This content is sponsored by Van Metre Homes.
There’s no doubt about it. With inventory at record lows, days on market measured in hours instead of days and escalating prices, the housing market in Northern Virginia is on fire. Loudoun County, in particular, continues to have the strongest market in the metro DC area.
To prepare for current market conditions, check out the top ten questions most frequently asked by homebuyers and sellers alike. Brian Davison, local expert and Group President of Van Metre Homes, shares the knowledge he’s accumulated while working for a local builder that has served the community for over 65 years.
- Historically speaking, how would you describe today’s real estate market?
In a single word: unprecedented. “I’ve been with Van Metre for over thirty-two years and it is the hottest market I’ve ever seen,” said Davidson. “There was a real estate boom in the early-2000’s leading up to 2008, but that was nothing compared to what we see happening right now.”
Inventory of both new and resale homes is down. Loudoun County, where Van Metre Homes is based, has the tightest supply of homes in the metro area. Current market conditions indicate that time on market has dropped from 1.5 months to just 0.4 month over the past year. The urgency surrounding the purchase of a new home is off the charts.
- What factors do you think contribute to current market conditions?
Historically low mortgage rates play a significant role in boosting the market. Excited to lock in low rates, buyers realize owning a home can be just as affordable as renting. Low interest rates feed affordable monthly payments.
There is also an increase in potential buyers as more millennials jump into the market, creating competition in a sector long dominated by other generations. “The millennials’ lifestyles are changing,” Davidson said. “Some are starting families and many just don’t want to be in an apartment or the city anymore.”
Plus, with the surge in teleworking brought on by the pandemic, people are more comfortable buying a home, even if it means living farther from their office. “The pandemic has taught all of us there’s a place in this world for flexible schedules and teleworking, and that’s been a key factor,” said Davidson.
- What do you consider to be the biggest challenge to purchasing a home right now?
The most significant challenge homebuyers face right now is finding a property. Searching for the perfect home becomes difficult when demand is high and inventory low.
The new and resale home markets face slightly different challenges. For existing homes, buyers may put down multiple offers and repeatedly lose bidding wars. “There are so many people vying for those homes,” said Davidson. “It’s definitely a seller’s market.” Resale buyers also face price escalation clauses and home inspection waivers.
While new home buyers do not have to deal with these ordeals, they may face challenges regarding appointment and homesite availability limitations. Davidson pointed out that builders are also dealing with an increase in material costs “by periodically raising prices and limiting the number of houses sold each month.” The assuring aspect of new homes, however, is that buyers don’t have to worry about price escalation clauses or homes delivering without warranties.
- COVID-19 has changed the way we live. How are sales and construction processes different today than they were even a year ago?
Before COVID-19, the process of building a house would often require multiple subcontractors working near each other at the same time. For example, an electrician and plumber might simultaneously work in the same home. The pandemic has led to stricter, more regimented schedules where subcontractors stagger times to avoid running into each other.
The sales department still operates by appointment only, meaning prospective buyers must schedule a specific time to look at a model home rather than walking through unannounced. “Before the pandemic, we’d have multiple families walking through a model home at the same time,” said Davidson, noting that the company has recently written more contracts with people who have never physically set foot in a model home.
In those instances, virtual tools help customers remotely meet with a salesperson. 3D programs like Van Metre’s Build Your Own Home allow potential buyers to build and visualize their dream home by changing and personalizing designer options from wherever is convenient.
- With such a booming and competitive real estate market, how should I prepare to purchase a home?
An essential first step is getting pre-approved with a mortgage company to know exactly how much home you can afford. “Make sure that you know the ceiling on what you’re qualified for,” said Davidson. “That’s the biggest thing.”
Also, do your research. Know where you want to live, what floorplans you like and what options you want your new home to have. By identifying upfront what is important, you can act swiftly when the right opportunity presents itself. Time is of the essence in this market: be prepared to act quickly.
- How do I get pre-approved?
Getting pre-approved is a relatively simple process for homebuyers. All you need to do is reach out to a mortgage company, such as Intercoastal Mortgage, LLC, and provide basic documents, including financial statements and your social security number. The company verifies assets and income, checks credit history and ultimately provides a letter showing the maximum amount of money you can borrow. “Generally, mortgage companies can turn that around in one or two days,” said Davidson.
The lender determines how much mortgage you qualify for and provides a monthly payment estimate based on the information submitted. They also inform you of how much money you can expect to pay in closing costs. Your required down payment depends on the loan program selected.
- How much do I need for a down payment?
Down payments are more affordable than you might think. It’s important to know you do not necessarily need to have enough cash on hand for a 20% down payment. Various programs allow you to move in with down payments as low as 3.5% to 5% of the home’s purchase price.
A loan officer with Intercoastal Mortgage, LLC can help guide you to the best option and answer any questions you may have.
- What is your most significant piece of advice for people thinking about purchasing a new home today?
Davidson points out that the market is hot and getting even hotter, so if considering buying a home, now is the time to start the process. Don’t waste time by not being pre-approved on the front end.
And more than anything, be patient. With persistence and perseverance, you will move into your perfect home.
- Why is there a cost differential between new construction and resale homes?
Homebuyers typically pay more for new homes relative to existing homes because they are in perfect condition. Maintenance costs are much lower for new homes and they are more energy-efficient than older properties. “Newer is better, and you pay a cost differential for that,” said Davidson.
The peace of mind associated with living in a new home is unparalleled, especially in the current marketplace. Upon moving in, there are no worries about components breaking or replacement costs. Rest assured, the home is structurally sound. And Van Metre Homes provides buyers with a one-year limited warranty for items inside their house, plus a 10-year warranty for major structural defects.
When buyers choose a used home, these warranties don’t exist and homebuyers are typically saddled with long “to-do” lists, including remodeling, replacing windows, painting and buying new appliances.
- What are some of the benefits of purchasing a new versus resale home?
As previously noted, new home buyers receive warranties that back up anything that potentially goes wrong with their home. They have someone looking out for them and helping them along the way.
Almost as important and definitely more fun, new home buyers usually select the colors and finishes in their new home. Components such as cabinets, countertops and flooring are hand-selected to suit personal tastes.
Purchasing a resale home may also feel more intense, with buyers rushing to wire money so they can close their deal and move in as soon as possible. Timelines tend to be very compressed. According to Davidson, the process of buying a new home is more relaxed, as Van Metre delivers the home in roughly six to eight months.
“You have time to prepare to move in,” Davidson said. And when you do move in, you immediately know the history of the property. The home has no hidden defects; it’s ready to decorate. “You’re walking into a clean, brand new home in mint condition,” said Davidson. “You’re not going to have to paint. It’s all yours and no one else has lived in it.”