties staying on the market longer than expected
– Properties going under contract in mere hours or days
The market in Charlottesville feels reminiscent of the market in 2004 – 2006…sellers asking seemingly silly amounts, buyers losing multiple houses in bidding wars, and inventories that feel lower than they did last year.
Note: this is not market-wide; this is happening in pockets around the Charlottesville area.
In 2010, I was writing about increasing foreclosures in Charlottesville.
In 2009, I was writing about short sales and foreclosures in Charlottesville.
Some Charts
Sometimes, I get curious.
While I tend to not use price per square foot as a great metric when evaluating properties, unless they are homogeneous products like condos, price per square foot is a good metric for seeing trends.
Shorter analysis: Prices have been going up in the Charlottesville real estate market. Here’s a link to the data; I do manual pulls from the Charlottesville MLS as it helps me better understand and feel the increases/decreases as well as helps me discern discrepancies. I’m still wondering about the leap between 2014 and 2015; I suspect that may be around the time that the “new construction” field in the MLS became required, and it may be something else.
Final Ramblings
I looked at a house on which I represented the buyer in 2006. Needed renovations, sold for $172K. Got renovations, and I’d probably list it for well over $600K today. But I’d wager they are never going to sell, as it’s a great home and investment. There are lots of this house around the city that have been owned for a long time, and will stay off market for a while.
Having been practicing real estate since 2001, I have seen a lot of pain through losses, and a lot more gains from my clients making moves up and down in the market.
At the end of the day, if you’re buying a house in Charlottesville, you’re buying in what I think is a pretty great place to live, that has a relatively high cost of living, but you’re also buying into a great community and hopefully gaining the life and financial stability that homeownership can provide.
A house isn’t a stock, an NFT, and may be a great investment. But ultimately you’re buying a home you can live in, and that’s pretty great sometimes.
And yeah, if you have questions, or are looking for representation whether you’re thinking about buying or selling a house in Charlottesville, I’m here.