As you can see, the craziness of the Hampton Roads real estate market in 2020 has just extended into 2021, with even less inventory which is driving prices up even higher. Sellers are clearly in the driving seat, forcing buyers to offer concessions such as offering way over list price, guaranteeing the price, even if the appraisal comes in less, eliminating any and all inspection contingencies, allowing sellers to rent back until they can close on a new property, and in some cases buyers are even offering to pay the seller’s closing costs! Some people are afraid we are in a bubble just like we were back in 2008, but I beg to differ. If you take into account the record low interest rates, it is easy to justify offering a higher price on a house you plan to hold for a long time, because the overall amortized price you are paying is driven down by the lower interest rates. With a lower interest rate, people can afford a lot more house!
Because lack of supply is driving our price increases and not loose lending practices, it is not likely that we will see a drastic market correction like we did a dozen years ago. Buyers can afford what they are buying, even if they are paying more than appraised value at the time of purchase. This just means buyers will have to hold property for longer to gain enough equity to be able to sell without bringing money to the table to pay off a mortgage.
Don’t be afraid to jump in to purchase a property in any of our Hampton Roads cities of Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Hampton or Newport News! There is never a bad time to invest in real estate, especially in a military area like South East Virginia.
Check out the latest market statistics put out by REIN, the Hampton Roads Multiple Listing Services. As you can see, inventory continues to decline, while sales prices continue to rise. It is getting harder and harder for real estate investors to find properties to buy that meet their defined criteria in all property types, from single family to large apartment complexes. This doesn’t mean it is impossible to buy, and doesn’t mean you should halt your buying activities until the market shifts. Even if a property has no equity on the day you purchase it, every rent payment your tenant makes is one payment into your retirement account that you don’t have to make yourself! What other retirement vehicle exists that someone else pays for? Only pensions and real estate investment property!
As you are shopping in any of our Hampton Roads, VA cities of Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Hampton or Newport News, PMI Virginia is happy to provide you with a free rental range report for your prospective purchases. Just fill out the form at the link below to request a FREE RENTAL ANALYSIS.