It’s not easy on the home front
Region’s low supply of residences for sale makes it challenging for potential buyers
Newlyweds Jennifer and Thomas Karnes tried to sweeten every deal to make themselves stand out in Hampton Roads’ tight real estate market.
The couple waived home inspections, made full-price offers without contingencies, offered escalation clauses thousands of dollars over asking price and 100% of closing costs, wrote “love” letters, sent preapproval letters in lieu of pre-qualification letters — and even offered one seller $100 worth of bitcoin.
Instead, they were outbid countless times, told by a real estate agent that “VA loans are trash,” and were met with repeated frustration and disappointment until finally closing a deal.
‘Multiple bids on each house’
Liz Moore, board president of the regional Real Estate Information Network, said it’s no secret the residential home inventory has been and remains low from Williamsburg to the North Carolina line — and across the entire country.
The number of homes for sale in Hampton Roads has been dropping every year. Buyers had roughly 2.5 times more options on the market in February 2020 than this past February, or 6,596 active listings compared with 2,501 listings, according to REIN data. The number of homes for sale dropped by 25% from 3,350 in February last year.
“There’s a significantly higher number of buyers in the market than we have listings for,” Moore said. “And so the challenge with that is it means there’s multiple buyers for every new listing that comes on the market and that often means there are multiple bids on each house.”
Buyers are finding themselves competing for listings, which tends to drive sales prices up, she said.
Old Dominion University economist Vinod Agarwal said the median sales price at the end of 2021 for existing homes in Hampton Roads was $279,000 — a9.4% increase from 2020.
“When new listings come, it takes only about a month for the market to basically clear,” he said. “Homes are simply selling faster than the supply that’s coming in.”
Many sell even before a “For Sale” sign can be placed outside, Agarwal said.
The median number of days homes in the region spent on the market was 11 in February compared with 20 a year ago, according to REIN. Hampton Roads home sales were down slightly, by 22 homes, or 1%, from February last year.
Rising mortgage rates present another affordability challenge now. The average 30-year fixedrate mortgage rose to 4.42% as of
March 24, an increase from 3.11% at the end of December, according to the Freddie Mac weekly survey. Mortgage rates had remained below 3% much of last year.
“I don’t think it will change in the immediately foreseeable future, but I do believe that interest rate hikes coupled with sellers who are realizing it’s a great time to jump on the bandwagon will bring more listings this spring and summer,” Moore said.
Patience and persistence required
The Karneses began looking for their house last spring before they married in October. Thomas, an Illinois native, was set to retired as a chief master sergeant from the Air Force at the beginning of the month and wanted to stay in the region.
Jennifer, a Chesapeake native, already experienced a tough market when she bought a small 1950s house near Naval Station Norfolk seven years ago. Hers was a full-price offer back then, and the fourth one on the house.
“I cannot imagine what this market is like for a firsttime home buyer looking for a starter home; I remember that feeling well,” she said.
Her plan was to build equity, move from that starter home and keep it as a rental property. But the couple want to take advantage of the seller’s market and realize the gain now. And living well below their means for several years enabled the couple to save cash and not have to sell until they found their next home.
Easier said than done.
“We went weeks without a listing even coming up,” said Jennifer, a civilian financial attorney for the Navy.
The couple looked at about 35 homes and bid competitively — within 24 hours of each showing — on six.
Their first offer, on a 1920s home in dire need of repair, was to be sold as-is. With a leaky roof and windows, the house also needed a costly paint job, but the Karneses made a full-price offer with no contingencies.
After days of waiting, they learned their offer was declined.
Ten minutes after another listing piqued their interest, the Karneses took off from work and dashed to see it but their vehicle got rear-ended on the way. Once they arrived, they had only 15 minutes to see the home, Jennifer said.
Still, they made an aggressive offer.
“We were so excited to finally be the first offer,” Jennifer said. “We were outbid. At least this time, they responded.”
Adjusting expectations
The final listing — the one that answered their prayers — was priced $150,000 over the Zestimate, a home value that real estate marketing platform Zillow presents online.
“We made an offer, and thankfully, were chosen,” she said.
That offer included waiving every inspection and paying every cost, including $50,000 over the listing price, but Jennifer said they were still outbid by $2,000.
“Luckily, we had a better structured deal and were chosen,” she said.
They originally sought a turn-key home in the mid-$500,000 range. They bought a fixer-upper in need of a new kitchen and bathrooms for $750,000.
Built in 1967, the 3,600-square-foot home has five bedrooms and four bathrooms. The daughter of an electrician and shipfitter, Jennifer said she crawled through the crawl space and the attic to do her own home inspection.
“At the end of the day, it’s high-stakes gambling at this point,” she said. “You have to ignore the competitiveness of the market going in and understand what you’re willing to give up, competitively structure your offer within that frame and adjust your expectations.”
Finally on March 24, the new Mr. and Mrs. Karnes accomplished their goal and walked over the threshold of their new home in the Thoroughgood section of Virginia Beach.