WINCHESTER — Rising home prices and an ongoing inventory shortage continue to make buying a home difficult for some in the region.
Not only is the booming real estate market creating challenges for buyers, it's also creating issues for some sellers, though the market remains in their favor, according to Mike Cooper, principal broker with Cornerstone Business Group in Frederick County.
“Buyers who need to move in the near-to-immediate future are struggling to win bidding wars with other buyers,” Cooper said. “That causes many buyers who also need to sell a home hesitant to put their home on the market for fear of not being able to locate a home to move to.”
In the Northern Shenandoah Valley, 560 homes are currently listed for sale, Cooper indicated. Of those, 165 are “to-be-built” units 90-120 days from being ready for closing.
“Many buyers do not have the luxury of time to make a move,” Cooper said. “Inventory shortages have been plaguing the valley since 2017.”
Based on a Virginia Realtors survey conducted in late May, buyers are experiencing frustration in the current market because some are losing bids to cash offers or offers that are tens of thousands of dollars above a property's original asking price.
This is causing some to drop out of the home-buying market altogether.
Of the 900 Virginia Realtor members who responded to the survey, 655 have been affiliated with an unsuccessful home purchase transaction this year. Among those unsuccessful transactions, 60.2% involved first-time home buyers.
The survey indicted that 83.5% of the unsuccessful transactions were attributed to a bid being lost to a higher offer, while 68.3% were because another offer had better terms. Additionally, 5.6% didn't qualify for a loan and 5.2% had an appraisal come in too low.
However, most buyers continued with their home search after an unsuccessful offer, according to nearly three-quarters (74.6%) of real estate professionals who responded to the survey. A little more than a third (36.5%) said that after an unsuccessful offer, their clients decided to pause their home search.
“The motto has been ‘cash is king,’ so if you’ve gotten five offers on a home, four have financing and the fifth is an all-cash offer, 99% of the time the cash is going to take precedence,” said Marissa Boone, who serves Virginia, West Virginia and Maryland with Keller Williams Realty. “Sellers want a ‘no fuss’ transaction, meaning minimal to no contingencies, quick close and the most cash in their pocket. We have people who purchased last year and already have $50,000 in equity, so they’re thinking of selling now.”
This type of market can push potential buyers into what most real estate professionals consider unsafe practices.
“The current market has buyers forgoing inspections, appraisals and buying ‘sight unseen’,” Boone said. “I do not suggest this.”
She recommends waiting for those who are not in a rush to buy a home. Those interested in buying now should “find a realtor that will get to know what your needs are and who will steer you in the right direction," she said.
For sellers, Boone recommends meeting with a licensed agent, getting a comparative market analysis and going from there.
“Buying and selling can be a wonderful experience in your life, but you must make sure you’ve got the right team backing you,” she advised.
Cooper said data from the second quarter in the Northern Shenandoah Valley suggests “good news for local real estate.”
“Across the valley, home sales are up 12.57% over 2020,” he said. “It would be easy to assume that is due to the COVID-19 lockdowns of 2020, but 2020 home sales were up 21% over 2019. The year-to-date closings are even more impressive. The valley has seen a 25.5% increase in overall home sales for the first six months of 2021 when compared to 2020.”
Data from Bright MLS, which provides market data to real estate brokers, indicates 496 homes were sold in Frederick County in the second quarter of 2021, which includes April, May and June; 282 homes were sold in Warren County, 184 were sold in Shenandoah County, 106 were sold in Winchester and 65 were sold in Clarke County.
The average sale price was highest in Clarke County at $441,000, followed by Frederick County at $372,000, Warren County at $359,000 and Winchester at $302,000. The lowest average sale price was in Shenandoah County at $291,000.
Across the region, the average sale price for a three-bedroom, two-bath home is $326,000. That's up 17.3% compared to the second quarter last year. Shenandoah County saw the largest increase in average home sale prices compared to the same quarter last year, rising 31.9%. Warren County had a 26.85% increase while Winchester saw a 17% rise, Frederick County had a 9.4% increase and Clarke County a 10.8% bump.
“Homes are selling higher and faster in the current market, and that is good news for sellers,” Cooper said. “No matter where a community is in the five areas, they all saw a higher sales prices over the original list price in the 0-30 days on the market category. Again, that is good news for sellers.”