Last year, even with the first of the Federal Reserve interest rate increases on the books, real estate professionals across the area were, it turns out, correctly predicting solid growth. Local agents such as Billy Flint, managing broker at Flint Property Group, feel that the positive trend seen in 2017 will continue into 2018. “We should see a strong market for residential and commercial properties in Central Virginia,” predicts Flint, drawing on his 30 years of real estate expertise. “I also see an improving market for raw land.” Despite the interest rate increases, mortgage rates are still historically low, the stock market and the economy are booming, unemployment is down, and many buyers are looking to take advantage of low rates before they go up any further. All of this points to a 2018 where houses and land will be selling at a brisk pace.
In 2017 and early 2018, the challenge for buyers—particularly in the mid-priced range—was, and is, inventory. According to the National Association of Realtors, in late 2017 there was a shortage of houses for sale compared to the number of buyers looking to purchase. There simply were not enough houses on the market to meet demand, and as we look forward into 2018, the big question many real estate professionals are asking is: Will there be enough houses for buyers? Laws of supply and demand being what they are, the market may be poised to tip into the realm of a “seller’s market,” which is something that we have not seen in this country since before 2008.
There are several factors that influence the influx of buyers to our area. Virginia is close to Washington D.C. and the business hubs of the Northeast, but free of the associated congestion and expense. Our state enjoys the beauty of four seasons without many of the weather extremes of the Midwest or Deep South, and is more affordable in general than homes on the West Coast. Virginia’s temperate climate and central location make it an attractive place for the two largest segments of home buyers in the market today: baby boomers and millennials. Nadine Blakely, a real estate agent with RE/MAX 1st Olympic, reflects that a growing number of homebuyers fall into these two categories. “I have a lot of clients who are retired or retiring and are looking to downsize to a more manageable home and yard,” Blakely says, “and I also have millennials, drawn here by good jobs in business and healthcare.” Baby boomers, now their retirement years, are looking for smaller, affordable, efficient houses that make sense for their stage of life. Ironically, the largest group of millennials turn 30 this year, and as they are settling down and starting families, they’re looking for much the same things when buying a house. “Inventory is low for certain types of homes,” Blakely admits, “and competition for those homes can be fierce.” The growth of Central Virginia’s industry, healthcare, and university sectors are also fueling an influx of new professionals who are looking for homes in the area. But it is not what might be called a seller’s market across the board—homes priced over $400,000 are still slower to sell, and buyers in that price range and above will find that they have more room for bargaining than buyers in the hotter sectors of the Central Virginia real estate market.
So what makes a home or location “hot” in the current market? According to Flint, the short answer is location and price. “The price ‘sweet spot’ for single family residential homes (including townhouses and condominiums) is right around $300,000,” he says. “But really, any home appropriately priced between $200,000 to $350,000 will enjoy more of what we think of as a seller’s market.” He predicts continued strong interest in the historic downtown Lynchburg area. “There is so much going on downtown,” Flint notes. “I think we are becoming a much better known destination town. With the downtown revitalization, growth of industry and universities, and the opening of the Academy of Arts and the renovated Virginian Hotel, it’s an exciting time to be in Central Virginia.”
Colleague Blakely agrees. “Lynchburg and the surrounding areas such as Fort Hill, Boonsboro, and Forest are hot,” she explains. “I had my best year ever in 2017, and I think it is going to be another great year for real estate here in Central Virginia, particularly for homes that are affordable and have certain features.” Blakely says that the features many buyers ask for include: main level living, open floor plans, garages off the kitchen, and basements (finished or unfinished). Oh, and new construction. “Buyers love new construction, provided it is not priced too high,” she says. “Everyone likes to be first.”
Advice to potential sellers
If you’re a homeowner considering selling in 2018, you have picked a great year. With area inventory low, you should have plenty of interest provided your home is priced appropriately for its age and location, is well-maintained, and “staged” so that its best features can be appreciated. “Sellers who are benefitting from this market are those whose property is in terrific shape and priced correctly,” says Flint. The agents note that most buyers are not interested in buying a house that requires a lot of work, so take care of any maintenance issues before putting your home on the market. Clean up and declutter the house and yard. Within reason, aim for a neutral palette so that prospective buyers can see the “bones” of your home without getting hung up on worn carpeting, or unusual or outdated paint choices. Real estate professionals with experience in your neighborhood will be able to give you expert advice and individualized suggestions for how to price and show your home to its best advantage.
Advice to potential buyers
If you are planning to buy a home in 2018, prepare yourself for competition! Know that with lower inventory and larger number of buyers—especially in the more popular markets—you will need to act quickly when you find the right house because, chances are, there will be other buyers who feel the same way. Go through the mortgage prequalification process. This gives you and the potential seller confidence that this is a commitment you can afford, and can make a difference in how credible you appear to a seller. When you find the right home, do not hesitate. The days of waiting for weeks to see if a seller will drop the price or provide other concessions are probably over for now, especially in the geographical areas and price points that are currently seeing the most turnover. It is vital in these circumstances to have a real estate professional with detailed knowledge of the market, and who is a strong negotiator looking out for your best interests. If you know you are competing with several other buyers, prepare yourself to make your best and highest offer right away. Sometimes that will mean going over the asking price. “Oh yes,” Blakely confirms, “this is happening. I saw it even back in January.”
With the number of competing buyers in popular markets on the rise, this year’s housing inventory will move quickly. The good news is that Central Virginia will likely see a continuing trend of higher closing prices and fewer days on the market across the board. This could encourage more potential sellers to put their homes on the market, which would, in time, alleviate the current inventory shortage.
Central Virginia homeowners have a lot to be positive about in the coming year. Homes are appreciating at a good rate in most areas, and those looking to sell will likely find that their homes spend fewer days on the market than in years past, and sell for much closer to their asking price. In their 2017 endof- year report, the Virginia REALTORS® association predicts the gradual, steady growth of the past few years to continue, and says, “The long term trend of continued growth indicates sustained improvement in the market.” Since steady growth indicates a healthy real estate market, with a regular influx of buyers and sellers, concerns about the risk of a real estate “bubble” abate. With all indications pointing towards a great year of real estate, Central Virginians can be optimistic about healthy growth of the market, whether they are looking to buy or sell in 2018.