The pandemic may be making it more difficult for people to buy a home.
According to a recent LinkedIn study, Richmond is third in the nation for attracting new residents during the pandemic, and homes are selling at prices 15% higher on average than last year.
“We’re number three in the U.S.,” said Christine Mottley, realtor with One South Realty in Richmond. “That is crazy. That’s causing a huge problem here.”
Mottley said there’s a major inventory problem right now because there are more people hoping to buy a new home, and not enough homes on the market.
“Millennials are a big factor,” Mottley explained. “Millennials are the biggest population right now. And they are ready to buy homes. They’re tired of their small apartments, and they’re ready to move on to be homeowners. And there’s just not affordable housing, and the affordable housing, we can’t even build it. It’s just not available out there.”
Mottley said on Saturday, she was planning to take a client to see five homes and by 10 a.m., four of them were already off the market.
“Buyers need to be prepared, especially my first time home-buyers,” she noted. “You’ve got to leverage all your assets and go all in with your with your offer. And it’s scary, I get it. I mean, I’m a homeowner, and I work hard. But that’s what it’s taken to to win these bids. Also, have a professional real estate agent that knows how to navigate and work through and know how to put in a strong competing offer.”
Mottley also said she’s heard of one home in the city that was listed for $750,000 selling for $850,000.
It’s not just buying that’s more expensive, Mottley said the cost to build is skyrocketing, as basic sheathing for floorboards and roof sheathing used to cost $8 a sheet. It’s $38 dollars right now. Lumber has also gone up three to four times in price.
“I was with a buyer, just this week, they’re getting ready to put their contract together to build, and they’re not getting in it until next spring,” Mottley said. “And a lot of times, it’s not just the the prices of the lumber, but also the appliances, they’re six weeks out, you know, lighting, things like that everything, the whole timing for everything is just taking so long.”
Mottley said the rise in market value of homes is different than what we experienced during the 2008 housing market.
“Back in 2008, they were creating buyers, basically, everyone was getting approved,” Mottley noted. “Also, they had adjustable rate mortgages back then. So, you were locking in at a low rate, and then it would just go up, and they couldn’t afford it. Underwriting was very loose back in those days. Now, it’s really tight.”
Experts don’t expect the market to crash or the prices and values of homes falling anytime soon.
Mottley wants renters to realize they might have to pay over the appraised value of a home in order to compete with the other offers on the table, and be prepared to cover closing costs yourself.