Asha Wright (left), a Realtor at ICON Realty Group, and her client Kai Banks look at a home with Banks’ son Aaren Cooke. (Photo by Ash Daniel)
While the long-term impact of the coronavirus pandemic on the Richmond residential real estate industry won’t be known for months, early reports indicate the area’s overall market strength could provide some shelter from the storm.
“We had a very strong first quarter,” says Laura Lafayette, CEO of the Richmond Association of Realtors, noting that Richmond’s mild winter jump-started the season.
“We talk about a spring market being April, May and June,” she says. “But in Richmond, buyers were out there very quickly in January. Buyers got out in front of sellers. It’s a good thing, because it’s given us some momentum.”
The Central Virginia Regional MLS April report (the most recent available at press time) shows sellers were being paid 99.7% of their asking price, and both median and average sales prices had increased, by 7.6% and 6.5% over the previous year, respectively.
By late April, though, there were signs that momentum was slowing. The March Virginia Home Sales report from Virginia Realtors, a statewide nonprofit, showed pending sales across the commonwealth were down more than 12% from last year, and fewer homes were being listed.
“[March’s] strong market activity reflects the significant demand and low supply that has characterized local markets throughout Virginia for years,” says Lisa Sturtevant, chief economist for Virginia Realtors. “However, it is likely that we will experience a significant slowdown in market activity in April as more families are impacted by unemployment, the military stop-movement order is still in place and the statewide stay-at-home directive remains in place.”
Lending changes will be another issue, Lafayette says, with some financial institutions raising credit score benchmarks, specifying higher down payments and reverifying employment after prequalification.
“Some buyers who qualified [for loans] are no longer in the market,” she says.
First-time homebuyer Kai Banks is.
Banks, a single mother of three boys, has worked hard to overcome credit issues stemming from a controlling past relationship. A native of Henrico County, Banks returned to the area in 2011, after her divorce. Looking to “reestablish my life,” Banks says, she wanted to live in the city, where she has extended family and was excited by the vibrancy in many neighborhoods.
Banks found a condominium rental on Church Hill with the assistance of Urban Hope, a faith-based affordable-housing nonprofit. She got a job at VCU, finished her degree and “chipped away” at her debt so she could prequalify for a loan.
In November 2019, her landlord said the condo she was renting was going on the market and asked if she wanted to buy it. “It was a two-bedroom, and we were outgrowing the space,” she says. “It was the push I needed to move into the housing market for real.”
Banks began working with Asha Wright, a Realtor at ICON Realty Group, who helped her through the loan prequalification process in early March. Then the pandemic hit. By the end of March, Banks and Wright were notified that Banks’ credit score wasn’t high enough.
Refinancing a car loan — using her federal stimulus check — boosted Banks’ credit score enough that the lender reinstated her prequalification and even increased her purchase limit.
“Everybody’s really been pushing me [in a good way],” Banks says, noting that she’s benefited from guidance from her lender as well as Housing Opportunities Made Equal of Virginia Inc. and Southside Community Development & Housing Corporation, local agencies that support home ownership through a variety of programs.
Wright says working with Banks has reinforced her focus on first-time homebuyers.
“They’re anxious, they’ve never done this before, they really need you,” she says. “The market changes are minor, but some are unnerving. This group aren’t the ones with large amounts of money saved or high credit scores. [Banks] reminds me of why I’m working with first-time buyers. She’s so determined.”
“This is not the recession of 2007-2009. This is a very jarring disruption.” —Laura Lafayette, CEO, Richmond Association of Realtors
Determination of a different kind came into play for Phil and Sandy Lawson, who had decided last year they wanted to leave their house of 14 years for something bigger.
“I really needed a dedicated office, and we needed more bedroom space for [our] teenagers,” says Phil, who’s a Realtor. “Also, it was great timing with low interest rates and high market values.”
By the end of February, the couple had contracts in place to sell their house — “well over asking price,” Phil says — and purchase another, which they found through word of mouth. “Everything was tracking forward, we were going through inspections, and then, coronavirus.”
With their closings scheduled for the end of March, the Lawsons ran into hiccups with the financial process. “Mortgage lenders and bank [employees] were working from home, establishing a new normal, so things were taking a little longer,” Phil says. “We were supposed to close on a Thursday but closed on Tuesday. It was minor in the grand scheme of things.”
Sandy says the move helped the family stay busy during what might have been a challenging time. “The first two or three weeks, the house didn’t feel like our house,” she says. “We’ve been feeling the stress of the move, but not the stress of the move and the pandemic combined.”
Phil says his real estate business has slowed, but homes in the $200,000 to $300,000 price range continue to move quickly. “Interest rates are still at historic low points, there’s low inventory,” he says. “It’s very much a seller’s market.”
As a first-time homebuyer, Banks admits to being anxious about searching for a home during a pandemic, but she is moving forward. She has not taken her sons with her to visit homes but has offered pictures and videos so they can see what she sees. “I would like to be in a house by the summer, so we can start school in our space,” she says. In mid-May, Banks placed a contract on a house.
RAR’s Lafayette says right now, safety is everyone’s chief concern. “First and foremost, Realtors are practicing real estate in conformance with the governor’s executive order,” she says. “There aren’t any public open houses, because we can’t control the number of people [who visit]. We are using technology that has been available for some time — setting showing times and marketing with virtual tours.
“Buyers are coming into houses wearing gloves and masks — they aren’t touching anything,” she adds. “Both listing and selling agents are making sure everyone is using correct cleaning and sanitary measures to make sure the house remains safe.”
What’s important, Lafayette says, is to keep perspective.
“This is not the recession of 2007-2009,” she says. “This is a very jarring disruption, but that’s what it is — a disruption. The savvy buyer knows there is less competition today than there was a month ago. The smart, savvy agents are planting seeds to see them come to fruition later. I heard one agent say that we’re going to have a spring market … but maybe we’ll see it in November.”
