(WAVY) — You can now add the local housing market to the list of things going crazy in 2020.
Record low interest rates make buying as attractive as ever. While record low inventory fuels competition for the few available houses, industry experts say they’ve never seen anything quite like it.
Interest rates are staying in the 2 percent range, with some buyers securing rates as low as 2.25 percent.
REIN, the Real Estate Information Network, reported the housing supply for this past August was down 47 percent from August 2019. This means, theoretically, if no new homes are added to the market, houses would sell out in less than two months. New houses are added every day, so that scenario likely won’t happen, but it still raises eyebrows. This is the lowest inventory of housing REIN has ever recorded.
The combination of low interest rates and low inventory is fueling competition.
“Every property that goes on the market, say it goes on the market Thursday or Friday, you can expect by Sunday you’ve got two, three, four, five offers. Now out of those five offers, three are going to be over list price,” explained Kris Weaver, a member of the REIN Board of Directors.
Realtors are seeing houses go extremely fast, sometimes selling in matter of hours.
“As a listing agent, I’ve seen everything from at list price to $20,000 to 25,000 over asking, where buyers are guaranteeing appraisals, they are waving inspections, just to be able to get the offer,” said Adrienne Downing, a realtor with Berkshire Hathaway Towne Realty.
The competitive market is also nudging prices higher and higher.
“Right now, from what I’ve seen, we’re increasing 2 percent a month,” said Weaver. “Keep in mind that’s a 24 percent annual rate of increase per year. Which is insane.”
With no sign of higher interest rates anytime soon, experts predict the current trend to continue for the foreseeable future.
For those concerned rising prices may mean over-paying for a property, experts expect prices will continue to trend upwards, and eventually plateau. But they won’t decrease.
“If you decide to wait for that property thinking it might be priced less next year, that’s probably not the case based on historical data here,” explained Downing. “Prices have gone up but appraisers are also reeling that in, so they’re not escalating out of control. I think people feel like they’re over-paying where they’re not necessarily over-paying.”
Downing offers some tips for those currently looking to buy or thinking about buying soon. First, when you find a home you love, don’t wait.
“You’ve been house hunting for a lot longer than you realize. You’ve been to your friends’ houses, You’ve been to your neighbors’ houses. You already have a general idea in your mind when you’re looking for a house of what you want. So if you walk into that first house and it’s the one, a year ago you might have been able to sleep on it for a couple days, but you need to make a decision and pull the trigger right away, right now.”
Also, come prepared. Get pre-approved. Put your best offer on the table first. And be ready to pay closing costs.
Negotiating for the seller to cover closing costs was relatively routine once upon a time. It’s not anymore.
“Those offers coming in over list price, they’re not asking for any closing costs at all,” said Kris Weaver.
And finally for those looking to sell, realtors encourage you to do so.
“Sellers: don’t wait, because a lot of sellers are afraid to put their house on the market because they think they won’t be able to buy something. But that’s just adding to the current situation,” said Downing. “Don’t wait. It’s a great market right now. You’ve got well-qualified buyers who want to buy. One of the things that COVID has done is make people realize what they want in a house. If they’re going to be stuck in it, they want what they want.”
- Armstrong’s six TDs lift Virginia past Yellow Jackets, 48-40
- 1 taken to hospital after Frontier Airlines jet makes emergency landing at Raleigh airport
- Richmond apartment building fails inspection, residents kicked out without warning
- Charlottesville Unite the Right trial starts Monday
- Instagram reveals each state’s favorite pumpkin treat, but Virginian’s isn’t a latte