Two stories that will lead the stories of the 2025 Charlottesville real estate market:
- Inventory will increase in the Charlottesville – Albemarle markets
- Homeowners insurance will become a greater part of the Charlottesville real estate market conversation
What follows is hopefully an articulation of the “why” I think housing inventory will rise in the Charlottesville area, and why I see homeowners insurance as a major factor; what really matters to me are two things – I want my clients to understand the context of these factors, and I want them understand that these things are important aspects of the Charlottesville market in 2025. For my clients making decisions, the “why” is less relevant than the fact that these things affect them.
The most positive development in the housing market over 2024 has been the increase in active housing inventory, which is approaching the levels seen in 2019. Although those 2019 levels represent a five-decade low before COVID-19, the market was still functioning better than it did from 2020 to 2023.
Your Home-Insurance Bill Has Only One Way to Go: Up
For tens of millions of Americans, home insurance will never be the same, insurers and analysts say.
“I don’t expect the property market to soften any time soon,” Mario Greco, chief executive of Zurich Insurance, said. “Nobody is ready to bet on a different weather pattern.”
Behind the crisis: Climate change is making the weather worse, scientists and insurers say. But that is only part of the story. A bigger driver of the record underwriting losses roiling home-insurance markets in many states: the propensity to build in disaster-prone areas.
“We’re just putting more things to break where the weather is,” said Neil Alldredge, chief executive of industry body the National Association of Mutual Insurance Companies. “If you were a dictator and wanted to move your population to all the most dangerous places, you couldn’t do a better job than we’ve done to ourselves.”
Insured losses from U.S. storms have grown 8% a year for more than a decade
The Charlottesville lens on inventory and insurance
I think we are going to see more houses on the market in the Charlottesville area in 2015.
- Sellers are finally ready sell, and are going to come to terms with interest rates in the 6s and 7s.
- Four guesses on inventory
- Me – up ~7%
- HousingWire – up 13%
- Bright MLS (which covers much of Central Virginia and north) – up 12.8
- Realtor.com – up 11.7%
- One of the greatest challenges in this market will be for the good real estate agents to explain and educate to both buyer and seller clients what more inventory means.
- Sellers who have watched the market only increase seemingly exponentially will have to shift from a “I want or need to clear X” to “what does the data say my home is worth? That price anchor you have in mind may not be what your home is actually worth.
- Buyers who have watched from the sidelines waiting for a “correction” and those who have participated in the market – and either won, lost, or feel like they won by a bidding war by losing may find that they have more power in this market. Or not; I’m making my educated guess, too.
Homeowners Insurance
I have been writing for many years about homeowners insurance and the Charlottesville market. 2025 is going to be the year that we see homeowners insurance become a much more significant part of offers, contracts, negotiations, and awareness. I suspect we will see:
- Some Buyers may unable to qualify for homeowners insurance because of the house’s CLUE report (basically a CarFax report on a house) + the buyer’s credit history.
- Some Sellers may face difficulty selling because to their home’s claims history, and may have to incentivize buyers — eg pay two or three years’ premiums in advance.
- Some homeowners may need to replace roofs prior to them actually “needing” to be replaced because the insurance company says so.
- A combination of the above + something I’ve not yet experienced.
Related from the Washington Post – Insuring your home has never been harder. Here’s how to do it.
For the past several offers and contracts, representing buyers and sellers, I have successfully included the Homeowners Insurance Addendum; here’s hoping more Realtors take this step.
While disaster risk is one reason that home insurance premiums are rising faster than overall consumer inflation, it isn’t the only reason. A portion of the increase in home insurance premiums stems from rising housing and construction costs, which soared during and following the pandemic. Replacement and repair costs have soared, and insurers are trying to keep pace, although some state insurance commissions are slowing the process.…
According to CoreLogic…
In 2024, 9% of U.S. housing stock is at “very high climate risk.”
By 2050, 16% of U.S. housing stock will be at “very high climate risk.”
One reason it’s expected to increase, Rogers says, is that new construction is elevated in the very places with the most risk.