The Charlottesville Area Association of Realtors released their 1st Quarter market report this week. It would be easy to look at it and say things are continuing to improve. The number of Sales are up, Homes are appreciating, and the economy here is providing more and more jobs. You can find all this data by clicking on this link. The summary is more homes sold in a shorter period of time, Home prices appreciated in some areas more than 10%, and there are less homes on the market for purchase. Click here to hear an overview from CAAR leaders.
What I want to share here though is what to look for moving forward that will impact Central Virginia real estate.
- New construction-New construction prices will continue to rise for three reasons. 1) there continues to be a demand especially because inventory on re-sale homes continues to diminish. 2) Material costs are rising for a couple of reasons. A) There are so many new homes being built in our area. B) Natural disasters (hurricanes, fires, floods and most recently a tornado in Lynchburg) cause increases demand because of the need to rebuild those areas damaged. And finally 3) labor costs. Those in the home building business are once again benefitting from all the new Apartments, homes, and commercial buildings. Their compensation is increasing because of the need for their services.
- Lack of Inventory- This issue it getting worse not better. The main reason is the demand for homes by buyers that is more than the number of homes on the market
- Where are all these people coming from? –as mentioned in this April 8th article there are four groups that help answer this question. Charlottesville continues to be a popular area for people who are looking for a 2nd home or a place to retire. Secondly, whether you agree or disagree with this policy, government support of defense contracting is on the rise. Next, Another key area of growth is at the University of Virginia especially in the bio tech area. The most significant of all the others is the start-up businesses that have quietly grown into significant employers here in Charlottesville. This is a critical piece to the before mentioned housing demand.
- Interest rates reducing purchasers buying power. If you are a purchaser, this is something you need to watch very closely. There is no doubt Homes appreciation is on the rise but so are interest rates (expect at least two more fed rate increases this year), meaning a monthly payment a year ago does not allow you to borrow as much money. For example, if you bought a home a year ago at $309,000, with interest rates today the same monthly payment would only allow you to buy a home priced at $284,000. The one piece of good news is the process of getting a loan is less cumbersome and there are some minimum down payment options that will help with those who don’t a lot of money saved. Listen to this link to see that yes, one can successfully purchase a home in this market.
I leave with some thoughts to help you as a buyer or seller:
- Make sure you get pre-approved by a reputable and in our opinion a local lender who truly cares about what's best for you. This will help a seller see you as a credible purchaser and assure them and you that you can actually purchase the home.
- Discuss and decide what you want in a home, where you want to live, and the price you are willing to pay.
- Choose a Realtor that knows your desires and who has the time to really seek out homes that fit your parameters.
- When writing a contract, find out what kind of terms the seller wants and write it with those terms in mind.
- Be ready to decide that a house is right for you and move quickly toward making an offer. Understand that you may write a few contracts before actually having one accepted.
- Also click on this link to understand the difference between renting and buying.
- Price your home competitively. Do not over price it. If you get the price right, there will be enough interest to guarantee getting the best price possible.
- Choose a Realtor who knows your particular neighborhood and has a great reputation amongst other Realtors.
- If you are going to buy another home, know where it is you want to live so when you get a contract you can move quickly to ensure a smooth transition.
- Have your Realtor help you get a pre-listing home inspection so you find out if you have issues that you need to repair before putting it on the market.
- Here is an article that provides more details on what you need to do before selling your home.
Michael Guthrie, CEO
Roy Wheeler Realty Company