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!

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)

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.

97 Hours per week to afford housing on minimum wage? What this means for investors.

In a recent article citing a report from the National Low Income Housing Coalition, it was reported that a minimum wage worker earning $7.25/hr would need to work 97 hours per week to afford to rent a 2 bedroom apartment at the national average of $1276/month without spending more than 30% of their income. That is crazy (and a mouthful)! Of course, a headline like this is meant to sensationalize and does not take into account widely varied market conditions around the country.

Here in Virginia’s New River Valley, the wage to rent/mortgage ratio is not as bad. A 2 bed apartment in Blacksburg or Christiansburg can rent for $800-$1000/month and if you look to Radford or Pulaski a reasonable rental can be found for an even lower price. While this still does not make up for the gap between earnings and rents for a minimum wage worker, it does make renting slightly more attainable for a renter on a single income and possible for a rental with multiple incomes represented.

Let’s take a moment to look at what this might mean for rental property investors. I will use a property in Radford at 1908 Third St that I am listing for $124,700 (or listed years ago depending on when you read this) to give a real world example.

Bottom line: For investors, affordable rentals are an incredibly stable, fairly easy to obtain asset that should always be in demand.

Two Takeaways for Investors:

1. Ensure that your rentals stay rented by purchasing low to median priced rental properties that will be affordable to the largest number of renters. Are there units in our area that rent for $2k and higher? Yes. However, there is a limited buyer pool for this type of property and you might risk your property going unrented by competing for them. Someone who can pay top dollar for rent can also likely afford home ownership so might go this route instead.

2. This is great news for newer investors who might have less capital to invest. The reality is that building a portfolio of $100k-$200k in Blacksburg/Christiansburg/Radford that rent for $700-$1300/mo (depending on area) will both be attainable in terms of saving a 20% down payment for newer investors and be the kind of properties that will be easy to rent. And, you can feel great knowing that you are providing a quality, affordable home to someone who needs it!

An Example: 1908 Third St, Radford

1908 Third St, Radford, VA. Click on the pic to check out my new toy for listings - a 360 Tour Camera!

1908 Third St in Radford is a 4 bed/2bath and will easily rent for $1000/mo (probably more) and listed for $124,700. It would be a great rental for a family working in Blacksburg or Christiansburg who would like the comfort of living in a large, single family home at the rental price of a smaller townhome/condo near VT.

If you purchased this property with a conventional loan and put 20% down ($25k), even after factoring in 10% of gross income for both maintenance and property management, you could still expect to have a 28% overall return on your initial equity!

Numbers like this are why I am all in on rental property investing and am buying properties like these myself. Homes like these are stable, appreciating assets that stay rented because of the large renter pool they draw from (… and also provide greater overall returns than the S&P 500!).

Conclusion

I have enjoyed reading investment advice from a real estate investor named John Schaub. Schaub’s advice is to buy one affordable rental like 1908 3rd St. every year. You might enjoy reading his book, Building Wealth One House at a Time. Just doing this, a person could build massive wealth in 10-20 years while serving their community by providing stable rentals that the average worker/student can afford.

In 2020, with the uncertainty in the market due to Covid-19, buying homes that will attract the largest pool of rentals that also cash flow is a good strategy to consider as an investor.

What do you think about this? If you are interested in learning more about building wealth through rentals like these or want to know more about how to calculate the overall rate of return on investment properties - let’s talk!

Philip Bowling // philipbowling@gmail.com // 978-473-0587

May 2020 NRV Real Estate Market - Everything's Changed, Everything's the Same

As I am writing this post, states across the US are beginning to slowly reopen after being shut down by Covid-19. While the shut down has affected the real estate market in the NRV, it is not necessarily how you might expect. Read on to get a market snapshot for the area as well as a few takeaways on how this might affect buyers, sellers, and investors.

Bottom Line: The low number of houses on the market has gotten even lower as sellers have decided not to list because of the uncertain economic outlook. This has increased buyer demand even more, driving prices higher and selling the few homes on the market that are priced well quickly.

Market Data

Active Listings for Sale

Number of Sales YTD

Average Days on the Market

Avg Increase in % Sales Price for Homes Under $450k

As you can see from the data above*, sellers have become wary of selling resulting in fewer listings. However, with continued buyer demand these fewer listings are selling in less days on the market for higher prices than they were at this time last year in a historically hot market!

What does this mean for:

Sellers

• Now is a good time to sell. There are buyers hungry for homes and investments in the New River Valley and, at least for right now, you will be listing at a market high with less competition than is typical for a spring/summer market.

• Depending on what changes with the local universities, offices transitioning to work from home environments, and how the economic recovery pans out there is a chance we will see a market decline in the next year making now potentially the best time to consider a sell if that is something you might consider in the next 1-3 years.

Buyers

• If you are waiting for the market to drop due to Covid-19, you will have to wait longer. Indications are that current market conditions will continue through this summer because of continued high buyer demand connected to the growth of the area. The decreased inventory has only increased this demand as there are fewer sellers deciding not to list than buyers deciding not to buy.

• Make sure you are pre-approved with a local lender. Lending restrictions have become more strict in the past couple of months so make sure you will be able to qualify for financing.

Investors

• Risk breeds opportunity. We have not seen a softening of the undergraduate housing market as of yet - properties on the bus line next to the university are still moving quickly for high prices. However, if there is an indication of a change this fall, buying opportunities might present themselves as uncertainty scares some parents and investors out of the market. Have cash and financing ready to go.

• There are currently opportunities to purchase cash flowing homes/townhouses in Christiansburg and Radford. There are two properties in particular I have been watching that I believe would make sound investments. The NRV is still growing and the demand for affordable housing is still there outside of the university market.

Conclusion: For now, even though it feels like everything has changed, in many ways the market has stayed the same: homes moving for close to list price very quickly. Will this last? It is hard to say. More information from Virginia Tech and Radford about their future plans as well as whether or not Covid-19 remerges with a vengeance later in the year have the potential to dramatically impact the market this fall and beyond.

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.