RICHMOND, Va. (WRIC) — It’s a stressful time for home buyers but still paradise for sellers. Experts say homes are flying off the market faster than last year in the metro area, while buyers’ and sellers’ wallets feel the effects.
Experts say the high demand is a good thing for Richmond. People want to live in the Richmond area, plant roots there, and stay for a while.
However, it creates quite a stressful situation for buyers. They’re told if they’re not patient, they will very likely be disappointed.
“It’s been eye-opening” said Chesterfield math teacher Kevin Oakey. He and his girlfriend began hunting for their first home in September.
“It’s a pretty big deal for us so we are excited, but its been, it’s been competitive,” Oakey said.
Since they began looking on and off, their strategy has become more urgent.
“[Before] it’d be like a four to five day process if we wanted to see it. Now, if we like it, I am calling them that day,” Oakey said.
So far, houses they’ve liked have either catapulted above their budget or been snagged off the market before they even have time to make an offer.
It’s been a seller’s paradise in the Richmond area for about the last four years, according to Laura Lafayette, CEO of the Richmond Association of Realtors.
“A house goes on the market, a house sells. A house goes on the market, a house sells,” she said ON Thursday.
The situation has become even more advantageous for sellers since just last year. Lafayette said data shows compared to the first few months of 2020, the average time houses are on the market has been cut in half, from 35 days to just 18 days this year.
“It’s one of those things I always say. Buyers in this market have to pack their patience,” Lafayette said
She also said the supply is about a fifth of what it would be in a balanced market, which is when neither seller nor the buyer has an advantage.
“That means that sellers are at an distinct advantage in terms of pricing. And that also means there’s a lot of competition among buyers,” Lafayette said.
Prices are soaring because of the demand.
“I’ve seen houses go for 40, $50,000 over their asking value,” Oakey told 8News.
“What I would say is different now than, say, four years ago, is the price of sales,” Lafayette said.
Lafayette said last year on average, a seller was getting 98 percent of what they’re asking for. This year, they’re getting two percent over the asking price.
“Buyers are paying over the asking price and four percentage points higher this year than last,” she said.
8News asked what she expects for the rest of the year. Lafayette doesn’t think much will change. She said interest rates will remain low and demand will stay high as it has in Richmond.
“2021 we will be on pace to do just about the same number of units, maybe slightly more than 2020,” she said.
Buyers are skipping getting an inspection so they can finally snag a home more than ever, according to the CEO — and she doesn’t recommend that.
“You don’t know what you’re getting,” Lafayette said.
The thought process is that if they skip the inspection, which the seller pays for, their offer will be more desirable.
Another effect on families right now is delays in mortgages getting processed. Lafayette said that’s happening for a few reasons. The low interest rates factor in here. People both refinancing and buying their homes are being processed at the same time.
“Purchasers have to understand that they’re competing for their lenders’ time with refinancing clients,” she said. “And quite frankly it’s just a glut of how much business is out there.”
The pandemic’s effects on the housing market as a whole are not as evident now in the Richmond area, according to Lafayette.
“I don’t think we’re in a pandemic market anymore,” she said.
Last spring, many people who had put their homes on the market pulled the listings down because they didn’t want strangers walking through their houses. Now that much of the population has been vaccinated, most people don’t have a problem listing their homes. Lafayette said in-person showings are coming back, but said virtual showings, like videos posted on YouTube, will stay a useful tool forever.
How do buyers get relief in Richmond?
“We’ve just got to figure out how to put more inventory on the street. Whether that’s people who’ve owned rental houses deciding to take them out of rental and put them into ‘for sale’, that would be very helpful. If we could create more options for seniors who would like to no longer have their house and the responsibilities of upkeep, if they had affordable rental options, that would open up some more first time home buyer inventory for us,” she said. “We just need to be able to build more units more quickly.”
Oakley said he’s thankful for help from experts like Joan Dorsey, who has been organizing showings for the couple. He said the process has been stressful at times, but overall is exciting. He said people who are considering entering the buyer’s market should be prepared to be patient.
Renters are still feeling the pandemic’s effects, according to Lafayette. Her non-profit’s housing resource line has helped 150 households with rental assistance valuing over $500,000 since September, she said.
“The need for rental assistance is real,” she said.
“The question for renters is once the moratoria are lifted, once the $300 unemployment supplement goes away, are they going to be comfortable and able to go back to their jobs,” Lafayette said. “Are they going to be able to pay their rent?”