Positive Signs for Life After Covid in the NRV Real Estate Market

As of today, we are over a year into the pandemic. I don’t know about you, but for me that is both hard to believe on the one hand, and on the other, it feels like this last year has dragged on forever! I want to take a moment and update you on how the real estate market has fared over this past year (just a hint … very well), as well as update you on some positive stats that make me optimistic about how our local economy will fare as we begin to emerge from Covid.

Positive Signs for Life After Covid in the NRV

• Moog, Patton Logistics, Modea, Orsani and Torc Robotics are growing & will create 575 new jobs in the NRV. Click here and here to read more.

• Applications to Virginia Tech have reached an all time high at 42,000 for 2021. Read more here.

• Covid-19 Vaccinations are about to move into phase 1c, allowing more of the population access. Click here to learn more.

NRV Real Estate Market a Year after Quarantine

• New home listings dropped by over 20% last year, however buyer demand stayed high, driving average sale prices up by nearly 10%. Home values are predicted to continue to rise through 2021.

• As of April, Townside Property Management is on pace to have 100% of properties leased for 2021-2022 with less than 4% of nearly 700 properties managed yet to have leases signed. Less than 1% of rentals have asked for Covid-related rent assistance.

• The historic sellers market we have experienced over the past few years has been supercharged by Covid & low interest rates. A continued lack of housing vs. demand has kept rents rising.

Keeping You Informed About New Construction in the NRV

New Student Apartments

• The Hub Blacksburg: Located off of Patrick Henry and opening next year featuring 1-4 bed units priced at $905-$1,405/bedroom.

• Cedar Pointe: Located off S. Main near 460 featuring 1-2 bed units priced at $950-$1,180/bedroom.

• Union: Located off of University City Blvd. near Kroger featuring 424 new 1-4 bed apartments and townhomes opening in 2022.

New Construction Homes in Blacksburg

• Givens Farm: Located off of N. Main featuring 4 bed, ~2800' homes starting at $485k.

• Midtown: Located in downtown Bburg featuring 3-4 bed luxury townhomes priced between $380k-$700k+.

• Villas at North Main: Located off of N. Main featuring 3-4 bed, 2200-2900' homes priced between $385k-$490k.

New Construction Homes in Christiansburg

• Clifton: Located off of Peppers Ferry featuring 3 bed, 2300-3200' homes priced between $345k-$410k.

• Kensington: Located off Radford Rd near 81 featuring 4 bed, 2200' homes priced between $335k-$375k.

• Midway Estates: Located between C-burg & Roanoke featuring 4 bed, 1750-2000' homes priced between $250k-$275k.

What positive or negative indicators are you seeing as the local economy comes out of the pandemic?- I would love to hear your thoughts. And as always, I am happy to help if you need someone to guide you through purchasing or selling a home or investment property in the NRV!

Are we in a housing bubble? 2021 NRV Real Estate Forecast

Happy New Year! I know that most folks are happy to have 2020 behind us and hope that 2021 will bring back some sense of normalcy. Maybe this is a year where you are setting some real estate goals and are wondering what sort of market to expect. I have taken some time to research what experts are forecasting for 2021 related to home prices, interest rates, a new President, and location. I hope this consolidation of ideas helps you understand our market. Please reach out to me if I can do anything to help you or anyone you know buy or sell a house in the NRV!

Bottom Line: Continued low interest rates and sky high buyer demand will likely drive home values up this year, though not at the rate we saw in 2020, possibly leveling out through the year as new construction comes online. More stringent lending conditions, strong equity positions, and high buyer demand make it unlikely that we are experiencing a bubble that will pop anytime soon.

Prices

• National Association of Realtors Chief Economist Lawrence Yun believes home sales will rise 8% in 2021.

• Median sales prices increased by over 15% Oct 2020 compared to 2019 making it the 104th straight month of price gains - something not seen since 2006. 2020 home sales nationally were up 7.4% from 2019 - the result of continued increase in buyer demand.

• How are so many people still able to buy with Covid’s affect on the economy? Renters seem to have been affected more than homeowners by Covid as many who own homes were able to have jobs that allowed them to continue to work remotely.

• What will stop the dramatic rise in prices? Here are a few thoughts:

  • An affordability ceiling where a family’s income leaves them unable to afford a home - enough of this and prices will level off

  • Builders of new homes starting to meet the demand of the number of buyers who want to purchase a home. New construction is planned to rise (which we can see in our area) which could help level off prices.

  • Finally, enough sellers enticed to enter the market. Sellers who were nervous to list because of the economic uncertainty might list this year which will create more housing inventory. The flip side of this is that buyers who were nervous might also join the market.

• Economist Matthew Gardner predicts sales prices to go up 4% in 2021 (though this was also his 2020 prediction which was exceeded), less than the increase in 2020 because of the affordability ceiling that interest rates can only help so much.

• As Covid begins to come under control, the year should return to its normal cycle with an uptick in homes for sale and prices in the spring which should decrease going into the fall and winter months.

Low Interest Rates

• Historically low interest rates could hit their low in q1 of 2021, however will likely not rise much through the rest of the year.

• Experts’ predictions in the increase of rates range from 3.1-3.6%.

• If the Covid vaccine roll out is slow, the economy could dip, causing rates to drop again.

The Biden Presidency

• Early indicators point to the Biden presidency being good for buyers

  • Biden hopes to enact a first time homebuyer credit to help new buyers afford their down payment.

  • He also wants to pump money into affordable housing with talks of wanting to pump $65 billion into new builds.

• There could be obstacles for investors:

  • Biden has talked about rolling back some mortgage interest deductions and the ability to receive inherited properties at a stepped up basis (in a sense tax free).

  • He has also talked about putting an end to 1031 tax free exchanges, though this is unlikely.

Are We in the Middle of a Housing Bubble?

• Yun does not believe the U.S. is currently in a housing bubble because of the amount of buyer demand in the housing market. This demand should ensure that our present day will not mirror the Great Recession.

• Forbearance due to Covid 19 affects about 5% of homeowners as of Nov. 30 which is down by 2% since May. These forbearances, where banks are allowing owners to delay mortgage payments, should not lead to a flood of foreclosures that ‘burst’ the market because:

  • Buyers are in a much stronger equity position than in the great recession - the result of prices that have risen and increased lending standards

  • The incredible buyer demand will make it easy for sellers to sell that need to, allowing them to avoid foreclosure

  • Even if the foreclosure rate doubles, it will still be lower than the national average.

Location

• “A recent Harris Poll found that over 65% of homeowners would consider moving to a different area if they were allowed to continue remote work permanently.”

• People are leaving busy and expensive city centers for more affordable and attractive places to live. Fortunately, the NRV is one of these places with our mountain setting, slower pace of life, and culture brought by the university.

Conclusion

Continued low interest rates and sky high buyer demand will likely drive home values up this year, though not at the rate we saw in 2020, possibly leveling out through the year as new construction comes online. More stringent lending conditions, strong equity positions, and high buyer demand make it unlikely that we are experiencing a bubble that will pop anytime soon. While there is still a threat of an economic downturn in the near future, most experts agree that the real estate market in 2021 should continue to stay strong.

Please let me know what you think about this - I would love to hear your thoughts. And as always, I am happy to help if you need someone to guide you through purchasing or selling a home or investment property in the NRV!

NRV Real Estate and Covid Pt. 2: Migration from City Centers

In this, the second of a 2 part series, I want to share some research we’ve done on what we can expect in the future for the NRV real estate market based on experts’ predictions about how Covid is effecting where people choose to work and live. Click here to read Pt. 1 about the impact Covid has had on the university system specifically connected to Virginia Tech and Radford.

As I wrote in Pt. 1, when March 2020 arrived and we realized that Covid-19 was here to stay, our expectations were that the virus would finally stop the historic real estate market we have experienced. Paired with that, our assumption was that potential unemployment and uncertainty with the economy would make leasing investment properties difficult this year.

THE REALITY HAS BEEN THE EXACT OPPOSITE:

• (There have been 25% less homes for sale) + (Buyer demand has INCREASED) + (Historically Low Mortgage Rates) = a 13% INCREASE in sales prices comparing summer 2019 with summer 2020!

• At Townside, where we manage around 700 rentals, only 3 went unleased for 2020-2021.

The potential impact of Covid on where people live and work

As the onset of Covid caused offices to close, many workers who began to work from home beginning the avalanche of zoom meetings that we’ve all grown accustomed to. For a growing number of workers living in expensive city centers, the ability to work from home has opened up the possibility of living in lower cost areas that offer a more attractive pace of life. A microcosm of this was reported on the NBC Evening News which you can view in this video:

Location Independence and NRV Real Estate

When you can work anywhere, you can live anywhere.

Location independent work environments accelerated by Covid are resulting in more people to have the option to move to more affordable areas that offer a high quality of life.

This is potentially great news for the NRV! With the tens of thousands of VT and Radford grads spread out all over the country, it will only take a small percentage of them to consider moving back to the NRV and working from here to keep our housing market stable and even growing.

We already see this trend with retirees who have historically made the NRV a top location in the country to retire. This trend has the potential to accelerate if VT and Radford grads, along with anyone desiring affordable housing in a beautiful mountain setting, decide to settle here in the NRV.

What are these potential buyers looking for?

As you consider selling your home or investing in a rental targeted toward someone ‘migrating’ to the NRV, keep these amenities in mind:

• This type of buyer/renter will be looking for an updated, move in ready home

• For retiree buyers/renters, they would prioritize hassle free living where exterior maintenance is provided - such as in an HOA. Places where one can age in place with amenities like a master on main are important.

• For buyers/renters looking to work from home: a dedicated office space that is separate from the main living area. Potentially even multiple spaces that could be used for office/school.

Conclusion

Covid has turned life upside down in many ways and there will be lasting effects of the disease and the pain it has caused for some time to come. There are also impacts of covid that have accelerated trends that were already present in our culture that could have some positive effects in some arenas of life such as real estate.

Speaking purely in terms of NRV real estate, with the potential that the universities in our area will rebound as well as the desirability to live in a region that has as much to offer as ours does, there is good reason to remain positive about the long term outlook of our real estate market.

Do you know a seller who is ready to get their property listed?

Are you trying to figure out how to purchase a home in this fast paced market?

Do you want to learn how to build long term wealth through real estate?

Please get in touch. It would be my privilege to help you.

Philip Bowling, REALTOR

PhilipBowling@gmail.com

(978) 473-0587 (c)

NRV Real Estate and Covid: Virginia Tech and Radford

When March 2020 arrived and we realized that Covid-19 was here to stay for a while, our expectations were that the virus would finally stop the historic real estate market we have experienced here with low inventory and sky high prices. Paired with that, our assumption was that potential unemployment and uncertainty with the universities as they closed in the spring would make leasing investment properties difficult this year.

The reality has been the exact opposite - I think of this summer’s sales market (2020) with this ‘equation’:

• (There have been 25% less homes for sale) + (Buyer demand has INCREASED) + (Historically Low Mortgage Rates) = a 13% INCREASE in sales prices comparing summer 2019 with summer 2020!

• At Townside, where we manage around 700 rentals, only 3 went unleased for 2020-2021.

What does the future hold for Va Tech and Radford?

In this, the first of a 2 part series, I want to share some research we’ve done on what we can expect in the future for the real estate market based on experts’ predictions about what will become of the university system that has been upended by Covid.

While we cannot predict the future, I am encouraged to read that many experts believe that large, public institutions like VT have a good chance of surviving and thriving coming out of the pandemic.

Here is what Christopher Merrill, CEO of Harrison Street that has $12 Billion invested in student housing says about the future of student housing:

Here are a couple of key takeaways we’ve found that look positive for the future of VT - a major economic engine that drives the New River Valley and therefore directly affects the real estate sale and rental market:

• If social distancing continues, there will have to be less ‘dorm density’ - so fewer on campus housing spots. This should drive up demand for off campus housing. Investors should keep social distancing principles in mind, attempting as much as possible to provide ‘bed bath parity’ so that as few tenants as possible need to share bathrooms.

• Even in remote only situations, students still desire to be near campus. We saw this last spring. When VT and Radford shut down, students living off campus stayed and accomplished their remote learning here in the community. Va Tech enrollment actually grew this year if you can believe that!

• If a move towards online learning causes smaller colleges to close, it will likely mean greater interest in large, public schools with endowments & robust online options.

Conclusion

It is impossible to know for sure what the future holds. However, history teaches us that our economy rebounds from downturns and that this crisis will likely be no different. Fortunately, there are many positive indicators that large, public institutions like Virginia Tech will be able to withstand and potentially even grow coming out of the pandemic. This signals that our strong real estate market could continue even in spite of Covid which is great news for buyers, sellers, and investors.

Do you know a seller who is ready to get their property listed?

Are you trying to figure out how to purchase a home in this fast paced market?

Do you want to learn how to build long term wealth through real estate?

Please get in touch. It would be my privilege to help you.

Philip Bowling, REALTOR

PhilipBowling@gmail.com

(978) 473-0587 (c)

Late Summer 2020 NRV Real Estate Market Update

Bottom Line: What do you get when you add low interest rates and continued buyer demand to a real estate market with a historically low number of homes for sale? Even higher prices with fairly priced homes selling within days (or minutes) of being listed.

Late Summer 2020 Market Stats

Here are some stats comparing the summer months last year (in a historically ‘hot’ market) with what we have seen in the same time period this year in 2020:

Number of Homes for Sale

Number of Sales YTD

Average Days on Market Before a Home Goes Under Contract

Average Increase in Sales Price for Homes Under $450k

A Note About Interest …

As a buyer, you might see these stats and think it would be wise to hold off on buying until the market cools off. Please consider two things before you do and know that I believe in the first more than the second:

1. With interest rates at historic lows (I’ve seen under 3%!!!) - and I mean historic - like never happened before historic - you might pay more for a property but end up with a lower payment because of the favorable rates. A mortgage on a $300k home at 4% would be $1145/mo. That same home priced $15k higher at $315k with a 3% mortgage would have a $1011/mo payment. Less per month for a home $15k more expensive!

2. If you decided three years ago to wait for prices to fall before purchasing you would still be waiting and a home you could have gotten for $220k then would cost you $270k today.

A mortgage on a $300k home at 4% would be $1145/mo. That same home priced $15k higher at $315k with a 3% mortgage would have a $1011/mo payment. Less per month for a home $15k more expensive!

What all this means for:

Investors:

• If you can take advantage of these low rates, it might be ok to pay market value for a property to have a property in your portfolio financed at this wicked low rate.

• With continued uncertainty due to Covid, it could be worth taking advantage of these sky high prices to sell today and have cash on the sideline ready to redeploy if the uncertainty continues and prices fall - especially starting this fall.

Sellers:

• Wait?! You are considering selling and have not listed your property yet?! Call me right now and let’s get it listed! Prices could continue to rise, however with 1. uncertainty in the future with the economy 2. historically high prices, and 3. historically low interest rates, there might not be a much better environment to sell your property in. Really, now is the time.

Buyers:

• See the note on interest rates above. This market in some ways is a win win for buyers and sellers in that you can pay a little more today and end up with a lower monthly payment because of the low rates.

• This is a market where it benefits to work with a real estate agent. When properties are moving in 3 days or less, you need to be the first to know when something is new on the market and be ready to make a good decision quickly - both of which a good agent can help you with. I get a heads up weekly both on properties that I will list but also on properties that the other 50 agents in my office have coming and can give my buyers a head start. I recently helped an investor friend put a duplex under contract that never went to market he would not have known about had it not been for our connection. I would love the chance to be that connection for you, too!

Conclusion: Low interest rates still make this hot market an attractive time to buy. High prices and an uncertain economic outlook make this a great time to consider selling (get while the gettin’s good). You have to move fast to get a property today, but it is a market where there are truly wins for buyers and sellers.

Do you know a seller who is ready to get their property listed?

Are you trying to figure out how to purchase a home in this fast paced market?

Do you want to learn how to build long term wealth through real estate?

Please get in touch. It would be my privilege to help you out.

Philip Bowling, REALTOR

PhilipBowling@gmail.com

(978) 473-0587 (c)

*Data comes from statistics pulled from InfoSparks, a service provided by the NRVAR.