VIRGINIA BEACH, Va. - These days, there are a lot of questions surrounding housing in Hampton Roads. With interest rates rising, people want to know if now is the time to buy or if they should wait.
Christy Allen, an associate broker and realtor, said it's an "interesting time" for home buying.
"I wouldn't say it's a full buyers' market yet. Sellers do still have a lot of control because there's still not a lot of inventory," she said.
In part, because it's getting more expensive to buy a home, interest rates are almost at 7%, and incomes aren't necessarily increasing along with it.
According to JLARC, Virginia's Joint Legislative Audit and Review Commission, the state's median home sales price has risen 28% over the past four years, reaching $270,000 in 2021. To keep up, Allen said buyers are now having to make concessions.
"Instead of looking at a $300,000 house, maybe they're looking at a $200,000 house," Allen said. "If they still want to achieve the same mortgage payment, they have to change something, either a lower price home, a different neighborhood — or they wait."
Let's say you do find a home that you love. How much will it cost? News 3 Problem Solver, Erin Miller crunched the numbers.
Let's say you want to buy a $300,000 home on a 30-year fixed-rate mortgage. If you put down 20%, you would need a $240,000 loan.
In October of 2021, with 3.3% interest, you'd pay about $379,000. If you were to do that today, with 6.9% interest, you'd pay $569,000 over the term of the loan.
"With the rates being high, you do have the advantage of refinancing that loan throughout time," said Georgette Houchins, Business Development Officer at Virginia Housing.
Virginia Housing is a self-supporting, not-for-profit organization created by the Commonwealth in 1972 with a mission to help Virginians attain quality, affordable housing.
While some people may put down 20% to purchase a home, others are putting down much less.
"The minimum that we see at Virginia Housing with our FHA loan [would be at 3.5%]. It's a 96.5% loan-to-value loan, which means the minimum downpayment would be at 3.5%. At Virginia Housing, we can offer that downpayment assistance in the form of a grant, which means we're going to give them free money," said Houchins.
The not-for-profit organization was created to educate and help first-time buyers through loan programs and unique financing. As mentioned, it also offers downpayment and closing cost help.
"The funds that you were going to use for a downpayment, you can save that for any additional expenses that you might have," she said.
That could be a savings of more than $10,000, which JLARC's report found is approximately what people spend on closing costs and down payments.
As for solutions, Houchins said to put together a spending plan. As a general rule of thumb, you don't want to spend more than 30% of your income on a mortgage/housing. She said you should also know your debt-to-income ratio.
"At the end of the day, you will be the one responsible for paying that mortgage," said Houchins. "Rates are high, but it is still a good time to buy — rent is high. But continue to search for the right property for you and, again, just be informed before you go talk to a lender before you go talk to a real estate agent. Do your research, take some education, take some training, so you can understand the process because you want to go to the table, knowing what the process is."
Allen agreed and said the market is shifting for buyers and sellers.
"A year ago, if you listed your house you may have had 20 offers. You were not offering closing cost assistance, you were not offering any concessions to the buyer, where now sellers are a little more willing to help the buyer out. We are back to negotiating. We're back to asking for home inspections," said Allen. "We want everybody to have the opportunity to be a homeowner."
The JLARC report also found that Virginia Housing could give better assistance with upfront mortgage costs. Click here to see the full report.
