Should You Worry about the Charlottesville Economy in 2026?

Housing headlines in Charlottesville are sending mixed signals. While University of Virginia forecasts rising unemployment, investors are still pouring millions into local developments. On the surface, everything looks strong. Underneath, many households are feeling the pressure.

In this episode, we break down the contradiction between economic optimism and financial reality. We look at what’s happening with Downtown Mall activity, the refinancing of Stonefield Charlottesville, and why rising property taxes and everyday costs are putting real strain on local families.

You’ll hear a clear explanation of how a city can appear to be thriving while residents quietly struggle to keep up. We also unpack what these trends could mean for your income, your home, and your long-term financial stability if you live in the Charlottesville area.

We cover key factors like local economic forecasts, housing affordability, tax increases, and the broader gap between investment growth and household reality.

If you live in Charlottesville, this episode gives you a straightforward way to understand what’s actually happening, and three practical moves to consider right now.

Transcript

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Securities and investment advisory services offered through LPL Enterprise. LPL, a registered investment advisor member, FINRA, SIPC, and an affiliate of LPL Financial. LPL and LPL Financial are not affiliated with Iron Eagle Advisors. Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Any guests are not affiliated with or endorsed by LPL Enterprise, LPL Financial, or Iron Eagle Advisors.

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Welcome back to Iron Eagle's Real World Money Show. I'm your host, John Flick, and today we're talking about something that's been all over the local news. What is actually happening with the Charlottesville economy right now? Because if you've been paying attention, you've seen some very confusing headlines. On one hand, UVA economists just put out a report saying that 2025 was one of Virginia's worst economic years since the pandemic. Rising unemployment, job losses, federal budget cuts, not great. On the other hand, the shops at Stonefield just refinanced for $74.5 million. That's a huge vote of confidence from investors who think Charlottesville retail is strong enough to bet $74 million on. So which is it? Is the local economy strong or is it weak? Is Charlottesville doing well or are we headed for trouble? Well, the answer is actually both, and that's what we need to talk about today. Because Charlottesville's economy is not one thing. It's complicated. There are parts of it that are doing great, and there are parts of it that are under real pressure. And if you live here, work here, own a business here, or if you're planning to retire here, you need to understand what's actually happening because it affects your job, your income, your investments, and your financial plan. So let's dig in. What's really going on with the Charlottesville economy and what does it mean for you? The UVA forecast and what it actually said. All right, so let's start with the bad news. The UVA Weldon Cooper Center economic forecast that came out last year. This is a quarterly report that UVA puts out. They track employment, unemployment, GDP, inflation, all of the major economic indicators for Virginia, and they use a pretty sophisticated model with over 300 variables. They also use national data from Moody's and 30 different data sources. So when they put out a forecast, people pay attention. And the forecast they put out in April of 25, looking ahead to 2026, was not good. Here's what they said. At that point, Virginia was expected to lose about 32,000 jobs in the remainder of 2025, and the unemployment was expected to rise 4.7% by 2026. Now, 4.7% does not sound terrible, but here's the context. Virginia's unemployment rate in 2024 was 2.8%. So we're talking about almost doubling that rate in two years. And 4.7% would be Virginia's highest unemployment rate since 2021, during COVID. So why is this happening? Well, according to the UVA economists, it's three things. First, federal budget cuts. Virginia has a lot of federal employees and a lot of federal contractors. So when the federal government cuts budgets and cancels contracts, Virginia feels it more than most states. Second, canceled government contracts. Defense contractors, technology contractors, consulting firms, a lot of Virginia companies rely on federal contracts. And when those contracts get canceled, or if they don't get renewed, people lose jobs. Third, tariffs and trade policy. This one affects manufacturing in some sectors of the Virginia economy that are tied to international trade. Now, here's the thing: Northern Virginia and Hampton Roads are getting hit the hardest. Over 50% of federal workers live in Northern Virginia. About 20% live in Hampton Roads. And about 62% of all federal contracts are spent in Northern Virginia. So if you're in Northern Virginia or Hampton Roads, this is a big deal, a huge deal. But Charlottesville is not immune. We have federal employees here. We've got people who work remotely for federal contractors. We've got UVA, which gets federal research funding. We've got a local economy that's tied to what happens to the rest of Virginia. So when the state unemployment rate goes up, Charlottesville feels some of that too. The good news? The UVA forecast says that inflation is staying relatively low and they expect recovery to start in late 2026. And in another bit of good news, the unemployment rate in December of 2025 was 3.6%. So it wasn't quite as high as the Welding Cooper's target. But for the next year to year and a half, well, buckle up, folks. It's going to be a bumpy ride for Virginia overall. So let's talk about the Stonefield refinancing and what it means. The shops at Stonefield just refinanced for $74.5 million. Now, if you're not familiar with commercial real estate finance, let me explain what a refinancing actually means. This is not new money coming into the property. This is not an expansion. It's not new construction. What's happening is the owner of Stonefield, O'Connor Capital Partners, had an existing loan on the property. That loan was probably coming due, or they wanted better terms, so they went out and got a new loan for $74.5 million to pay off the old one. The fact that they were able to do this tells you something important. It tells you that a major lender, FS Credit Real Estate Income Trust, to be specific, looked at Stonefield and said, this property is worth lending $74.5 million against. That means they think the property is generating enough income from rent to cover the loan payments. They think it's going to keep generating that income for the next three years, which is the term of the loan. So what does that tell us? It tells us that the investors still believe in Charlottesville retail. They think people are going to keep shopping at Stonefield. They think the tenants are going to stay. They think the rent is going to keep coming in. And when you look at Stonefield, that makes perfect sense. It's anchored by Trader Joe's. It's got LL Bean, Lulaman, Sephora, a 14-screen Regal Cinema. It's at the corner of Route 29 and Hydraulic, which is one of the busiest intersections in Charlottesville. Tens of thousands of cars drive by that intersection every single day. Plus, Stonefield is part of a bigger development. There's a hotel there. There's the Northrop Grumman facility, which employs hundreds of people. There are almost 700 residential units nearby, plus a new luxury apartment building with 227 units. So they have a built-in customer base, people who live right there and work right there and shop right there. And the fact that investors are willing to bet $74 million on that property tells you that they think Charlottesville is a stable market with steady consumer spending. Now, does that mean that everything is great? No, not really. But it does mean that parts of the Charlottesville economy are doing just fine. So what is the real divide in Charlottesville? We've got the UVA forecast saying Virginia is struggling, and we've got the Stonefield refinancing saying investors still believe in the Charlottesville market. So how do we square these two things? Here's the answer. Charlottesville does have a real economic divide, but it's not the divide you might think. It's not the city versus the county. The downtown mall actually had a 4% increase in visitation last year. 2.8 million visits. Retail vacancy is at or below 5%. So the downtown is not collapsing. And it's not that some parts of town are thriving while others are dying. The real divide is this institutional money versus household money. On one side, you've got UVA, UVA health, major employers with stable budgets, federal research funding, large commercial real estate deals like the Stonefield refinancing. That part of the economy looks pretty solid. On the other side, you've got households, families, retirees on a fixed income, small business owners, service workers, people who are working hard and making what should be good money, but still feeling like they're falling behind. That part of the economy is under real pressure. And here's the thing: both of these things can be true at the same time. The restaurants can be full, the parking lots can be crowded, the downtown mall can have more visitors than last year, and families can still be getting squeezed. Because a busy parking lot is not the same thing as financial stability. A crowded downtown mall does not mean families are comfortable. Charlottesville can look healthy from the outside while people inside it are getting pinched by rising costs, rising property taxes, and economic uncertainty. And that's the story we need to talk about because that's what's really affecting your financial situation. So, why can Charlottesville look stronger than people feel? So let's dig into this. Why do people feel like they're falling behind even when Charlottesville looks busy and successful? This is important because a lot of people are confused right now. They're thinking the economy must be doing okay, the stores are full, the restaurants have wait times, there's construction everywhere. I'm looking at you, UVA. But then they look at their own bank account and they're thinking, so why am I not getting ahead? Why does it feel like I'm working harder just to stay in the same place? And here's why. First, let's talk about property taxes. The city of Charlottesville just proposed a budget with a two cent real estate tax increase. That would bring the city tax rate to $1 per $100 of assessed value. Now, two cents doesn't sound like a lot, but here's the kicker. City residential assessments also went up about 4% in 2026. So you're getting hit twice. Your assessment went up and the tax rate is going up. If you own a house in the city that was assessed at $400,000, good luck finding that, and it's now assessed at $416,000. And on top of that, the tax rate goes from 98 cents to $1. Your property tax bill just went up about 9%. That's not 2%, that's 9%. And if you're in Albemarle County, you're feeling it too. The county's 2026 reassessment increased the tax base by 6.17%. That's driven by uh continued housing appreciation. So even if the county doesn't raise the tax rate, your tax bill is going up because your assessment went up. And here's the thing your paycheck probably did not go up 6% or 9% last year. So you're falling behind. It's not just homeowners, though. Now, some people are thinking, well, I rent, so this doesn't affect me. Wrong. When property taxes go up, landlords pass those costs through to tenants. Maybe not immediately, but over time rents go up to cover the landlord's increased costs. So if you're renting, you're indirectly paying higher property taxes through your rent. And if you're a young family trying to buy your first house, you're getting squeezed twice because home prices are high and now property taxes are eating up even more of your monthly budget. If you're a retiree on a fixed income, this is a nightmare. Social Security went up 2.5% last year. But if your property taxes went up 6 or 9%, you just got poorer. The grocery store, the gas station, the insurance bill, it's not just property taxes. Groceries are still expensive. Yes, inflation has come down from where it was in 2022 and 23, but prices haven't come back down, they just stopped going up quite as fast. So if eggs cost twice what they used to cost and they stay at that level, that's still twice as much money coming out of your budget every month. Homeowners insurance has gone up. Car insurance has gone up. Health insurance premiums have, you guessed it, gone up. All of these things chip away at your budget. So even if you're making decent money, even if you got a raise last year, it feels like you're treading water because all of your fixed costs, they went up faster than your income. And here's where it gets psychologically difficult. When you look around Charlottesville, you see activity, you see people shopping, you see new construction, you see investment. So you start thinking maybe it's just me. Maybe everyone else is doing fine, and I'm the one who's falling behind. You're not alone. A lot of people are feeling this. The city just created a new position called Economic Mobility Officer. That tells you the local government knows that economic mobility and poverty are real issues here, not just abstract policy problems. If everything was fine, there would be no need for that position. And then there's the federal uncertainty we talked about earlier. Even if your job is secure, even if you work for UVA or UVA Health and you're not worried about layoffs, the uncertainty affects you. Because when other people lose their jobs or are worried about losing their jobs, consumer confidence goes down. People spend less money, businesses pull back, the economy as a whole slows down. And UVA has had to publish guidance and support around federal research disruptions and delayed grant renewals. That tells you that the pressure is real enough that even UVA is planning for it. So even if you personally are insulated, the people around you are not, and that affects the community you live in. So here's the bottom line: Charlottesville's problem is not economic collapse. It's not that the businesses are closing or the city is dying or anything like that. Charlottesville's problem is something quieter and arguably more dangerous. Charlottesville is staying busy, staying desirable, and slowly becoming unaffordable for the very people who keep it running. The teachers, the nurses, the retail workers, the small business owners, the young families, the retirees on a fixed income. Those are the people getting squeezed. And that squeeze is happening while the parking lots are full and the downtown mall is busy. Because activity is not the same thing as affordability. And that's what you need to understand when you're making financial decisions. Don't assume because Charlottesville looks busy that everything is fine. Look at your own situation. Look at your own budget. Make decisions based on your reality, not on how things look from the outside. So, what does this mean if you work for UVA or the federal government? Folks, let's get practical and figure out what this means for you. Let's start with the people who are most directly affected by the UVA forecast. If you work for the federal government or you work for a federal contractor, you need to pay attention. The forecast is predicting job losses and rising unemployment driven by the federal budget cuts and canceled contracts. Now, maybe that won't affect you. Maybe your job is safe, maybe your contract is solid, but you need to be prepared for the possibility that it could. So what should you do? First, build your emergency fund. If you don't have six months of expenses saved, start working on it now. If you've got six months, consider how much nine or 12 months could help. Why? Because if you lose your job, it's going to take time to find a new one. And that's especially true if a lot of other people in your same field are also looking for work at the same time. Second, diversify your income if you can. If all of your income is coming from one federal job or one federal contract, you're quite exposed. Can you pick up some consulting work on the side? Can you build a second stream of income? Or can you develop skills that would be valuable in the private sector? I'm not saying you need to quit your job, but I'm saying that you should be thinking about what your plan B is if your job does go away. Third, don't make any big financial commitments right now if you can avoid it. This is not the time to buy the biggest house you can afford, and it's not the time to finance a $70,000 truck. Essentially, this is not the time to take on a bunch of new debt. If your job is at risk, you want to be as flexible as possible, and that means keeping your fixed expenses low. Now, if you work for UVA or UVA Health, your situation is probably more stable. UVA is not going anywhere, and UVA Health is not going anywhere. These are major institutions with long-term stability. But even if your job is secure, the local economy still can affect you. If unemployment goes up and people have less money to spend, that affects home values. It affects the local tax base. It affects the services and the amenities that are available in the community. So you should still be paying attention to what's happening in the broader economy, even if your job is safe. So what does this mean if you own a business in Charlottesville? Well, first, location matters more than ever. If you're in downtown Charlottesville, you're probably already feeling the pain. Foot traffic is down, vacancy rates are up, it's a tough environment. If you're in Albemarle County, particularly in the high traffic areas like Stonefield, Barracks Road, Pantops, you're probably doing better. So if you're thinking about opening a new location or moving your business, pay very close attention to where you're going. The city versus the county divide is real. Second, consumer confidence is going to be shaky for the next year or so. If unemployment is rising and people are worried about their jobs, there's going to be a pullback on discretionary spending. That means restaurants, retail, entertainment, personal services, they're all going to feel some pressure. So if you're in one of these sectors, you need to be conservative with your projections. Don't assume that revenue is going to keep growing like it has been. Plan for a flat or even declining revenue over the next year. Third, cash flow is king. This is always true, but it's especially true in an uncertain economy. Make sure you've got enough cash reserves to weather a downturn. Make sure you're collecting on your receivables. Make sure you're managing your inventory carefully. A lot of businesses fail not because they're unprofitable, but because they run out of cash. Don't let that be you. Fourth, focus on your core customers. When times are uncertain, people stick with what they know and they trust. They don't experiment as much. They don't try new things as much. So if you've got loyal customers, double down on taking care of them. Make sure they feel valued. Make sure you're giving them a reason to come back to you. And if you're trying to attract new customers, focus on building trust and relationships because people are going to be more cautious about where they spend their money. Finally, don't panic. Yes, the UVA forecast is predicting a tough year, but it's also predicting recovery starting in late 2026. So this is not the end of the world. This is just a normal economic cycle. Some years are good, some years not so much. But if you've got a solid business with good fundamentals, you're going to get through this. Alright, so what about investors and people planning to retire in Charlottesville? So let's start with real estate. If you own property in Charlottesville or you're thinking about buying property here, here's what you need to know. The UVA forecast predicts rising unemployment, and rising unemployment usually puts downward pressure on home prices. But Charlottesville has some factors that make it a bit more resilient than other markets. UVA and UVA Health are stable employers. Charlottesville is a desirable place to live. There is a limit to the buildable land because of the mountains and rural preservation areas. And there's already steady demand from people who want to be in a college town with good schools and cultural amenities. So I don't think we're going to see a housing crash in Charlottesville, but I also wouldn't expect big price appreciation over the next year or two. If you're buying, be conservative with your assumptions. Don't assume your house is going to go up 10% a year. Plan for flat or modest appreciation. And if you're selling, be realistic about pricing. This is not 2021, folks. People are not going to pay whatever you ask. You need to price competitively. Now, if you're investing in the stock market, the UVA forecast does not change your strategy a whole lot. Virginia's economy is a tiny piece of the national economy, about 2.5% to 2.6%. And the national economy is a tiny piece of the whole global economy, about 25 to 26% of the global economy. So even if Virginia Virginia has a tough year, that doesn't mean you should panic and sell all your stocks. Stick to your long-term investment plan, stay diversified, rebalance when you need to, and don't make emotional decisions based on local economic news. Now, what if you're planning to retire in Charlottesville? Here are some things to think about. First, cost of living. Charlottesville is expensive and it's going to stay expensive. Even if unemployment goes up and the economy softens a bit, I don't think we're going to see a big drop in the cost of living in our area. Housing is expensive, property taxes are going up, healthcare costs are rising. And if you're planning to retire here, you need to make sure you can afford it. Second, healthcare access. This is one of Charlottesville's big strengths. UVA Health is one of the best hospital systems in Virginia. It was actually ranked the number one hospital in Virginia and among the top 50 to 55 hospitals in the United States by Newsweek. The other major hospital here is Centera Martha Jefferson, which has been ranked number six in Virginia according to Newsweek's Best In-State Hospitals of 2025 and earned a top spot on the Forbes Top Hospitals of 2026 list. If you're retiring and you're thinking about healthcare access, Charlottesville is a pretty good place to be. But you need to factor in the cost. Healthcare is not cheap. Third, economic resilience. The good news is that Charlottesville is more economically resilient than a lot of other places in Virginia. UVA and UVA Health insulate us from the worst impacts of economic downturns. When other parts of Virginia are really struggling, Charlottesville usually does a bit better. But that doesn't mean we're immune. We're not. If Virginia has a tough year, Charlottesville is going to feel some of that. So if you're planning to retire here, don't assume that everything is always going to be stable and predictable. Build some cushion into your plan. Make sure you've got enough savings to weather a downturn. And make sure you're not overly dependent on any one source of income. Diversification matters in retirement just as much as it matters when you're working. All right, folks, so we've covered a lot today in Charlottesville looking busy, but families getting squeezed. The UVA forecast predicting rising unemployment, property taxes going up. So what do we actually do about it? I want to give you three specific moves you should be thinking about right now if you live in Charlottesville. Move number one is to stress test your housing costs. Here's the rule your total housing costs should not exceed 30% of your gross income. That's mortgage or rent, property taxes, insurance, HOA, utilities, maintenance. I grew up here in Charlottesville, and my father, who was a local businessman, not a financial wizard by any stretch, but he was a good man. And one of the things he tried to beat into my head all the time was never spend more than one week's pay on your monthly rent or mortgage. That comes out to a little less than 25%. Now the rule is 30%. So if you can do it with 30, you're probably okay, but 25 would be much better. Now I know a lot of times uh in today's economy with the housing costs and the rent costs and the salaries being what they are, that might not be possible, but it's certainly a goal. The thing is, a lot of people in Charlottesville are way over the 30% mark, much less the 25. I've got clients who are at 40 and 45% of their income going to housing. I have seen them over 50%. They're thinking, well, that's just what it costs to live in Charlottesville. No, that's what it costs to be house poor. So here's what you need to do: run the numbers. What percentage of your gross income is actually going to housing? If it's over 35%, you need a plan because when property taxes go up another 6% next year, your homeowner's insurance goes up and your HOA fees go up, you're going to be in trouble. Your options? Well, one is to downsize, move to a lesser expensive part of the region, rent instead of own, get a roommate, or increase your income. But don't just accept being house poor as the price of living here because it's going to get worse, not better. Move number two, build a 9 to 12 month emergency fund. I know everyone says six months, and I'm saying nine to twelve, but here's why. The UVA forecast said 4.7% would be the unemployment rate. Now we only hit 3.6, but there's still a lot of uncertainty out there. And you want to be prepared for things don't go as well as planned. And when a lot of people are looking for work, it takes longer to find a job. Six months might not be enough. Plus, if you work in a specialized field, or if you're a federal contractor, or if you're in a sector that's getting hit by budget cuts, it could take you a year to find something comparable. So you might need as much as 12 months of expenses saved. Not 12 months of income, 12 months of expenses, what you actually spend, not what you make. And yes, I know that's hard when your housing costs are already eating up 40% of your income and your property taxes just went up. That's the point. If you can't save that, your lifestyle is too expensive for your income. You need to cut back. Move number three, stop waiting for things to get cheaper. It's a big one. It's not going to happen. A lot of people are thinking, I'll just wait. Home prices will come down, rents will stabilize, property taxes can't keep going up forever. Yeah, yeah, they can. Charlottesville is a desirable place to live. Limited land, UVA is not going anywhere, wealthy retirees keep moving here, UVA Health keeps hiring, the demand is not going away, and the supply is constrained. So prices are not coming down. They might flatten for a while, but they're not going to go back to where they were five years ago. And property taxes, the city and county both need more revenue. Schools need funding, infrastructure needs maintenance, public safety costs money. Property taxes are going up. Maybe not every year, but the trend is up. So if you're waiting for things to get cheaper before you make a move, you're just going to be waiting forever. If you need to downsize, do it now. If you need to move to a more affordable area, do it now. If you need to get your budget under control, do it now. Because waiting is not a strategy, it's just procrastination with extra steps. The bottom line is Charlottesville is expensive. It's going to stay that way. And if you want to live here and thrive here, you need to be realistic about what that costs. Stress test your housing costs. Build a 9 to 12 month emergency fund and stop waiting for things to get cheaper. These three moves alone will put you in a much better position than quite a few people in this town. If you don't have someone you're working with or you feel like you're not getting clear explanations where you are, this is exactly the kind of thing we do at Iron Eagle Advisors. We sit down, translate the jargon into plain English, look at all the moving parts, investments, insurance, debt, retirement, taxes, goals, wants, needs. We help you build a plan that actually fits a real person's life, not just a spreadsheet. If you'd like to schedule a conversation, go to Iron Eagle Advisors.com and click on the Let's Get Started link or call our office at 434-465-6485. That's Iron Eagleadvisors.com or 434-465-6485. This is John Flick. Thank you for spending part of your day with me. Take care of your money this week so your future self doesn't have to look back and say, Well, that was dumb.