Fauquier real estate agents are optimistic the regional housing shortage will sort itself out, but argue that bidding wars for homes in Fauquier are not likely to go away anytime soon – spelling trouble for first time homebuyers and the local economy.

Back in 2019, Dawn Arruda, a real estate agent for RE/MAX Regency based in Warrenton, told Fauquier Now the housing market in Fauquier and around Northern Virginia was starting to take off.

“We were in a market where we put a house on the market and it would probably go under contract within a week to 10 days,” she said. “And mostly everybody would price it right where the market value should be.”

But when the pandemic hit, local agents, including Arruda, started to panic because they believed an economic downturn meant people would not want to sell their homes, let alone buy one.

“And everybody was like, ‘oh no, this is gonna be horrible, nobody’s going to want to move,’” she said.

However, the opposite happened.

Arruda said everyone began selling their homes in mass for two reasons: first, interest rates were low, so more people could afford to buy a home because their mortgage rates were lower, often lower than rent.

“If a rental unit is $2,400 a month, and I can buy a house for $2,100 a month – what makes more sense,” Arruda said. “What makes more sense buying a house that is going to make you wealthier, or paying somebody else’s mortgage that is only going to make them wealthier?”

Second, there was a high demand and low housing inventory, meaning more people were competing for the same homes – especially in places like Fauquier – which caused home values to soar.

“People were looking for this to come out to Fauquier County; they were wanting to get out of the city,” Arruda said. “[2020] was probably one of the best years for most real estate agents in this area since I can remember.”

But, two years later, the demand for homes has not ebbed, according to Arruda. Inventory is still low, she said, and home values are becoming more and more inflated because of how many people are still looking to buy.

Arruda, who works with buyers and sellers all over the state, said that one client she worked with, Ashley Wang, put out eight offers on homes from January to February. But she was rejected every time because someone had outbid her and/or waived their inspections.

“We went after every townhouse that came up and we offered over-asking and we got to the point where we were releasing home inspections,” Arruda said. “And we were still losing at $50,000 [cash down].”

Wang, 38, was a first-time homebuyer looking for a small townhouse for her and her 12-year-old daughter. Wang said she wanted to buy a home 10 years ago, but her husband passed away in 2015, and then her father fell ill not long after so she and her daughter moved in with Wang’s parents to take care of them.

Wang was finally ready to buy a home in December 2021, but after months of constant rejection she almost gave up because of how competitive the bidding wars for homes had become.

“A listing for $475,000 opens everybody else up for a bid war because now people know that the property [appraised at $500,000] is selling below [market value]…” she said. “Now your base is at $500,000 and the next person is going to say, ‘Okay, well I waive everything and then we’re going to add an additional $20,000. That happened multiple times when the house was listed at $475,000 and I got beat out by cash at $540,000.”

Eventually, Wang did purchase a home in Gainesville. But Arruda had to pitch the seller a “blind offer,” meaning Wang would buy the house without ever having seen it.

“[Wang] got the house for $525,000 but she didn’t have to get into a bidding war,” Arruda said. And when we got to the house walkthrough, everything was perfect. She was so happy. She was in tears. She was just so thrilled about how the transaction went.”

“But that’s what you have to do,” she added. “You have to get that creative in a market like this.”

Terrie Owens, another agent based in Warrenton and president of the Greater Piedmont Realtors, told Fauquier Now that many people, especially first-time homebuyers, in Fauquier will be hard pressed to find a home below $500,000.

As of March 24, there were 62 active (ready to sell) and homes for sale in Fauquier with the majority priced over $700,000, according to Owens. She noted there are also an additional 20 homes that are “coming soon.” Here is the breakdown in price of homes for sale in Fauquier as of March 25:

4 units are priced between $70K – $200K
4 units are priced between $200K – $350K
15 units are priced between $350K – $500K
15 units are priced between $500K – $700K
16 units are priced between $700 – $999K
28 units are priced over $1 million

And the number of rentals in Fauquier is even more dismal.

Within the last few years, Owens noted the number of rentals in Fauquier has fallen dramatically. As of March 24, there were 12 active rentals in Fauquier – three times less than in March 2019 – with the lowest price set at $1,550 and the highest at $3,300, according to Owens.

“[The housing market] is not getting any better,” Owens said.

But Arruda said there are some positive signs that the housing market is starting to catch up with demand. As of March, she noted there were 1.8 million housing starts, meaning 1.8 million homes have started construction.

“New construction also means other people will start to move from other houses,” Arruda said. “I call it a domino effect or a staircase effect.”

What Arruda means by “domino effect” is if more homes are built, the more homes people can buy – thus, demand goes down. But that does not necessarily mean demand will go down in Fauquier and the supply of homes in the county over the last few years has not shown signs of improvement.

Arruda said she doesn’t believe the Fauquier housing market is weaker than surrounding counties. Wang is a good example. But Arruda did acknowledge that “inventory is a problem.”

And not enough affordable housing could have consequences for the local economy.

Lisa Sturtevant, chief economist for Virginia REALTORS, told Fauquier Now that low inventory is a problem because the real estate market is a key driver of the local and national economy. If workers can’t move somewhere because of a lack of housing affordability or availability, then businesses can’t attract or retain workers, she noted.

The housing shortage in Virginia is not a new problem, Sturtevant said, but she noted that it has gotten worse. At the end of February, there was less than a month’s supply of homes statewide in Virginia – a 5 to 6 months housing supply is the normal threshold for a healthy housing market.

Arruda and Owens said they are confident that if people find the right realtor that this may help people’s chances at finding the right home for them. But they noted that if people are looking to purchase they will have to be aggressive in this market.

“Realtors have tremendous value and they actually have more value in this market than any other market,” Arruda said. And the reason is because as a buyer agent, they have to think outside the box to find that home for their buyer.”

Wang said she agrees that having a knowledgeable realtor and lender was a game changer for her. She noted that without her realtor and lender working together to waive items, such as the finance contingency, it may not have been possible to buy her home.

Nonetheless, she said that if someone is serious about buying a home it’s not going to come without risk.

“I think in order for you to be in this market, you almost have to have a sense of desperation or you just really like gambling,” Wang said.


https://www.fauquiernow.com/fauquier_news/article/fauquier-housing-market-still-strained-but-real-estate-agents-optimistic