In 2019, Dawn Arruda, a real estate agent for RE/MAX Regency based in Warrenton, told Fauquier Now that the housing market in Fauquier and Northern Virginia was starting to take off.
“We were in a market where we were putting a house on the market and it would probably be under contract within a week to 10 days,” she said. “And most of the time, everyone would set it right where the market value should be.”
But when the pandemic hit, local agents, including Arruda, began to panic because they believed an economic downturn meant people wouldn’t want to sell their homes, let alone buy one.
“And everyone was like, ‘oh no, this is going to be horrible, nobody’s going to want to move,'” she said.
However, the opposite happened.
Arruda said everyone started selling their homes en masse for two reasons: one, interest rates were low, so more people could afford to buy a home because their mortgage rates were lower, often lower than the rent.
“If a rental unit is $2,400 a month and I can buy a house for $2,100 a month, that makes more sense,” Arruda said. “What makes more sense to buy a house that will make you richer, or to pay someone else’s mortgage that will only make them richer?”
Second, there was high demand and low housing inventory, which meant more people were vying for the same homes — especially in places like Fauquier — which sent home values skyrocketing.
“People were looking to get this out in Fauquier County; they wanted to get out of town,” Arruda said. “ has probably been one of the best years for most realtors in this field since I can remember.
But, two years later, the demand for homes has not diminished, according to Arruda. Inventories are still low, she said, and home values are increasingly inflated due to the number of people still looking to buy.
Arruda, who works with buyers and sellers across the state, said a client she worked with, Ashley Wang, had eight home deals from January through February. But it was rejected each time because someone outbid it and/or waived their inspections.
“We went after every townhouse that came up and offered to ask too much and got to the point where we released home inspections,” Arruda said. “And we were still losing $50,000 [cash down].”
Wang, 38, was buying a first home looking for a small townhouse for herself and her 12-year-old daughter. Wang said she wanted to buy a house 10 years ago, but her husband died in 2015, then her father fell ill soon after, so she and her daughter moved in with Wang’s parents to get away. take care of them.
Wang was finally ready to buy a house in December 2021, but after months of constant rejection, she almost gave up due to the competitive bidding wars for houses.
“A $475,000 listing sets the stage for a bidding war for everyone else because people now know that property [appraised at $500,000] sells below [market value]…” she said. “Now your base is at $500,000 and the next person is going to say, ‘Okay, well, I’m giving up everything, and then we’re going to add another $20,000. This happened several times when the house was listed at $475,000 and I was beaten in cash at $540,000.
Eventually, Wang bought a house in Gainesville. But Arruda had to present the seller with a “blind offer”, meaning Wang would buy the house without ever having seen it.
“[Wang] got the house for $525,000, but she didn’t have to go into a bidding war,” Arruda said. And when we got to the house walkthrough, everything was perfect. She was so happy. She was in tears. She was so thrilled with how the transaction went.
“But that’s what you have to do,” she added. “You have to be creative in a market like this.”
Terrie Owens, another Warrenton-based agent and president of Greater Piedmont Realtors, told Fauquier Now that many people, especially first-time home buyers, in Fauquier will struggle to find a home under $500,000. $.
As of March 24, there were 62 homes active (ready to sell) and for sale in Fauquier, with the majority costing more than $700,000, according to Owens. She noted that there are also 20 additional homes “coming soon.” Here is the breakdown of prices for houses for sale in Fauquier as of March 25:
4 units cost between $70,000 and $200,000
4 units are priced between $200,000 and $350,000
15 units are priced between $350,000 and $500,000
15 units are priced between $500,000 and $700,000
16 units are priced between $700 and $999,000
28 units are priced over $1 million
And the number of rentals in Fauquier is even more lamentable.
In recent years, Owens noted that the number of rentals in Fauquier has dropped dramatically. As of March 24, there were 12 active rentals in Fauquier — three times fewer than in March 2019 — with the lowest price set at $1,550 and the highest at $3,300, according to Owens.
“[The housing market] doesn’t get better,” Owens said.
But Arruda said there were positive signs that the housing market was starting to catch up with demand. In March, she noted that there were 1.8 million housing starts, meaning 1.8 million homes started construction.
“New construction also means other people will start moving out of other homes,” Arruda said. “I call it a domino effect or a staircase effect.”
What Arruda means by the “domino effect” is that if more houses are built, the more houses people can buy – thus, demand goes down. But this does not necessarily mean that demand will fall in Fauquier and the supply of accommodation in the department over the past few years has not shown signs of improving.
Arruda said she doesn’t believe Fauquier’s real estate market is weaker than surrounding counties. Wang is a good example. But Arruda acknowledged that “inventory is a problem”.
And the lack of affordable housing could have consequences for the local economy.
Lisa Sturtevant, chief economist for Virginia REALTORS, told Fauquier Now that low inventory is a problem because the real estate market is a key driver of the local and national economy. If workers cannot relocate due to a lack of housing affordability or availability, businesses cannot attract or retain workers, she noted.
Virginia’s housing shortage isn’t a new problem, Sturtevant said, but she noted it has worsened. At the end of February, there was less than a month of housing supply in the entire state of Virginia – 5-6 months of housing supply is the normal threshold for a healthy housing market.
Arruda and Owens said they believe that if people find the right real estate agent, it could help people find the right home for them. But they noted that if people are looking to buy, they will need to be aggressive in this market.
“Real estate agents are hugely valuable and they are actually more valuable in this market than any other market,” Arruda said. And the reason is that as a buyer’s agent, they have to think outside the box to find that home for their buyer.
Wang said she agrees that having a knowledgeable real estate agent and lender has been a game-changer for her. She noted that without her realtor and lender working together to waive things, such as financial contingency, it might not have been possible to buy her home.
Still, she said if someone is serious about buying a home, it’s not without risk.
“I think for you to be in this market, you almost have to have a sense of desperation or you really like the game,” Wang said.