Lynchburg Business

Warm Weather Home Sales: Up or Down?

Issue: August 2010 by Suzanne Ramsey in Inside The Magazine, Real Estate

Homebuyers with their eyes on bigger digs or a different zip code traditionally look to warm weather as the perfect time to buy and sell. That was the case in the Lynchburg area this year, although local real estate agents will tell you that homebuyer tax credits and low interest rates had more to do with second-quarter sales than the thermometer.

According to Dee Meredith, president of the Lynchburg Association of Realtors, the local real estate market performed better in the second quarter of 2010 than it did a year ago, but not by much.

“It’s better, but not substantially better,” she said, adding that the $8,000 and $6,500 tax credits did positively impact sales.

“In June, we had 230 closings, and that’s pretty high,” she said. “Originally, the deadline for closing the loans, if you were applying for the [tax credit], was June 30, so everyone was slamming to get their closings done in June.”

That deadline was later extended until September 30 in cases where a binding sales contract was signed by April 30.

Preliminary numbers released by the Lynchburg Association of Realtors in mid-July, reported 564 homes closed in the second quarter of 2010, with an average selling price of $176,300. Days on the market averaged 120. This was a 9.1 percent increase over the second quarter of 2009, when 517 houses sold at an average price of $171,250 and stayed on the market roughly 170 days.

Chuck Cole, a broker with Ballengee & Company Realtors, called 2009 “my worst year since I got into the business,” and said he is optimistic that the increase in sales is an indicator that the market is improving.

“The spring has been good for our office…extremely busy,” he said in June. “Even with the tax credit gone, we’re steady. I think we’re coming out of the bad times a little bit.”

Cole, who has been selling houses in Lynchburg and Bedford and Campbell counties for 4 years, has personally seen an increased interest in lower-priced homes.

“I’ve been showing a lot of townhouses and condos,” he said. “I had a house in the $115,000 range. It’s incredible the number of calls I got. It’s under contract now and I’m still getting a ton of calls…It’s the best of both worlds: low rates and low prices. It’s definitely a buyer’s market.”

Meredith agrees, saying she can’t recall a time in her 21-year career when interest rates were so low―4.75 percent for a 30-year, fixed-interest loan.

“From that standpoint alone, it’s a great time to buy,” she said. “Buyers are really looking for a good opportunity because inventory is high and I also think because of the general economy that buyers have an opportunity to negotiate more strongly than they have in the past.”

Meredith also had some words of wisdom for sellers.

“From personal experience, I can say it’s really important for sellers to price their homes aggressively and have them in excellent condition,” she said. “Then they will have more success in selling them more quickly for more money. Those kinds of homes, perhaps, will even get more than one offer. Price is king right now. Nothing matters more than price.”

While she agrees it’s a buyer’s market and that sellers should “take the emotion out of the sale,” Wendy Reddy of Reddy Real Estate, also describes the local real estate climate as “very interesting” and “very volatile.” She blames this instability on a shortage of homes that led to a sharp, artificial increase in prices about 2 years ago. That’s when home prices shot up, or “went berserk,” as she puts it.

“[They] jumped higher than you would expect in Lynchburg,” Reddy explained. “Lynchburg is very steady eddy…then you had this jump 2 years in a row because there was a shortage.”

Now, she said, the market is not a bad one, but rather one that has “corrected itself.”

Still, Reddy will tell you selling houses is not a career for the faint of heart, particularly in a struggling economy.

“I’ve been working harder than I did in my first year of real estate, having to dig and work hard for it,” she said. “This business is not for sissies anymore. I don’t think it ever was.”