According to the National Association of Realtors (NAR), 2016 was a great year for the area’s real estate markets. Roanoke Valley real estate agents agree that business was brisk, prices were trending upwards, and the Federal Reserve kept interest rates extremely low. Unsurprisingly, as late as October 2016, the National Association of Realtors, the Mortgage Bankers Association, and Fannie Mae and Freddie Mac were predicting that home sales nationwide were really going to heat up in 2017.
But later in the fourth quarter of 2016, NAR projections had cooled considerably. With national election results that were surprising to many sectors, speculation on what the new administration would mean for real estate in the coming years began. The first concern for many in the business was the Fed’s anticipated hike in mortgage lending rates, the first of which occurred in December 2016, making money for housing slightly more expensive to obtain. The second concern was inventory of what they called affordable housing. NAR conducted a survey in the fourth quarter of 2016, and found that there was a significant decrease in consumer confidence as we enter the 2017 market. But here’s the thing: Consumers’ confidence was not that they couldn’t find a house, but that the house in question would be affordable.
Affordability appears to be the new buzzword for real estate in 2017. The definition of affordable encompasses more than just the pricing of the home, but includes possible resale value, condition of the home, and costs associated with owning the home (think homeowners association dues, commuting time,
or costs of utilities).
Despite a certain sense of healthy caution however, NAR is still projecting a sunny outlook for real estate in 2017 for several reasons:
- the interest rates, though rising, are going up at a very moderate pace;
- the risk of a housing “crash” is very low for the area;
- Millenials are now entering their prime home-buying years;
- the continued upward trend of the American economy
(the longest positive cycle in history).
In the Roanoke Valley, where markets have been on a steady but gradual climb out of the “Great Recession” since about 2010, real estate agents are upbeat about the outlook for the coming year. “Roanoke is really a pretty stable market,” says Jeannine Hanson of Long and Foster Realtors. “I think housing values will hold steady.” Holding steady on 2016 numbers of closed sales is a good thing. Even though banks are being cautious about lending money, and interest rates are on the rise, in Roanoke, houses are selling and so is land. And they are projected to keep on selling at a healthy pace in 2017.
In addition to a robust inventory, area real estate agents see the possibility of moderate increases in housing prices in the coming year, and even the current and projected interest rate hikes are unlikely to deter many buyers. As Kathy Chandler of MKB Realtors and the incoming president of Roanoke Valley Association of Realtors explains, “Yes, interest rates are going up, but not more than 5 percent—and that is still extremely low. You pay more interest on your car!” She encourages potential buyers to consider the math—an interest rate hike of a few tenths of a percentage point may only change a monthly mortgage payment by a few dollars. Interest rates themselves have been at historic lows with no increases since 2006, so we are overdue for some gentle correction.
Pat Joiner, also an agent with MKB Realtors, forecasts a 2017 with generally moderate growth. “I believe that most people feel really confident about our real estate market in Roanoke,” she says. “People continue to see owning a home as a safe, solid and valuable investment.” Chandler reports that there is about six months of inventory currently on the market. The delicate balance between supply and demand here in Roanoke is a far cry from the pre-recession years of the “housing bubble,” but the flip side is that it is a safer time to buy. “I don’t really see a large influx of houses coming in, and there is a healthy amount of pent-up demand,” Chandler says. Agents and clients are less intoxicated by unrealistic expectations, and are more measured and careful about their research and decision process. “2016 was our best year since 2006,” Chandler says. “Roanoke Valley Realtors have sold over a billion dollars in volume since then, and it is all good, steady, sustainable growth.”
Sellers Market? Buyers Market?
According to Roanoke Valley real estate agents, the market will display characteristics of both sellers and buyers markets, depending on a home’s location and affordability. According to Joiner, locations such as South Roanoke (in the city) and Southwestern Roanoke County are perennial favorites. Local agents say the segment of houses or condos priced between $200,000 and $350,000 are in the affordability “sweet spot”; inventory in that price range sells like proverbial hotcakes. Homeowners or builders who will be looking to sell a house in that range in 2017 should have no problem, provided it is in good shape and priced correctly.
What can sellers do to increase their chances for success in 2017? Educate yourself about the competition, price the home appropriately, and make sure that it shows well to potential buyers. The best way to educate yourself is to speak with someone who has been in real estate in the area. A licensed real estate agent will be able to give you individualized feedback on your home: its condition, location and current market value. In today’s market, the condition of your home is very important to its selling potential. Real estate agents may recommend updating paint colors, decluttering congested areas and refinishing floors. “We live in our homes and enjoy them as they are,” says Hanson, “but when you are getting a house ready to sell, you are competing with new homes.” She recommends spending the time and money up front to freshen up your home for sale.
Chandler agrees, stressing that you need to have your home ready to show from the first day on the market. “You want a home that is staged to show to its best potential every time,” Chandler advises. “Today’s buyers are savvy. They’ve done their research. They know where they want to be and what they want to pay. In my experience, buyers will say, ‘We don’t mind doing a little work,’ but they’ll go for bright and shiny every time.” For sellers who want to appeal to this more discerning buyer, the best advice is to have your home live up to those expectations as best it can.
For people looking to purchase a home or land in 2017, the advice is clear: Don’t sit on the fence! The days of competitive buyers markets when homes could be purchased for a fraction of their pre-2008 value are in the past. It appears unlikely that you will see plunging prices in 2017, so if you wait to make an offer because you hope the sellers will drop the price, you are likely to miss out. Especially as inventory continues to deplete, smart buyers need to be ready to move when the right house comes along. Educate yourself about the type of property you are interested in, talk with a bank about what you can afford, and enlist the services of a real estate professional to assist you in your search to prevent any unforeseen issues or disappointments. Real estate can be a volatile and challenging market to stay on top of, which is why the best real estate professionals will always recommend that you take time to interview several agents before selecting one who understands your situation and has the experience and expertise to be your best guide.
The real estate forecast for the Roanoke Valley is bright, with predictions of solid, steady, moderate growth across the market for 2017. The area continues to grow, with exponential growth in the bio-tech, medical research, and medical industries here, as well as the recent arrival of Deschutes Brewery. Roanoke has always been a town that people who were raised here want to return to, but now it seems the word is out, and people from all over the country are now settling in the Roanoke Valley. Many are attracted by the excellent climate, beauty of the surrounding Blue Ridge Mountains, and the myriad of outdoorsy offerings such as the Greenway. Others tout the many cultural opportunities, the increasing number of exceptional restaurants and breweries, and the ongoing revitalization of the charming downtown. Whatever it is that draws people, it appears that Roanoke will only continue to grow, and growth is good news for real estate. With a forecast like this—whether you are selling or buying, or just taking an active interest in the local market outlook—the year ahead for the Roanoke Valley looks sunny indeed.