25 May Recent Trends in the Residential Real Estate Market in Northern Virginia
We recently had a conversation about some important market trends with Latham Schweitzer, a premier real estate agent with Long & Foster who has a deep background in real estate appraisal. “I am seeing signs that the market is changing. Walk and talks still have real relevance for buyers who want to make a competitive offer and certainly, everybody is concerned about the cost of any home improvements or repairs. The market is really uneven now…I don’t know that contracts will continue to trend significantly above-asking price…it probably will in some market segments, but perhaps not for others. I have seen some listings that are getting hardly any traffic. Rates have gone up and buyers will have more leverage moving forward as a result. Things may be starting to move back to more equilibrium.”
Buyers are Facing Increased Hidden Costs
With rising interest rates, buyers can expect increased mortgage payments and closing costs such as transfer taxes. Buyers should also anticipate out-of-pocket expenses for maintenance and repairs since these are less likely to be performed by the seller and unlikely to be a bargaining item in the transaction. Buyer’s risk additional closing costs if the appraisal contingency is waived and unsupported by comparative property assessments. Another unexpected “cost” is the buyer demanding a rent-back provision that allows them to remain in residence in the home until they have found their own new house. This, in turn, is propelling the rental market to remain strong in certain areas, which is an additional burden on some buyers.
Renovations and New Construction Escalations
The costs associated with buying a property to renovate, rebuild, or develop have also seen an increase. In addition to shortages and supply chain logistics driving up the base cost of materials, delivery delays lead to lag times in construction that translate into additional dollars in the budget. Higher quality firms are in demand, and it may be tempting to go for a less reputable but apparently less expensive company. Still, fixes to poorly executed workmanship will drive the cost even higher. A price in time and money lies in critical peripherals like building and trade permits. Finally, the delays in delivery of the finished project result in additional housing expenses in a rental or other owned home.
Buyers who haven’t been priced out or turned off of the current market can get creative to find homes that aren’t actively listed. Those presented through an estate sale or homes adjacent to a recently sold property are often potential property purchases. Care should be taken to make an offer with full knowledge of the possible list value of these properties to present an attractive offer. A qualified real estate agent or appraiser can help with pricing, and a home inspector can help identify potential additional costs associated with the property. Biller & Associates conducts walk-and-talk consultations that might be particularly well suited to this option. Contact us to learn more.