As we saw in 2018 in the Charlottesville area, the spring market seemed to begin in early January, when it usually starts heating up in mid-February. Sales seemed to slow down a bit in mid-summer as there still wasn’t enough actual inventory – either resale or new construction – to supply the increasing demand.
Many landlords have taken advantage of the number of people needing someplace to live and we have seen average rental rates start to rise – $1,500-$2,000 is fairly average rent here now, which prices many people out of the market in the city.
We have also seen an increase in the number of apartment buildings being completed in a hurry and quickly opened for tenants along the Fifth Street Extended Corridor, West Main Street, Stonefield, and near the Hollymead Town Center, with more planned for Seminole Square in the near future.
So, will 2019 bring more of the same results? How will the housing market shake out in the current economic climate?
Home Prices Are Rising Slowly . . . With Less Offers
During the course of 2017 and early 2018, national home prices made a giant 10% jump. This year, however, may be a different story. Home prices are estimated to rise in 2019, but at a much slower pace, and the number of homes for sale is expected to increase by 1%.
Part of the slowdown is due to increased mortgage interest rates and another part is because of overall economic uncertainty. That combination is enough to discourage many Buyers who are on the fence about purchasing a home.
But there are still Buyers in the market, and many of them are looking for newly built homes. In fact, new home construction is projected to increase by 8% in 2019.
That’s the good news.
Here’s the bad news: There just aren’t enough new homes to go around in some areas. Plus, construction companies also don’t have the manpower to keep up with demand.
What’s the bottom line? Expect the new construction that is available to go for a higher price.
What Higher Prices Mean for Sellers
The number of homes sold next year is still expected to rise, even if it’s at a slow pace. That’s great news for Sellers, but keep in mind that a lot of Buyers are being priced out of the market, which could lead to fewer offers for your home.
So what should you do about this? Be aware of your competition. With less offers to go around, you want your home to really stand out from similar ones in your area. Prepare your home for potential Buyers and work with a real estate agent to help you list your home at the right price.
And be sure to wait for the right offer. Some Buyers may try to offer a low number. If you aren’t in a hurry to move, wait for an offer that gives you the most profit. Remember, the less desperate person always has the upper hand when negotiating.
What Higher Prices Mean for Buyers
If you’re going to buy a home in this market, you absolutely must find out how much house you can really afford. Going to at least three different lenders and getting a pre-qual letter or pre-approval will help you know for sure how much house you can afford so you don’t get tempted to buy at a higher price.
Commit to staying within that budget amount. Don’t rush into a home purchase that doesn’t make financial sense for you no matter how much pressure you feel watching competitors pluck good homes off the market.
If you can’t put down at least 10% on a 15-year fixed-rate conventional loan, then you probably can’t afford a house in this market. A down payment that’s less than 10% will strangle your budget with massive monthly mortgage payments.
If you want to get prepared to buy and you’re committed to your budget, here are some options to consider:
Keep saving. If you stay patient and motivated, you can save for a five-figure down payment by this time next year.
Sacrifice some wants. If you can’t afford to buy the house you want, be willing to give up some “nice-to-haves” for your “must-haves.” Find the least expensive home in the best neighborhood you can afford and you can upgrade as your income and savings increase over time.
Expand your search. What if the location where you’re planning to buy is what’s increasing your budget? You might be surprised at the gem you can find in a less popular neighborhood.
Getting connected with a Solutions agent who really knows the area is the best way find a home that fits your budget and lifestyle.