residential real estate Archives - Page 8 of 13

A welcome respite

While the spring was red-hot for the residential real estate market, conditions are expected to cool off in the fall.

“The market is definitely stabilizing,” says Liz Moore, board president of Real Estate Information Network Inc., the multiple listing service (MLS) for the Hampton Roads region. “We had such a frenzied market during the pandemic.”

She cautions, though, that it’s hard to predict what will happen next because the market has been so crazy.

Earlier this year, housing inventory was so low, nearly every listing had multiple offers on it, creating an ultra-competitive market for buyers.

A steadier market, which is a good possibility for this fall, is good and bad for buyers. Rising interest rates are pulling some buyers out, and would-be first-time homebuyers could be affected more than other potential buyers. But that means a more balanced supply-and-demand equation.

“It was so competitive for the last two years that buyers didn’t have much of a chance in a multiple-offer situation,” Moore says. “Now that there’s not quite such an intense frenzy of competition, buyers don’t have to pay such wild prices.”

In July 2021, the median sales price for a home in the region was $300,000 — and a year later, the median cost rose about 7.5% to $322,500, according to REIN data. And that’s up from the median price of $275,000 from July 2020. Still, Moore is seeing some cooling on the higher end of the market, where homes listed for $750,000 or more are staying on the market longer than they had in recent years.

“I think there is good news on the horizon,” Moore says. “As the inventory inches up, that will be a welcome respite for these buyers.”

A slow shift

Jeremy Caleb Johnson is advising clients preapproved for a mortgage loan at the beginning of 2022 to adjust expectations.

The price of houses they may have looked at just months ago likely not only went up significantly, but the low interest rates available then have also risen dramatically.

“What you may have been able to afford in January of this year, you can’t afford that now,” says Johnson, an agent and associate broker with Long & Foster/Christie’s International Real Estate in Virginia Beach. “We all have places that we would prefer, neighborhoods and parts of the city that we would prefer to live in, but we may not be able to do that now.”

Tight inventory across Hampton Roads caused the median sales price (MSP) for a home to rise from $300,000 last year to $322,500 in July, according to a market summary from Real Estate Information Network Inc. (REIN), the multiple listing service that covers the region from Williamsburg east through Virginia Beach and south across the North Carolina border.

“A house in Virginia Beach is going to be a little more expensive than a house in Chesapeake,” says Johnson, chairman-elect of the Hampton Roads Realtors Association. “A house in Portsmouth is going to be less expensive than a house in Chesapeake. Buyers may have to find a little bit of flexibility in their budget to say, ‘OK, I really want to be in Chesapeake, but maybe Portsmouth is OK because I can afford to be in this city, or this part of the city as opposed to that part of the city.’”

There are signs that the market is starting to soften due to higher prices and mortgage rates. There were 2,777 pending sales in July, down 19.3% year-over-year and 9.66% month-over-month. Settled sales during that month totaled 2,909, a 23.4% decline year-over-year and down 12.38% month-over-month. Median days on the market were 12 in July, up from nine in June, according to REIN.

“Unlike the 2021 buyer frenzy that we had, we have a more cautious buyer who is very concerned that they may be overpaying for a property,” says J. Van Rose, president of Rose & Womble Realty Co. in Virginia Beach. “They’re still out there. They’re still looking. But instead of getting 15 to 20 offers, we might get two to three, and they’re not well over the list price.”

Rose says he’s also starting to see contracts that include home inspections, closing-costs assistance and other contingencies that might have been waived when the market was hotter.

While buyers are gaining some bargaining power, they have fewer properties to choose from. There were 4,129 active listings in July, down 10.65% year-over-year and up only slightly — 0.36% — month-over-month, according to REIN.

Rose says one group that is struggling to find property they can afford are active-duty military members, who make up a significant portion of Hampton Roads’ population. They may have been able to combine their housing allowance with a Veterans Affairs (VA) loan to buy the house they wanted when interest rates were low but can’t afford it now that rates are much higher.

Hampton Roads’ housing market is less affordable than it used to be, says Virginia Realtors Chief Economist Ryan Price. Just three years ago, the region’s MSP was $258,950, which buyers with a gross household income of about $61,000 could afford, assuming a typical housing cost burden of 30% of their income.

Today, a buyer would need a gross income of $84,900 to afford a house at the current median price, but regional median income was $68,454, according to the 2020 census. Although the regional median income has likely gone up some since then, it is definitely still below $84,900, Price says.

Rising mortgage rates haven’t made the situation easier. Tidewater Mortgage Bankers Association President Mike Grunwald says buyers panicked earlier this year as mortgage rates began climbing faster than he’d ever seen in his 13-year career. Pre-approvals had to be reevaluated and some clients became discouraged.

Rates, which had climbed as high as 6%, were varying “between 5% and 6%” as of August, “depending on the type of loan program and a buyer’s income and credit rating,” he says. The Federal Reserve Bank, responding to inflation, raised benchmark interest rates four times as of early September, with another hike expected later in the month.

“There aren’t a lot of [refinances] going on, unless it’s for a divorce or they’re cashing out,” says Grunwald, a senior loan
officer at Southern Trust Mortgage in Virginia Beach.

Speaking in August, Grunwald said he thought mortgage rates had probably peaked for the foreseeable future, adding that there were indications that the federal government could provide incentives for builders to construct more affordable housing or offer tax credits to sellers. There’s also been talk of a new 40-year mortgage to help lower payments.

“There’s got to be some kind of responsible action to what’s going on,” Grunwald says. “The middle class has to have some place to live.”

Read here about Hampton Roads’ rental market.

July NoVa home sales drop 29% from 2021

As price growth slowed and inventory increased slightly, Northern Virginia housing sales dropped 28.8% in July compared with last year, according to a Northern Virginia Association of Realtors report published Friday.

“More options are available to homebuyers now that the market is calming. It remains a seller’s market, but the feeding frenzy has subsided somewhat,” NVAR President-Elect Heather Embrey, a Realtor with Better Homes and Gardens Real Estate Premier, said in a statement. “Well-maintained, updated properties that are priced correctly are still in very high demand.”

The median price for a home sold in Northern Virginia last month was $650,000, up 1.6% from July 2021, but lower than June’s median of $684,500. In July 2019, the median price was $542,750.

Houses spent an average of 15 days on the market, the same average as last year. In June, homes sold in 12 days on average.

The total sold volume in July was $1.37 billion, down 23.7% compared with July 2021. The number of active listings last month was also down from July 2021, dropping from 2,533 to 2,477 listings. In July 2019, the number of active listings was 2,635.

NVAR reports home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church, and the towns of Vienna, Herndon and Clifton.

Hampton Roads’ July active house listings down

Hampton Roads’ active residential listings in July continued to lag behind monthly totals for the past four years, according to Real Estate Information Network Inc. data published in August.

Active listings have dropped steadily every July since 2014. At the end of July, there were 4,129 homes actively listed in the region. In 2021, that number was 4,621; in 2020, 5,576; in 2019, 9,052; and in 2018, 10,057. This July’s listings are down 10.65% year-over-year.

Pending sales totaled 2,777, down 19.3% from July 2021 and 9.66% month-over-month. The region had 2,909 settled sales, down 23.4% from July last year and 12.38% from last month.

“Right now, there’s some lingering uncertainty in the real estate market,” REIN Board President Liz Moore of Liz Moore and Associates LLC said in a statement. “Interest rates on home loans are up and down a bit, and the record inflation we’re experiencing is still impacting families.”

Homeowners likely aren’t selling because they know that they’ll then need to turn around and buy a home, Moore said.

The median sales price of homes for the month was $322,500, up 7.5% from $300,000 last year but down from $325,750 in June.

Homes’ median days on the market was 12, an increase of 33.3% from June. New construction sales totaled 237, down almost 28% from the 329 sales in July 2021.

Va. housing market sees sharp drop in sales

The housing market is cooling off, compared to a year ago.

Home sales in Virginia dropped by nearly 19% in June, compared to sales in June 2021, the sharpest drop in the housing market since the beginning of the pandemic, Virginia Realtors reported Friday.

In June, 13,324 homes were sold in Virginia, which is 3,208 fewer sales than the same time last year. At the end of June, there were 19,375 active listings, nearly 200 more than this time last year. It’s the first time inventory has expanded in Virginia’s market in more than seven years, according to Virginia Realtors.

Activity was up about 2% in June, compared to May, which is lower than typical May to June jumps, the report said.

“The slowdown we’re seeing in sales is due to more buyers pressing ‘pause’ on their home search,” Virginia Realtors President Denise Ramey said in a statement. “The lack of inventory paired with the rise in interest rates have created a more challenging environment for home buyers.”

The slowdown is widespread across Virginia, and about three-quarters of local markets have had fewer sales so far in 2022 compared to 2021. The largest declines are in the Shenandoah Valley, coastal communities, Northern Neck and the Eastern Shore, as well as suburban areas of Richmond and parts of Northern Virginia, according to the report.

However, the largest supply growth is the Shenandoah Valley, outer suburban communities in Northern Virginia and the New River Valley.

There are fewer new listings on the market compared to last year, an 11.5% decline. For 10 months straight, the number of new listings has declined when compared to the prior year. But the number of active listings has increased slightly, about 1% over a year ago. Between May and June, active listings swelled by 2,500, a 14.8% increase.

The median home price in Virginia is $397.315, nearly 7% higher than in the same time period last year. The median price is about $25,000 higher than a year ago. But when comparing median home price month-to-month, it has gone down about 1% since May.

It’s still a competitive market for buyers, with pressure remaining to pay higher than the asking price. The average sold-to-list price ratio was 102.4% in June, lower than last month but higher than in June 2021. Homes sold for more than $800,000 have been selling for 2.9% above the list price on average, and homes in the $600,001 to $800,000 range went for 2.8% above the list price on average. However, the list price is not as high as it was in the past few months, which Virginia Realtors says signals easing pressure on home prices.

The number of days a house is on the market is still competitive, with 18 days as the average, three days faster than June 2021. Higher-priced homes sold the fastest, but they sold quickly across all price points.

The wildcard in looking at the housing market is inflation, with mortgage rates rising.

Pulaski sees housing future in 3D

Like communities around Virginia, the town of Pulaski faces housing demand far outpacing supply.

“We don’t have enough housing in our area,” says Town Manager Darlene Burcham. “So many of the people who work in our area don’t live in the community.”

One way Pulaski hopes to grow inventory is by working with Iowa-based home builder Alquist 3D to construct houses using 3D-printing technology. Alquist is building two houses on Pierce Avenue, the first of 200 it plans to build in Virginia over the next five years.

Burcham hopes these will be the first two of many in town. She’s talked with executives about other possible parcels.

Using 3D printing for exteriors can shave weeks off a standard construction schedule, reduce jobsite waste and cut building costs by 15%, according to Alquist. The process also allows builders to be less reliant on the volatile lumber market.

Completion depends on how quickly Alquist can purchase hot commodities like windows and doors. “We have the same supply chain issue that every other home builder has,” says Alquist founder and CEO Zachary Mannheimer.

Obtaining concrete to build the homes’ exterior walls won’t be a problem, he says, because Alquist uses a proprietary construction “ink.”

One house in Pulaski will be a model, and the other will be sold in the $200,000 range, Mannheimer estimates. The two houses will be single-story, 1,300-square-foot homes with three bedrooms and two baths.

Alquist’s path to Pulaski began when Mannheimer connected with Andrew McCoy, director of the Virginia Center for Housing Research at Virginia Tech.

Alquist and VCHR built a test home in Richmond with a $500,000 grant from Virginia Housing. They printed external walls last summer, but a few things need to be completed before it is sold.

While talking with housing officials who worked on the test home and another in Williamsburg, Mannheimer heard about several rural communities, including Pulaski, seeking to increase housing supply.

Initially, Alquist planned to build 200 homes
in Southwest Virginia, but plans evolved once word got out. Now, Mannheimer says, as many as half the homes will be in the region, which fits Alquist’s mission to provide housing in economically distressed and underserved areas.

“Smaller communities [are] where we believe the future of innovation lies,” Mannheimer says. “These towns have been overlooked for decades. They have lots of needs, and they have lots of opportunity.”

Va. median home sales price breaches $400k for first time

The statewide median sales price for a home in May rose above $400,000 for the first time, according to the Virginia Realtors’ May 2022 Virginia Home Sales Report.

The median price was $401,082, up 8.7% and more than $32,000 from a year ago.

In total, 13,048 homes sold in Virginia in May, an 8.5% decrease from the same time last year. Although sales activity rose 8.8% between April and May, “this increase is considered a typical seasonal bump,” according to the report.

Compared to last year, nearly all regions in the commonwealth are experiencing a cooling housing market through the first five months of this year.

“The moderating trend we are seeing reflects not only a return to more normal levels, but also a cooling of demand from home buyers,” Virginia Realtors Chief Economist Ryan Price said in a statement. “Buyers are feeling the weight of surging home prices, high inflation, mortgage rate jumps and an extremely competitive market with few options to choose from.”

There was approximately $6.6 billion in sold volume in Virginia in May, up less than 1% from a year ago. Higher prices led to the uptick, as there were fewer sales overall.

In Virginia’s market, the shrinking trend in supply seems to be changing. Statewide, the market had 16,875 active listings at the end of May, a 5.6% decrease from last year, but the smallest decline in three years.

The number of active listings at the end of May was 9% higher than at the end of April — a larger increase than a typical seasonal bump.

The average days on market statewide in May was 17 days, five days faster than last May. Homes in the $600,001 to $800,000 price band sold fastest, with an average of 13 days to closing.

Economic growth to continue slowing, ODU experts say

The U.S. economy will continue to slow in the second half of 2022 and a recession is increasingly likely, according to the Old Dominion University’s Dragas Center for Economy Analysis and Policy’s mid-year economic forecast released Friday.

Increases in inflation are expected to slow as well but harden, leaving costs elevated, report Robert McNab and Vinod Agarwal, director and deputy director of the Dragas Center. They forecast that U.S. real gross domestic product (GDP) will increase at an annual rate of 2.2% this year and that Virginia’s real GDP will increase at an annual rate of 2.4%. Hampton Roads’ real GDP is expected to increase by 2.4% primarily because of anticipated increases in defense spending.

Reductions in government spending, the effects of COVID-19 on supply chains and Russia’s invasion of Ukraine contributed to the 1.5% shrink in real GDP in the first quarter of 2022.

“While we are confident in the ability of the Federal Reserve to adjust its monetary policy in the short term, we are significantly more concerned about the ability of Congress and the administration to seriously tackle the deficit and debt,” says a news release from the Dragas Center.

Despite the slowing of inflation, the economists predict it will be difficult for the Fed to raise the discount rate sufficiently to lower inflation without significantly slowing economic and job growth in the coming months. Also, the report predicts the Consumer Price Index to increase by 6.5% in 2022, and core CPI will increase by 5.5%. Those numbers are expected to continue to increase in 2023 but not as quickly, with the Dragas report expecting a 4.8% rise in CPI next year and core CPI growing by 4.4%.

Mind over matter

In April 2022, inflationary expectations — beliefs among consumers when asked about future costs in a University of Michigan study — reached 5.4%, the highest level since the Great Recession of 2008.

“The danger is that increasing inflationary expectations will become a self-fulfilling prophecy, forcing the Federal Reserve to act even more aggressively and tipping the economy into a recession in the later quarters of 2022,” the Dragas Center reported.

Slowing economic growth will lead to slower growth in individual employment and jobs in the second half of the year, according to the forecast.

The U.S. headline unemployment rate (the rate of unemployment that is based on the number of people who officially say they do not have a job and are looking for work) is expected to average 3.8% in 2022 and increase to 4.1% in 2023, according to the Dragas Center.

In Virginia, which usually has lower unemployment numbers than the national average, the headline unemployment rate will average 3.5% this year and increase to 3.8% in 2023. The Hampton Roads headline unemployment rate is predicted to average 3.3% this year, and the number of civilian jobs are likely to grow by 2.2%. Job quits will remain high through this year but should slow in 2023 as economic growth slows and the risk of recession grows.

As for the Port of Virginia, the Dragas Center forecasts that general cargo tonnage will increase by 8.7% this year, and 20-foot equivalent units (TEUs) by 11.8%. The port handled a record amount of TEUs in 2021, so the prediction lines the port up to set another record this year.

The median price of existing residential homes sold in Hampton Roads is expected to continue climbing this year but at a lower rate than seen in 2020 or 2021, the Dragas Center predicts, as rising interest rates dampen demand.

255-apartment complex coming to Suffolk

The Cathcart Group, a Charlottesville-based real estate developer, is building a 255-unit apartment community in Suffolk planned to open in 2023.

The Gallery at Godwin will be on nine acres at 3061 Godwin Blvd. in Suffolk and will have one-, two- and three-bedroom apartments with rents ranging from $1,200 to $1,900. The complex will also have 15,967 square feet of retail space and will be near the Publix grocery store coming to Suffolk and Sentara Obici Hospital.

Cathcart owns 1,930 apartments in Virginia and manages nearly 4,000 apartments, with another 1,600 in planning in different stages in Harrisonburg, Winchester and two out of state.

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