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The Danger of the Unsolicited Offer

January 17, 2022 By Rick Jarvis

The phone rings –– you don’t recognize the number, so you answer.

On the other line is a Realtor, who says that they have a buyer who is interested in buying your property, and that they have a written offer in their hand. Would you consider selling it?

Well, you know that the market is good and that prices have gone up, so you engage.

‘How much?’ you ask. 

The Realtor on the other end of the phone tells you a number that is way above what you ever dreamed your home could fetch –– AND you wouldn’t have to pay a listing fee. 

You do some quick math –– sales price, back out a small commission for the agent, subtract what you owe –– and try to contain your excitement. 

You hadn’t planned on selling, but that is a pretty big number. 

You say, ‘Send it to me …’

The Money You Missed

A large chunk of money is hard to resist when offered –– especially when you aren’t expecting it –– and it can catch you off guard.

But do you know what is better than a high sales price? A HIGHER sales price with better terms. 

‘And how exactly do you propose that one turns a large payoff to an even larger one?’ you might ask.

Easy, you leverage the greatest invention in the history of mankind when it comes to housing –– the Realtor Multiple Listing Service (MLS.)

How to Harness the Power of MLS

So how exactly does MLS create value for the seller?

Simple –– it harnesses the power of the network and amplifies it to your benefit.

MLS tracks somewhere between 95% and 99% of all real estate transactions –– meaning that anyone who is serious about purchasing a home uses it as their primary mode of finding a home.

Yeah, I get it. Zillow, Trulia, Realtor.com have the same info and better user interfaces yadda yadda yadda, but guess where Zillow et al get their information? You guessed it, MLS.

So when you offer your home for sale and put it into MLS, you immediately broadcast its availability to a network of 6,000+ Realtors working with 95%+ of the buyers in your market (as well as ZIllow, Trulia, and Realtor.com, too.) 

The impact is nearly instantaneous –– everyone who needs a home comes rushing all at once to try to buy yours. 

Creating an Auction is Simple (if you know how)

If you have ever been to an auction, you’ve seen the impact.

If you only have one person who wants the item up for bid (which is rare), well it typically doesn’t get top dollar.

However, all it takes is two people vying for it –– and the price escalates quickly.

If you have three or more, you can guarantee the price will escalate well in excess of the item’s value –– and thus, the goal for any auctioneer is to tempt three or more people into a simultaneous bidding war. 

That is why sellers love (and buyers hate) auctions. Multiple buyers keep one another honest and force everyone to dig deep and pay up. 

Auctions identify the most desperate buyer and make that individual defeat everyone else to win the prize. And when there are hordes who all want the same thing, prices and terms reflect the fact that demand is well in excess of the supply.

And I have some good news –– good Realtors know to leverage MLS to create auction-like conditions. So if you know how to make MLS function as a de facto auction, you can create the most value imaginable for your selling clients. 

Unless, of course, someone sells their home without using MLS.

The Impact of Buyer Competition

When you bid at an auction for a piece of art, or maybe some other rare artifact, generally the price that is paid is the only thing that matters. 

Central Virginia Mls - Fill Online, Printable, Fillable, Blank | pdfFiller
A real estate contract dedicates one paragraph to price and another 10-15 pages to the remainder of the terms. A good listing agent knows how to shift a great deal of performance risk to the purchaser’s side.

When you sell real estate, price obviously matters, but so does the structure of the financing, amounts of the deposits, the terms of the inspections, the terms of the appraisal, any rent backs or other extended possession agreements, closing dates, personal property, etc. –– all of which create seller value over and above the price. 

So, while the competition will drive the price up, a shrewd seller (or more specifically, their agent) will leverage the competitive environment to simultaneously shift the remainder of the contract’s terms in favor of the seller. 

Examples 

An offer that is bid up to say, 10% over the asking price, but with an appraisal contingency that could bring the price back down if the appraisal is less than sales price, then the seller is at risk for the price to be reduced in the event of a low appraisal (happens all the time, by the way.)

An appraisal contingency is a contractual right the purchaser wants to maintain in any offer. However, if a competitive offer waives the appraisal contingency, it forces everyone’s hand and you typically see other offers follow suit.  

Similarly, if the purchaser offers a $10,000 deposit that returns to the purchaser in the event that their loan is denied, but someone else makes the deposit non-refundable, well the seller is in a far stronger position to leverage both offers to make the deposit non-refundable. 

When the seller has leverage, nearly all risk in the contract can be shifted from the seller to the purchaser.

Without multiple offers, the seller’s position isn’t nearly as strong.

Multi-Offer is Key

When you fail to expose a home to the market, you don’t allow competition to do its job.

In 2021, nearly 60% of the homes in all of our MLS received multiple offers –– an all time high. But, when you dig deeper and examine specific segments where inventory is especially low and demand is especially high, such as the affordable segment in Richmond’s West End, the number is even higher. 

Not only did 70% of the West End’s affordable homes sell for more than ask in 2021, look how far above the asking price they sold for …

So, when you cut a side deal with a tenant in your rental, or with your neighbor who has always coveted your private back yard, or you accept the unsolicited offer brought to you by an agent with ‘cash buyers from NY,’ you are squandering the leverage an MLS-inspired ‘auction’ creates to not only drive the price higher, but to shift the remainder of the terms well in your favor.

The bottom line is when buyers compete, sellers win. 

Summary

I fully acknowledge that sometimes taking an unsolicited offer or off-market sale makes sense, but the cases are far fewer than people would believe. The public just doesn’t understand the power they are giving up when they don’t let the world know that they are willing to sell. 

If you get an offer on your home but have not exposed it to MLS, please resist the urge to sell it –– even if you feel the price exceeds your expectation. You are leaving significant value on the table. 

Yes, saving some commission dollars may seem like a good idea, but I can guarantee you that the commission you save pales in comparison to the leverage you forfeit by not selling through the MLS in such an inventory-starved environment.

Perhaps in the future, when the market balances itself again, the ability to create a bidding war will subside and the commission you might save could make a back channel sale makes sense.

Today, however, is not that day. 

2022 Market Housing Market Forecast

January 14, 2022 By Rick Jarvis

Each year, we try to push out our thoughts about the housing market in the coming year.

2022 is no different.

The presentation we did this year we feel is one of the most important ones we have ever done.

Why?

Because the market conditions are quite frankly, unprecedented.

At no time in our history have we had so many extreme inputs to the market –– from inventory to stimulus to mortgage rates to inflation to migration –– everything.

To offer you a taste of what is in the presentation, here is a sample of what we see coming:

  • prices should continue to increase –– even possibly spike again
  • mortgage rates should rise
  • inventory conditions will continue to be near historic lows
  • migration to our region has never been higher
  • 2008 vs 2022 price analysis
  • new housing difficulties

And so much more…

Enjoy!

The Coming ‘Wave’ of Foreclosure

January 23, 2021 By Rick Jarvis

I am beginning to hear a lot of chatter about foreclosure right now. 

Spoiler alert –– don’t worry.

One of Biden’s first acts as President was to extend protection to homeowners experiencing hardship due to COVD

As we transition from one administration to the next, we are beginning to see where this administration stands on many issues –– and being someone who makes a living in real estate, Biden’s housing-related policies are of particular interest.

Unsurprisingly, in one of his first acts as President, Biden extended both COVID-related forbearance protection and the foreclosure moratorium in an attempt to keep those who lost jobs from being unceremoniously tossed out into the street for non-payment of their mortgage.

The System Shock

When COVID hit and we went into lockdown, it cost a lot of people their jobs.

For a slew of others, COVID may not have cost them their jobs, but their pay decreased sharply when their industries were decimated.

The spike in initial jobless claims (March 2020) still blows me away in its severity

When you have that many people become unemployed (or underemployed) as rapidly we did (see the unreal spike in the chart above), everything is impacted –– and housing was, of course, not spared. 

In the period immediately following the lockdowns, people started to make tough decisions about how to allocate their savings into an extremely uncertain future –– and not making a house payment became a choice many had to make.

Enter ‘forbearance.’

Forbearance

COVID has forced us to learn so many new terms –– ‘flatten the curve,’ ‘herd immunity,’ ‘mRNA,’ and ‘contact tracing’ to name a few. ‘Forbearance’ is yet another one and now at the front and center of COVID housing news.

Without getting too deep in the weeds, mortgage forbearance is basically the ability for a homeowner to (legally) stop making payments to the mortgage servicer for a period of time without fear of losing the home in foreclosure. 

Forbearance does not absolve the borrower of the debt, it just basically says ‘We both know that I can’t pay you right now because of COVID, but I will start paying you again when I have a job and we will work out how to make up the payments I missed.’

Right now, those who report the news are acting as if the two are one and the same.

It is as unfortunate as it is uninformed.

Foreclosure (vs. Forbearance)

While the words sound similar, they mean different things in the same way that ‘lose your house’ means something way different than ‘mortgage relief.’

Forbearance is temporary relief in making your mortgage payment –– foreclosure is the legal process that a lender must go through in order to seize your home for non-payment of your mortgage. 

When you are (legally) in forbearance, you don’t have to pay the bank, but you cannot have your home taken through foreclosure. If you stop making your mortgage payments but are not protected by some type of forbearance agreement, then the bank can take the home from you.

Note –– forbearance does not mean the same thing as mortgage delinquency or pre-foreclosure. Just because a borrower is in forbearance does not mean foreclosure is immenent.

Asset–Based Lending

2008 notwithstanding, lending money against an asset like housing is one of the safest forms of lending imaginable.

Why?

Borrowers tend to pay their mortgage above all other types of debts (credit cards, medical bills, student loans, boats and other do-dads, or other non-essential expenses) because being homeless sucks and foreclosure eviscerates your credit.

Thus, banks love to loan money against REAL assets –– and a house is a real asset (think REAL estate.)

Besides the fact that borrowers tend to make mortgage payments come hell or high water, there is an asset securing the loan:

  • If I, as a bank, extend you credit to buy a home and you don’t pay me, I can take your home and resell it to get my money back.
  • If I, as a bank, extend you credit to pay household expenses or Netflix (i.e. –– a credit card) and you don’t pay me, I can’t really take the food you have eaten or the movies you have watched and sell them to get my money back. 

And thus the reason that loans secured by assets are at lower rates than loads not secured by assets.

Appreciation = Protection

So not only are houses real assets –– houses tend to appreciate in value.

Yes, 2008 showed us that houses don’t ALWAYS go up in value, but for the large majority of history (including every year for the past 10 years,) housing values have marched forward in a stable, if not spectacular, manner.

The equity created by the simultaneous reduction of debt and appreciation in the price creates additional value in the home –– and that is critical to understanding the real risk to the market we are in.

Forbearance is Up, Foreclosure Will Not Be

Right now, the message being delivered by news and media outlets is forbearances are up sharply (which is true) and that the moratorium on foreclosure has been extended by presidential decree (which is also true) –– which, for the person who doesn’t follow the market in great detail, sounds ominous. 

It shouldn’t.

Foreclosures happen when TWO conditions occur:

  1. the owner cannot make the mortgage payment AND
  2. the house is worth less than the debt

Without both, foreclosure is unlikely.

If the debt owed > home value, the homeowner will have to write a check to the bank for the difference between the debt and the sales price when they sell it.

If the debt owed < home value, the homeowner will collect a check for the difference between the debt and the sales price when they sell it.

That is a massive difference.

Using real numbers:

  • if a home is worth $400,000 and the debt is $500,000, then the owner is incentivized to allow foreclosure and stick the bank with $100,000 loss
  • if a home is worth $400,000 and the debt on the home is $300,000, then the owner is incentivized to sell the home and pocket the $100,000

It is all about incentives. 

Homeowner Equity

So if foreclosure happens when the home is worth less than the debt, where do we stand right now?

From the Urban Institute (urban.org)

Using the chart above, when the yellow line falls below the blue line (negative equity), people are far more likely to get foreclosed on. When the yellow line is above the blue line, then the owner will sell the home and pay off the mortgage.

Right now, there has never been more collective equity in the US home market.

Do you really think foreclosure is going to be an issue?

Summary

I get it, we are still paying for the debacle that was 2008. The public sentiment is that when prices rise fast, bad things are about to happen. People remember the pain, but they don’t understand the reasons.

2008 was bad for sure, but the conditions that created the housing crisis of 2008 DO NOT EXIST TODAY.

Depending on whose research you want to believe, the current available housing under-supply is as severe as the housing over-supply was in 2008-2010.

Does that put it in perspective?

In our last blog, we wrote about how pricing was not likely to head down anytime soon, and (good news) foreclosures tend to move inversely with home price appreciation.

Right now, the lack of housing is pushing pricing higher as rapidly as in any other time in history and as equity increases, delinquent homeowners sell in lieu of electing foreclosure –– and this condition is unlikely to change in any meaningful way for the foreseeable future.

Articles such as this disingenuously deceive the reader in an attempt to garner clicks.

Yes, events that are not easily predicted can bring rapid changes to any market –– and will always be a threat –– but the threat to today’s housing market is not too many foreclosures. 

Will there be a few additional owners who end up losing their homes when forbearance ends? Yeah, perhaps. But you won’t notice.

Don’t let those who are uninformed frighten you about some coming wave of foreclosures.

They are –– in a word –– wrong. 

An Appraisal is Not Fair Market Value

August 30, 2020 By Rick Jarvis

Definition: Fair Market Value (FMV):

  1. A selling price for an item to which a buyer and seller can agree.
  2. The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.
  3. The price that property would sell for on the open market.

I once had a professor tell me that Fair Market Value was the price at which both sides felt like they got screwed (I loved that one!) but I will let the more formal definitions rule the day.

Fair Market Value is basically the price at which two willing parties can agree upon to exchange an asset. 

Ok Then, What is an Appraisal?

In real estate, an appraisal is a 3rd party analysis of a property’s value based on recent sales of comparable (similar) properties –– but that does not necessarily mean it represents fair market value.

The appraisal is nothing more than a (supposedly) qualified and (hopefully) impartial individual offering their opinion of the value of the home. The appraiser is hired by the lender (well, you actually pay for it even though the bank requires it) and is used to set the value upon which the loan amount will be based –– provided it is equal to or less than the purchase price.

So if you are getting a loan for, say, 80% of the value of the home, the bank will loan you 80% of what is either the price on the contract or the appraised value –– whichever one is lower. 

And to answer the question –– Yes, an appraisal is mandatory if you are getting any type of conventional loan to finance your property.

How Does an Appraiser Arrive at the Valuation?

Typically for residential purchases, appraisers employ the ‘Comparable Sales’ method. The Comparable Sales method uses 3 recent closed sales of similar properties –– makes adjustments for any differences –– and then computes a value. 

While there are other appraisal methods for income-producing property (the ‘Income Approach’) and unique properties where similar sales are few and far between (the ‘Replacement/Cost Approach’), the comparable sales approach is used in a large majority of cases when residential property is purchased. 

Rapidly Changing Conditions

For a moment, imagine the value of something OTHER than real estate.

What do you think the last Super Bowl ticket is worth? The $200 it says on the ticket or the $3,500 you can get for it on StubHub? And what do you think that ticket is worth on the day AFTER the Super Bowl? Not much …

And what do you think a bottle of water is worth in the middle of the Sahara? The $1.59 you paid at 7-11 or closer to $1,590 the person with the empty canteen just offered you?

You get the picture.

The point is that market values are fluid and constantly in flux depending on any number of reasons. And thus, as market conditions change, so does market value.

And trust me when I say this, this market is one of the most fluid markets in the history of real estate.

The Issue Now With Appraisals

As we like to say at One South, using past sales to predict future values is a bit like driving your car while looking out the rear view mirror. It will tell you where you’ve been, but not necessarily where you are going. 

This is especially true in the current environment. 

In a market where 10-15 offers is not uncommon and inventory levels are the lowest in history, past sales are always going to yield a value lower than where the market is trading.

Simple economics states that when demand exceeds supply, prices rise (and the converse) –– and when the number of buyers exceeds the number of sellers by as much as it currently does, it only makes the difference between the appraised value and the sales price that much larger. 

It’s frustrating that one of the most integral parts of the home buying process is so disconnected from actual values.  

The Mistake Buyers Make

The ‘Missed Appraisal’ (one where the appraised value is lower than the contract price) is extremely common right now –– especially when multiple offers are involved.

So for many buyers, the jubilation (and relief) of winning a competitive offer situation quickly turns to doubt when the appraised value is less than the price they paid. In effect, buyers allow a third party valuation opinion based on events in the past to cast doubt upon a decision made on current market inputs. 

Don’t.

Why?

Because the Appraisal is not Fair Market Value!!!

Yes, appraisals set the loan amount and when the appraisal comes in low the buyer needs to make up the difference in cash –– but remember, appraisals are really about the financing and not FMV!

I cannot overstate this enough –– the fair market value of the home and the appraised value are not the same thing. 

Things to Note About Appraisals

A few things to remember about the appraisal:

  • Appraisers never go through the houses they use as comps
  • Appraisers never talk to the purchaser, seller, lender, or (rarely) Realtors about the price
  • Appraisers cannot use PENDING sales in their analysis
  • Appraisers never visit the houses you didn’t purchase
  • Appraisers (typically) don’t how many offers were made on a house

I am not throwing appraisers under the bus, only pointing out the differences between purchasing a house and appraising one –– as well as the different set of rules appraisers must follow.

The bottom line is that no one knows as much about the decision as you do. 

Appraisers Are People

If you really want to have some fun, pick any home and take a look at the value that Zillow, Trulia, Realtor.com, Movoto, Realist, and/or the tax assessment assigned to it. I guarantee that each one is different –– sometimes shockingly so. 

Appraisers are no different. 

In the same way that Zillow (et al.) have different algorithms, so do people. Yes, the form that appraisers use is the same, but the comps they choose and the adjustment they make are subjective.

If you assigned 5 different appraisers to value the same home, odds are each one will arrive at a different value. 

It’s unfortunate, but it’s true.

Summary

Remember, appraisals, while important, are not gospel. They are just someone else’s opinion of value of a unique asset who did not see the other homes you did, who does not have your motivations, and who does not have your likes and dislikes. 

Your opinion of your decision is what matters –– not the appraiser’s. 

When markets are moving as quickly as this one is, don’t worry about the appraisal as it relates to the VALUE of the home you are buying. If you have done your homework and have made the best decision for your situation, then the appraisal is not what matters in the long run.

Trust your own gut and don’t sweat the appraisal.

The Best Time to Build a House –– EVER!

May 18, 2020 By Rick Jarvis

The world is weird right now –– no one will argue that.

The world is also quite uncertain now, too –– and I don’t think you will get an argument there, either. 

But that said, there has never been a better time to build a house –– and I will gladly engage in an argument as to why that is true.

Disclaimer

Now, when I say it is a great time to build, I am talking about the market, and not necessarily about the individual. 

If you are on an uncertain financial footing, then, no, it might not be a great time to build. Those whose industries are in the midst of a major reset or have exposure to a resurgence of COVID, then any long(er) term plans should probably be put on hold and liquid assets hoarded.

But for those whose financial positions are solid, there has not been a better opportunity to build a home in the last 50 years, if not longer.

Inventory 

Let’s begin with housing inventory.

Simply put, inventory was at record lows headed into COVID –– and COVID only exacerbated the problem.  

In the latter part of February and early March, inventory locally (and nationally) hit all-time lows. To give you a sense of the level of low, look at the chart below. 


The chart below shows inventory by MONTH


The chart below shows inventory by UNIT COUNT


Some submarkets had roughly 1 month of inventory, with most still operating with as little as 3. (For context, a market is considered balanced when it has 6 to 8 months of inventory.)

Each year that we have distanced ourselves from 2008, inventory has become increasingly more rare –– and 2020 was shaping up to be even lower than a record-low 2019.

Now, instead of the normal increase in resale inventory that typically appears for the spring market, COVID caused many homeowners to wait and NOT bring their properties to market.

NOT HELPFUL, COVID!

The traditional ‘March to May’ bump in available homes never materialized this year, and thus, the market has even fewer choices than last year’s ridiculous record low.

Perhaps the decision to sell will come later, but for now, the houses that we need to satisfy even a somewhat tempered spring demand are simply not there. 

The spring of 2021 will be absolute insanity.

Production and Housing Starts

So pretend for a moment you are a banker –– what is the first thing you do when the economy goes sideways? 

You stop lending, of course.

Credit contraction is the first reaction to economic upheaval and the one thing that the Fed and Treasury need to combat in order to minimize the impact of any financial crisis. 

So if you are a bank, are you going to encourage new home construction when you really have no idea how COVID will play out? Of course not. 

And therein lies the rub …

The homes that are currently under construction are almost all a result of contracts written last fall and this spring prior to COVID. 

In our market, roughly 50% of the homes built in any given year are ‘speculatively’ built (in other words, the home is started without a contract in hand in ‘speculation‘ that a buyer will emerge prior to completion.)

Housing starts had just started to recover to historically normal levels (see the chart above) in an attempt to make up for the decade long deficit in new home production –– oh well, so much for building the number of homes we need to.

So just to make sure you realize –– the market for new homes had been undersupplied for close to a decade AND the normal number of new homes that would have been speculatively built to try to handle the demand are not going to be started!

Uh-oh.

The lack of speculative building will manifest itself in the spring of 2021 and will mean a greatly reduced pool of new homes to choose from. With inventory levels already stressed, the lack of new homes will make homeownership even more challenging.

Preference Shift

One of the more interesting patterns to emerge from COVID is the population exodus from the large east coast metropolitan areas to smaller cities and/or suburbia.

Click the image to read the article.

COVID punishes density and places like NYC are already seeing a population electing to flee vertical properties, public transportation, and high cost of living for some grass, the (perceived) safety of their own car, and overall affordability.

Besides the safety aspect, Zoom and other virtual meeting platforms have proven that expensive office space and cumbersome travel is not as necessary as we thought to connect with clients.

Furthermore, the leading wave of the Millennial home-buying generation was already poised to begin the transition out of the cramped 1 bedroom apartment anyway –– COVID is simply accelerating the emergence of the trend.

This demographic shift will not be felt as acutely as some of the others discussed here, but over the longer haul, it will impact the need for more new construction and alter the distribution of population along the eastern seaboard.

Material Costs

So guess what COVID did to global demand? It basically killed it.

As much damage as COVID has done to the US economy, it pales in comparison to what happened (and is still happening) in China, Russia, much of Europe, and the Middle East.

Click the image to read the article.

In the latter part of 2019, much of the world was already arguably in a recession, and the onset of COVID has devastated what was already a weak global economy.

We’ve all heard about COVID’s impact on oil markets (literally negative pricing), but the cost of the other commodities has also plummeted. Metal (steel, iron, aluminum, copper), wood products, and other essential commodities are all down sharply due to lack of demand and will likely stay down as global demand abates.

So the good news here is that the cost of building a house has actually come DOWN for the first time in decades –– and that spells opportunity for those in position to take advantage of it.

Fear

Just so you realize, the largest one month drop in the Builder Confidence Index happened in April. 

Housing Market Index

BCI is now on par with the years immediately following both the Financial Crisis of 2008 and the 1987 Crash.

New construction sales have slowed precipitously, and the majority of the work in residential construction is the work that was contracted during the 2019 fall and early 2020 spring. 

So while I don’t think I would call builders desperate, I would call many of them concerned, and the opportunity to secure a good price is far greater now than it was even a few months ago. 

As Warren Buffet is so fond of saying, ‘When others are cautious, be bold.’

Interest Rates

And of course, there is the interest rate.

Whenever financial interruptions occur, the first thing the Federal Reserve and/or Treasury do is to relax monetary policy. In other words –– they make borrowing money cheaper.

Why? Because cheap money (typically) encourages economic activity. 

In the same way that the cost of oil is in everything, so is the cost of money –– and when borrowing is cheap, it makes a lot of sense to borrow for long term purchases. 

If you are going to borrow money, now is a phenomenal time to do so.

No Bidding Wars

So the cute little renovated bungalow you have been waiting for just showed up in MLS and showings start Sunday. You ping your agent and several texts later you are set to see the property at noon on the first day.

Buying today can feel like an auction

When you show up, you find out that you are one of 20 showings that day and the seller already has 3 offers in hand (2 are over the asking price,) and they are expecting another 5 more.

Ugggg.

Just so you realize, the scenario I just described is not as uncommon as you would think –– it is due simply to the lack of inventory.

So in order to be the winning offer, a purchaser will need to waive the inspection contingency, the appraisal contingency, and put down as much cash down as possible. And did I mention that you will probably also have to offer more than the asking price?

For many, that is next to impossible.

Now, imagine a scenario where you get a new home, with a full set of warranties, no waiver of inspection or appraisal contingencies, and you are the only offer.

I fully recognize that new homes tend to be built in new communities and the appeal of the 1950s renovated bungalow in a mature walkable neighborhood is powerful. But winning a competitive offer scenario is beyond many people’s means.

So if you are not in a position to win a competitive bid, then building a home can make a lot of sense.

Summary

Yes, I get it. It is hard to look at the condition of the world and think, ‘Hey! I have an idea –– let’s build a house!’

That said, the US economy is far less tied to the world’s economy than most realize, and thus, pay more attention to what is happening within our borders than outside of them. The news abroad is ugly for sure, but the US tends to be the exporters of recessions, not an importer of them.

There is still a reset that needs to occur for sure –– hospitality, travel, office space –– they all need to figure out what the new normal is. That will take some time for sure and cause some pain, but it will get worked out.

Other economic impacts aside, when you step back and take a long view, you will realize that the housing market was already massively undersupplied –– and COVID actually worsened the problem, not helped it.

So to repeat:

  • Resale inventory is at an all-time low
  • New home speculative building has largely ceased
  • A demographic shift away from the crowded northeastern urban markets is already underway
  • The cost of materials is at or near 20-year lows
  • Builders are a bit fearful and likely to be aggressive to win deals
  • Mortgage rates are stupid low
  • No bidding wars

I simply cannot imagine a better time to build a house. 

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I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.

kendall@richmondrelocation.net

Working With Buyers

I am Sarah Jarvis, Broker at One South and I work with our buyers. I bring 20+ years of experience to our Buyers Advocacy program and take great pride in helping our clients understand the RVA marketplace.

sarah@richmondrelocation.net

From the Blog

Where Are the Cranes?

One of the prettiest views of the Richmond skyline is as you approach the city from the south along 95. You can see the skyline of Downtown, the James River, Manchester, Shockoe and Church Hill as well as a host of other areas from the I95 Bridge. It gives you a sense of what Richmond is and …

[Read More...] about Where Are the Cranes?

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804.201.9683


How Do I Schedule a Showing?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.
kendall@richmondrelocation.net

804.305.2344


How Do I Determine What I Can Afford?

We offer competitive mortgage solutions with a commitment to exceed your expectations. We’re local industry experts who are also your friends and neighbors. Whether you want to communicate online or in person, we’re just a call or click away.
www.cfmortgagecorp.com
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Equal Housing

The Sarah Jarvis Team agrees to provide equal professional service without regard to the race, color, religion, sex, handicap, familial status, national origin or sexual orientation of any prospective client, customer, or of the residents of any community. Any request from a home seller, landlord, or buyer to act in a discriminatory manner will not be fulfilled.

IDX Disclaimer

All of the information displayed here is deemed to be gathered from reliable sources but no warranties, either express of implied, are made part of this site. Additionally, the IDX Feed for listing information may contain descriptions of properties not represented by One South Realty, its agents or staff and any violations or misrepresentations are the sole responsibility of the listing brokerage of the subject property in violation.

Contact The Sarah Jarvis Team

804.201.9683

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2314 West Main Street Richmond, VA 23220

sarah@richmondrelocation.net

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Chris Lester
Senior Loan Administrator
NMLS# 353830
804-307-7033
Email Southern Trust Mortgage

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Members of the Sarah Jarvis team are licensed in the Commonwealth of Virginia.

 

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