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The business of home buying: Home buyers in Virginia, nationwide feeling squeeze in today's real estate market

The COVID-19 pandemic brought on low interest rates and new opportunities for homebuyers. But two years later, it's created a shortage of what's now available.

VIRGINIA BEACH, Va. — As the saying goes, home is where the heart is.

“Everybody I think grows up in a certain area, you miss being home," Matt Mcgee said.

Mcgee, a Virginia Beach native, is now a homeowner in the city where his heart has always been.

“My dream was always just to come back home and buy a house in Virginia Beach," he told 13News Now. 

After living for more than a decade in a rented apartment in the city, he considers himself one of the lucky ones after purchasing his first home in the fall of 2021. One open house after the other, Mcgee almost gave up on buying his own slice of the American Dream. 

“To be honest, I wanted to give up and stop thinking about it. I didn’t think it would happen," he said.

“When I would show properties to him, there would be a line of people waiting at the door for their turn," Hampton Roads broker Jeremy Caleb Johnson said, noting that Matt's story has become the American story of what buying a home is like in today's real estate market. 

“You’re competing with people that have a lot more money than you do," Mcgee said.

"A log jam."

Johnson helped craft the deal by helping Mcgee close on his new home, who said the entire real estate economy is defined by rising competition. 

“We need about two million homes nationwide to keep up with population demand. In 2020, we had 900,000 homes built nationwide," Johnson said.

From a 30,000-foot perspective, he said there aren't enough homes to accommodate the number of buyers in the marketplace. Low interest rates brought on during the COVID pandemic made home-buying an attractive venture, but a balance that the economy hasn't been able to sustain. 

The Virginia Realtors Association reports recent data supporting this growing trend of low inventory. At the end of February, there were more than 12,000 active listings in the Commonwealth, which they say is down 22.3% compared to the same time last year.

Plus, home buying has slowed at the same time. In February, the association reported 8,160 home sales, which they say is down 8.4% from a year ago.

A seller's market, and first-time buyers

Chances are for the home buyers who are able to break through, it’s taking a bigger chunk out of their bank account. 

According to Old Dominion University’s 2021 State of the Region report, the average price of a house in Hampton roads rose almost 10 percent from 2020 to 2021.

“Pretty much in the height of craziness right now," said RE/MAX Alliance realtor Stephanie Clark.

Clark has seen a barrier created for first-time buyers.

“They love one [house] but there might be two to 15 other offers on the house," Clark said. "Those with little cash are cut out of the market."

Clark added that the seller’s market we're in could continue for the foreseeable future, until rising interest rates ultimately lower the demand for home buying. Until then, home sellers will continue profiting off the current dynamic. 

A recent house in Chesapeake Clark helped close finished at approximately $50,000 over asking price.

“It really doesn’t matter what price range you’re in. It’s the same problem across the board," Clark said.

According to the association, the state average for homes was $350,000 this February, a more than $28,000 increase than it was in February 2021, equaling an 8.9% increase. The association also added the recent average sold-to-list price ratio was 101.4%. 

See a listing you like? Chances are, it won't be for long

ODU's State of the Region report also showed houses, on average, stay on the market for 24 days in Hampton Roads. So if you’re in the market for your next or first home, take it from Matt Mcgee: the game you might be playing is a waiting one.

“You have to be patient. There will be places you look at and think 'This is it!' It's not going to be it," Mcgee said. 

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