RICHMOND, Va. (WRIC) — Over the past decade, Central Virginia has seen a year-over-year growth in home sales and price appreciation. Now, despite a global pandemic and subsequent stock market crash, the Richmond Association of Realtors predicts 2020 will be even stronger than 2019.
Chief Executive Officer Laura Lafayette has been with the Richmond Association of Realtors for 28 years. Beginning in mid-March, she says, the housing market took a turn for the worst.
“It was this kind of tremendous disruption for about a month,” Lafayette said. “Early in the pandemic, there was a sense of, you can track the virus through touching different surfaces, and we weren’t talking as much about the airborne nature of the virus. So there were certainly some sellers who withdrew their house from the market, took it off the market, because they weren’t comfortable with people coming into their home.”
While realtors in many other states across the country struggled to keep the real estate moving, those in Virginia transitioned much of their work to a virtual environment.
“People learned how to practice real estate safely during COVID,” Lafayette said. “We were very grateful that Governor Northam, in all of his Executive Orders in the spring, allowed the practice of real estate to continue.”
By mid-April, Lafayette says activity in the housing market began to make a return.
“There was just a torrid pace of activity during the summer, and that continued into the fall,” she said. “Our October sales, pending sales, which indicate what kind of activity we’re going to have going forward, outpace 2019.”
Lafayette says the Richmond Association of Realtors does not anticipate a slowdown in that momentum heading into the new year because the concept of a seller’s market in Central Virginia pre-dates the pandemic by at least four years.
“At this point, COVID has not really affected the for-sale market,” Lafayette said. “There’s far more buyers out there for the limited inventory we have. In fact, buyers have found that they may not get the first house they put an offer on or the second or the third, so they have to really be patient. We’ve seen a lot of competing offers, we’ve seen a lot of homes go on the market for one price and sell for substantially more than that price.”
She says the major difference in home buying habits during the pandemic has been limited to buyers being more selective in the homes that they want to see in person.
The Virginians who are struggling most with housing reportedly are those in the renting sector.
“It’s renters, by and large, who’ve either lost their jobs or lost portions of their income,” Lafayette said. “When will the eviction moratoriums phase out, and then what happens? So far, landlords have been made whole, most tenants have been made whole. If that changes, if landlords are not made whole and they can’t pay their mortgage, then we’re going to see the real estate market affected.”
But home builders are also being impacted, as their suppliers struggle to keep up with the demand for materials, while operating under reduced capacity limits.
“Now you have a large increase in the amount of demand coming through the factory, but they have to be at 50 percent capacity because of the COVID-related restrictions,” HHHunt Homes Virginia Division Manager Patrick McCarthy said. “We used to have a two-week lead time on windows; we’re now up to 15 weeks.”
Not only does that slow the pace of a housing project, but it also raises the price, which then gets passed on to the consumer.
“We had an increase from the third quarter, and it hit us really in October, where our lumber package, the pricing went up anywhere from 10 to $20,0000 a house,” McCarthy said. “It starts with the — who we get it from. The increases that they’re incurring, they’re trying to pass on to us, and where we can, unfortunately, we have to pass it on to the consumer, just to try to keep our head above water.”
Even though these factors make home building amid the pandemic a more strenuous process, HHHunt hasn’t let up steam in Central Virginia. By this time last year, McCarthy says they started the build on approximately 420 homes. This year, that number has jumped to about 550.
“There’s a few reasons. One is interest rates are low. I think with the pandemic, people have been looking at their walls and they just need something new,” McCarthy said. “From a seller’s standpoint, there’s not a lot of reasons to incentivize, and I think buyers are understanding that, so they’re trying to buy everything right now because they don’t know what’s going to happen with prices in the future.”
As for HHHunt, McCarthy says the real estate developer will be slowing down in 2021 in an effort to maintain a sustainable pace and price.
“Something that we can maintain a little bit better, and just make sure our quality is really where we want it to be moving forward,” McCarthy said. “We’re still going to see growth, but it’s going to be more of a flatline year.”
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