A local realtor says last week’s rate hike from the fed may cool things off a bit, but the local housing market should remain robust.
Hampton Wilkins with Wilkins and Company Realtors says the past two years has seen a fundamental transformation in the Danville area housing market, and the coming Caesar’s Virginia casino is not the only reason. “There’s so much more going on, like Precision Machining and other new companies coming in,” Wilkins says. “Danville is on the radar around the world. I can’t even believe I’m saying that now, but it’s true.”
Wilkins says the biggest impact has been in the demand for local properties. For decades the process of selling a local home took months with very little activity. That’s no longer the case. “Almost every home that goes on the market now has multiple offers,” Wilkins says. “We used to tell people expect it to take around 6-8 months. Now it’s closer to 6-8 days.”
The Federal Open Market Committee last week announced a three-quarter point hike in their benchmark lending rate. “That’s going to prohibit some people from qualifying for a (home) loan,” Wilkins says. “It will also most likely reduce some of the demand we’ve seen the past two years.”
Interest rates are now inching close to 6% for a 30-year fixed rate mortgage.
This is the Fed’s third rate increase this year, and the largest single hike since 1994.
Realtor Elizabeth Ware with Elizabeth Ware Realtors said that if rates continue to rise, there will be a decrease in the number of buyers in the market. However, she hasn't seen prices being impacted by the higher interest rates.
"Most of the housing forecasts that I have read continue to promise steady prices even with increased interest rates," said Ware.
The area has also seen an increase in cash buyers over the past year, said Ware.
"Certainly, to a seller, cash is more desirable, not having to worry about financing contingencies and appraisals are a benefit compared to a buyer getting a mortgage. We do have out of state buyers looking at our area for various reasons, many to move closer to family and relocating from more urban areas," said Ware, adding that this can be frustrating for first-time homebuyers.
"Most first time home buyers are not cash buyers, so competing with cash offers makes the process frustrating. Many buyers have made multiple offers on multiple properties without any luck," she said.
Ware believes the casino has put Danville on the map to investors across the country that never considered our area in the past.
"We are seeing investors purchasing land," she said.
Wilkins says there are enough positive factors in the region right now to help offset negative impacts from the rate hike. “Yes, it will impact the buyers. Yes it will prevent some would-be homeowners from purchasing now. But there’s so many good things going on in the local economy that I think we will come through this,” Wilkins says.
Star-Tribune staff writer Diana McFarland contributed to this report.