WOW, I know it’s been quite a long time since my last letter to you. My apologies! This has been an absolutely CRAZY Spring for real estate – both selling and renting. If you are a military family in transit, you know what I mean. Amazingly, when I speak with people around the US, I am hearing the same story almost everywhere – shortage of houses to buy or rent, bidding wars, crazy prices, waiving all contingencies – and even bidding wars on rentals! Interest rates have dipped back down again, and it seems that we have so many more families than usual moving this year.
What I see is a market shift, a bit like a minor earthquake when the tectonic plates make a sudden jump. Between late 2019 and today, in our area, home prices have gone up about 20%. That’s a HUGE movement in a short period of time (normal increase rates are 4% to 6% year-to-year). We’ve seen a significant number of tenants buy homes during this period. That’s another huge movement, as the younger generation are jumping into ownership, many for the first time. There had been a lot of talk about the Gen Y and Zers not ever wanting to buy homes, but it seems this year they’ve “bought in” to the value of ownership. And yes, here in Northern VA, we are finally seeing the promised Hi-Tech Effect – as those Amazon/Microsoft/Google/Facebook employees are now arriving, looking for homes.
Now is probably not the time to buy an investment property. But for some owners, it may be the time to cash-in on selling a rental. We’re doing that for many of our clients in fact, and for most, getting great results with high dollar, non-contingent "as is" sales. If you are thinking of doing this, consult with your tax advisor or CPA, to see if you will be affected by capital gains tax, and to understand your options. We frequently assist with 1031 exchange sales (selling a rental and buying a rental elsewhere), and are happy to talk to you about that process.
Did I mention that we were named one of the Top Real Estate Teams of 2021 by Northern Virginia Magazine again? : ) Go Team KHSM!
In other news – COVID rates continue to drop nicely in our area. In Virginia, about 42% of the population have received at least one vaccine, and about 30% have gotten both. Walk-in clinics are now open, and anyone 16 and over can get vaccinated. We’re seeing rates drop in most parts of the US, although there are still a few states that are struggling with outbreaks. The majority of new cases seem to be in younger people. By and large, life is returning to normal for many of us. One sign of this is that song books and hymnals are back in the churches! Another is that car traffic is almost back to pre-COVID rush hour volume. Ugh.
One of the biggest challenges with returning to normal, however, is the lack of available workers. Restaurants and construction companies in particular are having difficulty hiring and keeping employees. It is true that some would prefer to stay home and draw unemployment than go back to work (although of course, some legitimately need the financial help). Virginia is once again requiring those on unemployment to actually “look for a job,” but that’s not solving the problem in many areas. And unemployment scams are profuse – I have received over 6 notices recently from the Virginia Employment Commission of people trying to file fraudulent unemployment claims against my company – people I have never heard of, let alone having worked for me. These scams are being done by organized groups and in high volume – in Virginia someone can initiate an unemployment claim over the phone, and up front no one is verifying that the information is accurate. The VEC is overwhelmed with these fraudulent claims, and employees there are working overtime to deal with this crisis.
The lack of available workforce IS affecting us in property management. It is getting harder to find handymen and contractors to do quality work. Contractor business-owners are telling us they can’t find or retain workers. We are seeing delays in getting jobs done and it’s getting to be worrisome. This may ultimately mean that we’ll have to pay higher prices for repairs/renovation work, and material costs (lumber, appliance parts, etc.) have already gone way up. I am concerned that this situation will get worse before it gets better.
However, it is spring here. It seems in two weeks, we’ve seen the trees go from mostly bare to fully in leaf. Temperatures are going to be in the high 80s this week! The hummingbirds are back. Last week, I was able to take a brief mini-vacation with my husband to the Corvette Bash in Bowling Green KY, and really enjoyed the visit. Just enough time to catch my breath as we head full-on into the busy season for property management.
Feeling happy and blessed. Hoping the same for you and your family.
Betty and team
***quick PS - we're starting Spring AC checks for those with service contracts or who've asked us to do so - please let us know if you want to have your home checked as well - typical cost is $69 - $79 for the inspection/clean, more if coolant needs to be topped off or repairs made***