Albemarle homebuilding rate ‘incredibly low’

The pace of homebuilding in Albemarle has slowed to a crawl. In the third quarter of 2008, the county issued the fewest building permits for residential units in four years.
According to a new report being presented to county supervisors Wednesday, Albemarle issued only 94 permits for dwelling units in the third quarter, the lowest number since the first quarter of 2004, when only 77 permits were issued. Albemarle is on track, for the year, to issue the fewest home building permits this decade.

“It’s an incredibly low number this time,” said Mark Graham, Albe-marle’s director of community development. “And I think that just speaks to the weakness of the housing market right now.”
“We typically have around 800 units a year, and this year I think we’re going to be just around 500,” Graham said. “Anecdotally, based on conversations we’ve had with builders, and looking around, we don’t see this turning around until mid-2009, if we’re lucky. And if we’re not lucky, it may go on longer than that.”
The large number of homes on the market doesn’t bode well for the prospect of many new homes being built in the near future.
The local real estate market is considered balanced between buyers and sellers when it has an inventory of somewhere between 2,000 and 2,500 homes for sale, according to a separate report from the Charlottesville Area Association of Realtors. Yet there are nearly 3,500 homes for sale in the Charlottesville area.
“There’s still a lot of units out there on the market looking for buyers. So, as long there’s that kind of inventory, that lessens the demand for anybody to come in and build new houses,” said Dave Phillips, CEO of the Realtors association.
The number of building permits issued for dwelling units has the potential to fluctuate drastically from one quarter to the next, depending greatly on the number of new large multi-family developments, such as apartment complexes. However, Graham said that the county doesn’t anticipate any major spikes in developments in the next six months, partially because of the large number of residential units that remain unsold.
With the housing market shaking sellers’ confidence in their ability to sell homes for a strong profit, many are renting out units they might have otherwise put up for sale.

Condos feel the pinch, too

The association reported that the number of condominium and townhouse sales in Albemarle plummeted 44 percent in the first nine months of 2008, falling to 266 from 475 in the same period in 2007.
“The condo market has extra inventory on the market right now … and both the residential single family market and the condominium market are both turning to renting properties, because they’re having trouble selling,” Phillips said.
The decline in condominium and townhouse sales was more subtle in Charlottesville, with 184 sales in the first three quarters of 2008, compared with 202 a year prior.
In the first three quarters of 2008, the median price of homes that were sold in the region declined 2.5 percent compared with 2007, according to the Realtors association. However, Albemarle County is the only locality that saw an increase in median prices — a 4.5 percent increase — compared with across-the-board declines in other nearby localities, such as a 5 percent drop in Charlottesville.
In Albemarle, the median home sold for $320,000 in the first three quarters of 2008, compared with $265,000 in Charlottesville.

And the silver lining

The positive news in the county’s permit report is that the commercial market hasn’t taken the same kind of hit as the residential market, said Graham, who says the commercial market has remained fairly stable.