Hot Market

Local real estate agents are scrambling to field calls as Lexington and Rockbridge County experiences a red hot housing market, where home inventory is low, competition is high. What are some reasons for this?

NATIONAL TRENDS

Rising prices, dwindling inventory and high demand define the current national market.

Since the start of the pandemic, realtors, sellers and buyers have seen the housing market return to levels of activity that can only be compared to the boom of the early 2000s that led up to the recession. The market is hot, and some economists believe that it has become a housing bubble. This bubble is caused by unusual behavior in the market, such as higher costs, higher demand and fewer homes, leading to greater speculation.

At the start of the pandemic, many urbanites found themselves stuck in crowded and expensive cities. Over the past two years, these people migrated to other parts of the country that they considered more affordable and could work remotely from. This has created hot spots of activity in cities like Austin as well as rural areas throughout the country.

However, this new activity means higher demand. This gives the sellers greater power to inflate asking prices and gives buyers little leverage. The National Association of Realtors reported that since 2020, homes have increased in price by 39%. Additionally, the number of housing units available is historically low. A Freddie Mac report found that the United States is about 4 million homes short of what should be available. New construction halted during the recession, and slowly increased over the next decade. However, the pandemic caused another lull in construction.

The rapid increase in price is not sustainable. Because of the issue of supply and demand, fewer people are able to afford the few homes available on the market, especially people interested in buying their first home. But economists are not too worried that the bottom will fall out any time soon.

The government learned to be wary of housing bubbles during the fallout of the market crash in 2008. Over the next four months, interest rates will slowly increase from 3% to 5%. This is expected to cool down the market, but it could be a while before the market returns to normal.

LOCAL TRENDS

Many counties and cities in Virginia underwent changes in their real estate market during the pandemic. Rockbridge County was no exception.

 

    • In Virginia, the median sales price increased 8.9% from 2021 to 2022.

    • At the end of February 2022, the number of active listings (12,142) was 22.3% lower than a year earlier.

    • In the past year, the amount of home sales in Rockbridge County increased more than 10%.

    • The median home price in Virginia in 2018 was $265,000. As of March 2022, it is $350,000.

 

Kara Braddick, a real estate agent in Lexington, thinks that people want to move to the area because they have a connection to Washington and Lee or the Virginia Military Institute, or they pass through the area and fall in love with its small town environment.

“I think a lot of people know about Rockbridge County because they’ve had some sort of affiliation with the area in the past,” Braddick said. “And they’ve seen that it’s growing and that it’s a small town, but offers a lot of cultural diversity and things to do, versus another rural area that doesn’t have the arts and the sciences. And I think the universities kind of keep the town pretty young.”

Chris Slaydon, the director of community development for Rockbridge County, believes there are two main reasons people are moving to the area: “[People are] realizing that they don’t have to live in a big city to make the same source of income as they currently are. And then the quality of life, the cost of living, you know, all that. The quality of living goes up and the cost of living goes down when you have access to broadband and being able to work like that.”

One possible negative effect for people who were longtime residents of the county before Covid is that they may be priced out of homes that they want to buy due to transplants driving up home prices.

Braddick believes that this influx would not have been possible only a few years ago. The development of broadband, introduced by BARC in 2018 and spurred on by Covid, has made it possible for people to work remotely. “There are houses before the BARC project started, that I would have listed, that would be very nice properties, that wouldn’t sell because they didn’t have internet access.”

“In our area, Rockbridge County, there are so many rural areas and so many places that have no accessibility. And so, because working from home was the top priority, and that’s what everyone’s doing, I mean even down to extracurricular streaming, no one’s buying cable packages anymore, everyone’s streaming,” Braddick said.

BROADBAND

BARC provided broadband to its first customer in 2018. The cooperative started the implementation in Rockbridge County and has continued into Bath County.

BARC Cooperative provides electric service to around 13,000 connections in five counties in the area of west central Virginia (Bath, Alleghany, Augusta, Highland, and Rockbridge). BARC was formed in 1938 as part of the Rural Electrification Act that was meant to address the need for electricity to residents in rural areas.

Nowadays, there is an even greater need for broadband in rural areas. BARC started construction of mainline fiber in Rockbridge County in 2017. BARC provided internet access to its first customer in 2018. After starting in Rockbridge, BARC continued into Bath County.

Tish Blackwell, BARC’s director of communications, said that BARC recognized the need for broadband in the area, but wanted it “selfishly for themselves initially,” that is, limited to BARC’s electricity customers. The former CEO of BARC, Mike Keyser, was the individual who pushed to expand broadband into other parts of the county.

BARC started in the Kerrs Creek area of Rockbridge County. After that, the subsequent expansion of mainline fiber was meant to capture the most populous areas of the county. Blackwell said BARC divided how they were going to implement the broadband into stages. They first implemented broadband for the company, then their members, and finally they looked for opportunities where broadband could help develop the economy.

Blackwell also said that while the development of broadband has provided people with the tremendous opportunity of being able to work virtually, BARC had no idea there would be a global pandemic that would force people all over the country to perform their jobs from their homes.

“The pandemic was not even a thought in anyone’s head,” she said. Blackwell also said that she is constantly getting calls from real estate agents asking for updates. “I get calls and emails every day [from real estate agents], ‘Can you tell me when you’re going to get to this house?’ because they have people looking at these homes and it’s a big consideration.”

Slaydon, the county planner, said that the introduction of broadband into the county has been critical to real estate development in the county because it has transformed how and where people can work. “Teleworking is a huge part of it as well. We’re very fortunate — most of Rockbridge County is very fortunate — we have the BARC project.”