2018 | Real Estate Outlook
In the Roanoke Valley, springtime brings warmer weather, greening lawns and trees, and blooming bushes and flowers in yards across the area. In addition to azaleas and daffodils, many lawns will sport “For Sale” signs as well. Springtime is the most popular time to put a home on the market, and usually the time when the most real estate inventory is available and the largest volume of buyers are looking. Whether you are considering buying or selling a home in 2018, or just curious about how the real estate forecast will affect your own property values, understanding the trends and factors in the coming year will help you to make informed decisions. These days, the savvy homeowner and homebuyer is a welleducated one.
Last year, even with the first of the Federal Reserve interest rate increases on the books, real estate professionals across the area were correctly predicting solid growth, and agents such as Scott Avis, of MKB Realtors, feel that the strong market seen in 2017 will continue into 2018. “I think this is going to be the best year since 2008,” predicts Avis, drawing on both his real estate expertise plus over 20 years of construction experience. “Across the market, in all price ranges, there is growth.” Despite the interest rate increases, mortgage rates are still historically low, the stock market and the economy are booming, unemployment is down, and many buyers are looking to take advantage of low rates before they go up any further. All of this points to a 2018 where houses and land will be selling at a brisk pace.
In 2017 and early 2018, the challenge for buyers—particularly in the mid-priced range—was, and is, inventory. According to the National Association of Realtors, in late 2017 there were not enough houses on the market to meet demand, and as we look forward into 2018, the big question many are asking is: Will there be enough houses for buyers? “I am concerned that across the market and in all price ranges, there is low inventory in the Roanoke Valley,” says Avis. “The average days on the market are way down, and properties are seeing multiple offers.” Laws of supply and demand being what they are, the market may be poised to tip into the realm of a “seller’s market,” which is something that we have not seen in this country since before 2008.
There are several factors that influence the influx of buyers to our area. Virginia is close to Washington D.C. and the business hubs of the Northeast, but free of the associated congestion and expense. Our state enjoys the beauty of four seasons without many of the weather extremes of the Midwest or Deep South, and is more affordable in general than homes on the West Coast. The Roanoke Valley’s temperate climate, excellent healthcare, and outdoor attractions make it an appealing place for the two largest segments of home buyers in the market today: baby boomers and millennials. Bill Gearhart, president and principal broker with Coldwell Banker Townside, reflects that a growing number of homebuyers fall into these two categories. “I see more and more millennials coming into the market, yet the boomers are still buying,” he says. Baby boomers, now their retirement years, are looking for smaller, affordable, efficient houses that make sense for their stage of life. Ironically, the largest group of millennials turns 30 this year, and as they are settling down and starting families, they’re looking for much the same thing when buying a house. The healthcare, research, and industry sectors are also fueling an influx of new professionals who are looking for homes nearby. With inventory low since early last year, Gearhart predicts that more new homes will be built in the area. “After 2008, homebuilding slowed to a crawl,” Gearhart explains, “but now, as builders see the numbers of buyers competing for existing homes, they are starting to pick up the slack.”
So what makes a home or location “hot” in the current market? According to both Avis and Gearhart, the short answer is location, price, and condition. “Anything priced between $300,000 and $400,000 is going fast, though I’m also seeing an increase in sales over $500,000,” says Gearhart. “People are not as afraid to make that kind of investment as they were a few years ago.” Colleague Avis agrees. “I’d even say that anything below $500,000 in certain areas is pretty hot,” he adds. Salem, South Roanoke, parts of southeast and western Roanoke County, and Botetourt County are especially popular—as are the downtown Roanoke and Grandin/ Raleigh Court areas, particularly with young professionals. Avis says that many buyers are asking for certain features: main level living, semi-open floor plans, updated kitchens and baths, master suites, and in many cases, a well-tended yard. The most important feature though, is a well-maintained home. “Keep your home in good condition and do the necessary updates,” he advises. “Most buyers don’t have the time or desire to take on a ‘project’—You don’t generally see multiple bids on homes that need work.”
Advice to potential sellers
If you are a homeowner considering selling in 2018, you have picked a great year. With area inventory low, you should have plenty of interest provided your home is priced appropriately for its age and location, is well-maintained, and “staged” so that its best features can be appreciated. Susan Bailey, with Long and Foster Real Estate, is upbeat about sellers’ opportunities in the coming year. “We aren’t yet at what I’d call a ‘seller’s market’, where sellers will regularly get multiple offers,” Bailey explains, “but we’re getting there.” She also cautions potential sellers that most buyers are not interested in a house that requires a lot of work, so take care of any maintenance issues before putting your home on the market. Clean up and declutter the house and yard. Aim for a neutral palette so that prospective buyers can see the “bones” of your home without getting hung up on worn carpeting, or unusual or outdated paint choices. Update within reason, but don’t go overboard. “Realize that there are some things that you can’t claim as value immediately,” says Bailey. “A kitchen renovation can cost $50,000, but you won’t get every one of those dollars out of a sale.”
Experienced local agents will be able to give you expert advice and individualized suggestions for how to price and show your home to its best advantage. Bailey recommends doing research before signing with an agent, and says don’t be afraid to get several opinions on all suggestions—including asking price. “You are doing yourself a disservice if you aren’t interviewing at least three agents,” Bailey says. “If you sell your home within the first week, you’ll kick yourself because you could have done better.”
Advice to potential buyers
If you are planning to buy a home in 2018, prepare yourself for competition! Know that with lower inventory and larger numbers of buyers—especially in the more popular markets—you will need to act quickly when you find the right house because, chances are, there will be other buyers who feel the same way. Go through the mortgage prequalification process. This gives you and the potential seller confidence that this is a commitment you can afford, and can make a difference in how credible you appear to a seller. When you find the right home, do not hesitate. The days of waiting for weeks to see if a seller will drop the price or provide other concessions are probably over for now, especially in the geographical areas and price points that are currently seeing the most turnover. It is vital in these circumstances to have a real estate professional with detailed knowledge of the market, and who is a strong negotiator looking out for your best interests. If you know you are competing with several other buyers, prepare yourself to make your best and highest offer right away. Sometimes that will mean going over the asking price. “Be adaptable and realistic,” advises Bailey. “You can’t force a seller to price a house at your number, and you probably won’t find a home with everything on your wish list, so pick a couple of things to prioritize and look for those. Then when you find a place that fits, don’t hesitate!”
With a dearth of inventory in popular areas, for the first time in a long time the market is poised to favor sellers—particularly those selling updated, well-maintained properties in the soughtafter price ranges. Buyers will need to be prepared to be decisive, because in the forecasted 2018 market, the more laid-back buyers and fence-sitters will likely end up disappointed. With numbers of competing buyers in popular markets on the rise, this year’s inventory will likely move quickly. The good news is that the Roanoke Valley will likely see a continuing trend of higher closing prices and fewer days on the market across the board, and perhaps this will encourage more potential sellers to put their homes on the market, which could in time alleviate the inventory shortage.
Roanoke Valley homeowners have a lot to be positive about in the coming year. Homes are appreciating at a good rate in most areas, and those looking to sell will likely find that their homes spend fewer days on the market than in years past, and sell for much closer to their asking price. In their 2017 endof- year report, the Virginia REALTORS® association predicts the gradual, steady growth of the past few years to continue, and says, “The long term trend of continued growth indicates sustained improvement in the market.” Since steady growth indicates a healthy real estate market, with a regular convection of buyers and sellers, concerns about the risk of a real estate “bubble” abate. With all indications pointing toward a great year for real estate, the market looks healthy and likely to be brisk. Whether buying or selling a home in 2018, there is a lot to be optimistic about in the Roanoke Valley.