As measured by a poll taken by Roanoke College, Virginians are feeling optimistic about the real estate market, a trend continuing from the last such poll in February.
While real estate market figures have been improving in Williamsburg, buyers and sellers here seem a little more "conservative" about the local market, according to Linda Kinsman, executive director of the Williamsburg Area Association of Realtors.
A new state law that went into effect Tuesday to aid first-time homeowners could lead to greater buyer optimism.
Buyers and sellers report growing optimism as 47 percent of respondents believe it is a better time to sell today than a year ago. This figure falls to 43 percent of respondents when asked about selling a year from now. Low mortgage rates, inventories and higher prices are the top reasons given by respondents for selling optimism.
On the other side of the real estate market, 43 percent of buyers believe that today is a better time to buy than a year ago, although only 33 percent of buyers consider this will be true over the coming year. The leading sources of optimism among buyers include low interest rates, prices and an improving economy.
Considerable differences exist across the state. Northern Virginia sellers are very positive about current and future conditions. In contrast, there is pessimism in Southwestern Virginia and the Shenandoah Valley. More respondents in these regions were pessimistic about current selling conditions than were optimistic. Buyers are the most optimistic about current conditions in the Tidewater region, likely due to the passage of the Homeowner Flood Insurance Affordability Act of 2014.
Sentiments about the current condition of the real estate market have changed little over the past four months, with close to 30 percent of respondents in the Roanoke College poll feeling more optimistic than pessimistic about the market today and over the course of the coming year. Close to 60 percent of Virginians believe that the condition of the real estate market has improved since last year, a 3-point reduction since February 2014. And 55 percent believe that conditions will improve over the next year, a 3-point increase since February.
Kinsman said there was probably a reason for that.
"Some have noted a slight pause in the housing recovery this year, most likely attributable to the harsh winter," she said.
Sale prices and other real estate market outcomes depend upon a variety of factors influencing buyers and sellers, according to an analysis of the polls. Several positive items are likely playing a role. The Virginia labor market is considerably stronger than the nation as a whole, with seasonally adjusted unemployment at 5.2 percent compared to 6.3 percent nationwide.
Prices for goods and services have remained relatively low since the recent economic recession. Housing inventories, while still low, are beginning to increase in many areas of the Commonwealth, including Northern and Central Virginia, likely due to fears of future rate hikes. Low inventories are a boon to sellers and drive real estate prices up as buyers compete for few available listings.
Kinsman said local inventories aren't low, which may make potential buyers and sellers more conservative.
When comparing 2014 to 2013, May statistics, locally, show that new listings were up approximately 12 percent (164 vs. 184), according to Kinsman, for single-family detached homes and the same for single-family attached properties (35 vs. 55). Pending sales decreased 17.5 percent for single-family detached homes (103 vs. 84) and 11.8 percent for single-family attached (34 vs. 30) properties.
Closed sales remained fairly steady: 111 vs. 103 for detached and 35 vs. 35 for attached. The median sales price was up 17.7 percent to $379,000 for single-family detached homes (2013: $344,990) and down 2.2 percent for single-family attached at $220,000 (2013: $224,900).
"The month's supply of inventory was even with last year for both property types (8.4). Our year-to- date average percentage of list price to sale price continues strong at 97.48 percent and days on market have dropped slightly from this same time last year," Kinsman said. " Since prices don't indicate a shortage of inventory, we conclude that market participants are feeling conservative and that we may have settled into a slow and steady growth."
Virginia's real estate market is facing potential push backs. Mortgage rates are trending upward year-over-year, although they have fallen in recent months, according to Roanoke College. On June 20, zillow.com reported an average mortgage rate of 4.04 percent in Virginia for a 30-year fixed rate mortgage with at least 20 percent down and a credit score of 740. Credit markets remain tight, deterring borrowing and buyers.
However, optimism in the real estate market continues to rise, among sellers more so than buyers.
But a new change to state law might encourage buyers.
On July 1 a new law went into effect that makes it easier for Virginians to save for their first homes. The First-time Home buyer Savings Plans, HB331, helps Virginians prepare for homeownership, reminds them how important it is and is designed to improve the long-term health of the housing market. It was the major legislative priority of the Virginia Association of Realtors in the 2014 session of the General Assembly.
Virginians will now be able to invest up to $50,000 in financial institutions like credit unions and banks or directly in mutual funds, brokerage accounts or almost any other financial vehicle and declare them first-time home buyer savings plans. The gains or earnings on the investment are free of state taxes. The funds can be used for down payments and closing costs on first home purchases in Virginia.