Thursday, December 1 2022

Hampton Roads residential market tightens

Published

September 29, 2022




by

Cathy Jet


Average monthly rents in Hampton Roads have increased significantly in recent years. Photo by Mark Rhodes

The Navy man sat in Barbara Gatewood Sgueglia’s office in tears.

His rent was going from $1,600 to $2,750, and with several kids and his wife in school, he just couldn’t swing it, even if the landlord offered to split the difference.

Anything he could afford would likely be “much less attractive,” says Sgueglia, chairman of the board of the Hampton Roads Realtors Association and founder of the military relocation team in Chesapeake.

The sailor’s situation has become all too common in Hampton Roads, she says. The number of available rentals has dropped so low and rents have risen so much that it has become difficult for people to find what they can afford.

Part of the reason is that Hampton Roads, with its large military presence, has a lot of what Sgueglia calls “accidental landlords.” These are military families who bought their first home several years ago and rented it out to build capital when they were reassigned. Now they’re moving – and the area’s real estate market is so tight it’s hard to find a new place for themselves.

“They had to go back to their [old] houses and the tenant has to move,” says Sgueglia. “It takes another rental out of the market.” The Hampton Roads market had 606 newly listed rental properties in August, according to raw data from the Real Estate Information Network Inc. (REIN) — a sharp drop from three years ago, when 1,142 apartments were newly listed.

Other investors may have pulled out due to problems during the pandemic and sold their properties during the height of the real estate market, she says.

Meanwhile, more and more people are looking to rent, says J. Van Rose, president of Rose & Womble Realty Co. in Virginia Beach.

“One of the reasons the housing market was so hot was that with interest rates as low as they were, you could buy a house for almost $400,000 with an interest rate by 3% and it would be cheaper than going into an apartment from afar,” he says. “Now that the interest rate has gone up, it’s closed that gap.”

The situation for tenants in Hampton Roads is near dire, says Jeremy Caleb Johnson, agent and associate broker at Long & Foster/Christie’s International Real Estate in Virginia Beach.

The rule of thumb for rent in most parts of the region averaged about $1 per square foot of property, meaning a 1,100 square foot townhouse or condo would rent for $1. $100 unless there’s something remarkable, he says. The average rate is now around $1.25 to $1.30 per square foot in what for many tenants has become what he called “an ultra-competitive market.” The average monthly rent for the area was $1,800 as of September 1, up nearly $200 from the same time last year.

“We see multiple applications for a property in very many cases,” says Johnson, chairman-elect of the Hampton Roads Realtors Association board. “We’re seeing people offering above the advertised rent.”

Robert McNab, director of the Dragas Center for Economic Analysis and Policy at Old Dominion University’s Strome College of Business, says Hampton Roads is catching up on rental rates. Before the pandemic, they increased more slowly than the national average. Now they accelerate faster.

“Of course, these increases in housing values ​​and rental prices outweigh the gains in wages and salaries,” he says. “This is placing extraordinary stress on families in Hampton Roads, especially military families who may be moving to the area and their basic housing allowance has not kept pace with rental price appreciation in the region.”

The challenge for Hampton Roads is to diversify its economy, which relies heavily on Department of Defense spending, McNab says. It represents about $4 out of every $10 of economic activity in the region.

“Private sector job growth has lagged behind that of other metropolitan areas in Virginia and across the country, so the big challenge ahead is how to create more robust private sector growth that doesn’t is not tied to the federal government,” he said. “It’s something that obviously won’t happen overnight. This is going to take a concerted effort. »

The Sgueglia Navy serviceman and his family were finally able to stay in their rental property, after negotiating a monthly payment of $2,200 with the landlord, a decrease from $2,750.

“We finally settled down,” she says. ” He stays. The owner is not thrilled, but the owner is a [former] military himself, so he understands.

Learn about home sales trends in Hampton Roads, including statistics and local tax rates.

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