Can I Afford a Home in Charlottesville?

Is Charlottesville Housing Affordable? 

The city of Charlottesville is a town in constant flux – students move from place to place as they travel through their University careers, medical residents live here for about three years before heading off to other opportunities, visiting scientists and professors stay for a year or two before moving again, and government employees are stationed at the JAG school or NGIC for two to three years at a time before also moving on.

There are those that came here for college and stayed on because they loved the location, some who came for a job or family and decided to make it work for a bit longer, and then there are those that were born here and are trying to buy their own houses, but are increasingly finding it difficult to afford something when prices and demand are driving them out of the market.

Today, we’re looking at the true costs of living in Charlottesville.

According to the most recent EOY 2017 CAAR Annual Report, the Greater Charlottesville median sales price rose to $300,000.

When you look at the math, purchasing a house using a typical loan leads to the most commonly cited figure of 80/20 – or putting $60K down for a $300K house.

On an 80% loan at 3.75% your payments would be about $1,448 per month, depending upon if you have mortgage insurance and other costs.

The link below is to one of the many mortgage calculators that help spell out what a Buyer can afford: https://www.nerdwallet.com/mortgages/how-much-house-can-i-afford/calculate-affordability

How much do you need to make annually to afford a 300K home?

Example: 

If you earn $56,516 annually – what is considered the average household income – you can afford $1,695 in total monthly payments, according to the 36% rule, which measures your debt relative to your income, and is used by lenders to evaluate how much you can afford. 

With the NerdWallet calculator link above – putting in $400 debt payments per month, and an excellent credit score – you would be able to afford a home that’s $247,154.

If you earn $60,305 you can afford a $300,000 home with a likely mortgage rate of 3.95% and all else staying the same.

Low Inventory leads to more rentals

As of today, Jan 15, 2018, there are 22 listings in the city of Charlottesville that are listed at $300K or less – they range from one bedroom condos to attached townhouses and only a few single-family homes.

With demand at an increasing high, the rental market is stepping into the void and snapping up those who are not going to be in town long-term or those that have given up on the dream of finding something they can afford. 

With rates staying steady, many lenders are encouraging people to buy to take advantage of them. The reality is that with few listings at the prices people can actually afford many are choosing to move out of town to the surrounding counties and take advantage of lower real estate taxes, yet they now will face a longer commute and schools that are increasingly becoming overcrowded.

The city has made a commitment to more affordable housing, but it remains to be seen how quickly they can build to meet that demand – stay tuned!

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Charles McDonaldBy Charles McDonald - Charles, and his firm, Charlottesville Solutions, are known locally and around the world for helping people relocate to the Charlottesville area. His background (running his own engineering firm for 20+ years in the Silicon Valley) has given him the skills to not only develop this site but also to manage a stellar group of agents!
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