For Ayla and Patrick Joynt, the experience of shopping for their new home in Coastal Virginia was a rollercoaster ride. They were outbid not once, not twice, but three times on houses—at least one of which they describe as “a dream”—before they were finally holding a title and a set of keys. “We were starting to wonder what we were supposed to do,” says Ayla. “It was hard.”
The Joynts are not alone. The current real estate market is reminiscent of a couple of decades ago. Home sellers are seeing bidding wars that jack prices up above the listing price—in many cases, even over the appraisal price—people are waiving home inspections and paying the seller’s closing costs, and deals are being made within a couple of days after the homes are listed, sometimes even before a “For Sale” sign can go up in the yard.
However, the circumstances behind why this is happening are far different than the market conditions in the mid to late 2000s. “It’s the perfect storm of low interest rates that are causing buyers to be anxious to take advantage of the market before those rates start edging up, and the classic low inventory on the supply and demand spectrum,” explains Liz Moore, President of Liz Moore and Associates, a real estate firm based in Williamsburg. “You pull those two things together, a new listing hits the market, and generally speaking, it’s got multiple offers within days.”
It is an issue that is affecting the entire country. However, there are circumstances that are specific to our area that are exacerbating the problem. “A large part of what keeps our real estate market fluid, flowing and liquid is the military,” says Kim Finley McElvein of Swell Real Estate Company, based in Virginia Beach.
“They come in, they buy, they leave, they list. You have a lot of movement because of that. COVID stopped that right in its tracks. There was no PCSing (permanent change of station), for months and months. People just didn’t move. On top of that, you had the complication of children having to learn at home, largely. Trying to deal with a schedule of having children who are online or at least having to get online several times a day while you’re working from home, too? Forget it. So, you can see why people are just staying put and not trying to sell their homes. It’s just too stressful.”
From a buyer’s perspective, it’s just as stressful. “The first house we put a strong offer on, we got beat out,” says Ayla Joynt. “The second house, someone offered to pay in cash and we’re not talking about cheap houses. We’re talking in the mid-$350s. The third house was a dream. We wanted it so badly we were willing to put down $5,000 in earnest money. Somebody outbid us again.” Fortunately, Ayla and Patrick got into the fourth home they put a bid on even though they had to expand their search and go a little further out than they wanted.
What can you do if you’re in the market to buy now? Ayla offers the following: “Be patient. The right house is going to come up when it’s supposed to come up. Everything happens for a reason.” McElvein, Moore and Joynt also agree having an experienced real estate agent working for you to guide you through the muddy waters of today’s real estate climate is critical.
“It’s really important to have an agent that understands the market and can advise you on how to eliminate contingencies to write a really strong offer,” says Moore. “In some cases, we’re advising our buyers to write backup offers, so if the winning bidder gets buyer’s remorse after the fact, our clients are then able to step into the transaction without having to go through a bidding war to get it.”
Will the buyer’s market last? “We’re seeing the type of inventory problem that has not been known by people who have been in the business for 30 years,” says McElvein. “It’s never been seen, but it’s a unique circumstance. It’s not going to be like this forever. But truly, it’s getting a little bit better day by day.