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Economics 101: With demand outstripping supply, the local housing market has taken on new competition-driven traits – Chesterfield Observer

Originals courtesy of FREEPIK

While other areas of the region saw big year-over-year increases in home closings by March — at least on a percentage basis — Chesterfield County’s business volume dominated central Virginia, according to Integra Realty Resources in Richmond.

In 2021, 2,037 homes were sold for the year ending in March, and this year the volume has been relatively unchanged, having barely increased to 2,044 new homes.

According to Integra, the county’s top five subdivisions, which ranged from new home closings, are Harpers Mill, RounTrey, Foxcreek, Magnolia Green and Silverleaf.

The underlying geography – the size of Chesterfield – and its steadily growing population continue to drive new home construction and resale activity in the county, says Tom Tyler, director of housing markets for Integra.

“It obviously has more stock, and it also benefits from having major scheme communities out there, like Magnolia Green and Harper’s Mill that have been in development for years, section after section,” Tyler says. “So, new sections of these communities keep popping up online, and that kind of helps keep inventory a bit. On the flip side of that, I think if you ask a home builder: Is there enough stock of land in the county, it’s likely to say no.”

Laura Lafayette, CEO of the Richmond Association of Realtors ASH DANIEL

Laura Lafayette, CEO of the Richmond Association of Realtors ASH DANIEL

It’s exactly the equation of supply and demand that tells the story of local real estate in Central Virginia, says Laura Lafayette, CEO of the Richmond Association of Realtors.

“We haven’t had enough stock for several years, and that’s a trend we’ve seen,” Lafayette says. She adds, “Since the housing slump in 2008,” 09, “2010, we haven’t seen housing begin to recover in the way we need to in order to have an adequate supply of housing.”

Eliminate the impact of the paradigm shift of the COVID-19 pandemic, the rise of remote jobs, supply-related inflationary pressures, and your parents’ real estate market.

Lafayette explains that the degree of difficulty has increased for both the beginnings of new homes and the resale market.

She says, “New construction is hard to project on the ground, and certainly hard to feature in whatever shape, shape or form is affordable. Labor shortages, supply chain issues, and cost of materials have exacerbated the cost of new construction.

“In terms of resale, there are many reasons why we don’t see people putting their homes on the market,” Lafayette continues. “You know, there are a lot of people who have refinanced — they get a very low interest rate, so they might be able to sell high, but have to buy high.”

This and more, she says, further complicates the demand for home inventory.

“Now, if you’re selling your house and it’s downsized dramatically – or you’re at some point in your life where you want to sell your house and move into the seniors community or something – you might have a reason to sell. But when people realize they have to sell at a high price And buying at a high rate, it could cause them to pause, especially if they are sitting on a really low interest rate.”

Anyone who has had their family or friends while shopping for a new home in the past couple of years has heard of a catalog of real estate properties.

And when there are so many economic variables in play, what exactly creates demand?

For those in the market, there is one major factor moving the real estate numbers in Central Virginia: quality of life.

It’s less of a problem than a challenge driving the current housing market, says Catherine Ooty, a realtor with regional Rashkin Saunders & Co. “It’s very easy to live here,” she says, explaining that she has noticed strong interest in the local area from buyers outside the region and even from outside the United States.

Ottie notes that one reason this is so important is the rise of work-from-home jobs, allowing people to move from anywhere to a place where rush hour, compared to, say, the capital, is nonexistent. Homebuyers from larger markets can find more value and bargains than anywhere else.

She says the trend of remote work has figured out more in homebuyers’ design preferences as well.

“In general, home offices are huge. A lot of people have been sent home from work, and in many cases, I think that’s permanent. … Most people I offer homes to — even single people — want a home office,” says Ottie. “They want some space they can buy to work from. And I think the home office was just such an unusual thing, and now it’s almost mandatory for most people.”

She adds that the changing economy has focused buyers on affordability, but venturing is off the cards for most buyers, given how competitive the market is. Ooty, who has been in real estate for nearly a decade, says the home buying market is more competitive than ever, and typical buyer trends and requirements have changed dramatically.

“People have done all kinds of crazy things,” Ottie says. Buyers offer to cover seller closing costs. I just sold a house, and the buyer gave the seller free rent so he could stay in the house a little longer after closing.”

She adds that the tendency of buyers to forgo home inspections has become normal, and they are now also offering to forego appraisals by the lender, an option often available to buyers who have a bigger budget to close the deal.

Tight inventory in the housing market has slowed activity for some, and the pace of plane-fueled home sales since the pandemic in the rearview mirror, Lafayette says.

“This year will be the first year since 2011 that we haven’t seen an increase in sales year over year,” she says. Despite the pandemic, [2020] It was an exceptional year for real estate – the best of the century – and then 2021 has already passed 2020. But we don’t think that will happen this year. …so, it was an extraordinary run. ” ¦

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