Real Estate Investment Overview
News reports have been announcing the inching up of the number of active listings, despite the median sales price still rising. There are three reasons why the real estate investment in rental market trends in Virginia Beach is one of the best – activity in the real estate market, quality of life, and relative affordability.
In the past year, the Virginia Beach county housing market received the #1 rank for the lowest median days on the housing market, indicating that homes were selling like hotcakes! But 2022 may give buyers some chances to get in.
It is location is along the Atlantic Ocean at the mouth of the Chesapeake Bay which has given the city miles of sandy beaches, plus a stable economy with defense contractor companies, corporate headquarters of national and international companies, and robust locally-owned businesses.
Virginia Beach Real Estate Market Trends
State’s largest professional trade association for real estate, Virginia Realtors, in its April 2022 Virginia Home Sales Report, in its housing market trends, stated that the listing median price was $390,000 not just in Virginia Beach but the statewide housing market.
This was around $100,000 higher than 4 years ago, in April 2018, and last year, the median listing price gained $32,500, a home price growth increase of over 9%. Homes sold were on average, 3.4% higher than the list price. The average sold-to-list ratio was a minimum of 100%.
On April 2022, home sales in Virginia went down 11.6% from the past year, with 11,991. This resulted from inflation, rising home prices, and interest rates. Virginia housing market predictions in the coming year is a decrease in housing demand because of the rising interest rates and will cause a slowdown in the growth of real estate prices. But the higher mortgage rates and real estate prices will still be a hurdle for buyers.
Based on Virginia Realtors 2022 housing market forecast a decrease of around 1/10% of the previous year, primarily because of increasing affordability challenges, continued low inventory of homes, and an upward trend in mortgage rates.
Virginia real estate prices are forecast to rise by 4.1% in 2022, with the price growth rate slowing as demand abates and housing inventory eases.
Attractive Renters Market
State of Virginia is one of the 14 states that lets landlords serve an unconditional quit notice to tenants in violation of the terms of the lease. Virginia Beach real estate investors are not required by state laws to have a landlord permit, it depends on the individual cities’ local laws.
Landlords don’t have to pay interest on deposits, nor are late fees have limits if these are included in the rental contract. If Virginia Beach tenants are too noisy and let minors have drugs or alcohol, they can be evicted for their guests’ behavior as non-compliance with the law.
Virginia Beach real estate market also allows the short-term rental market. If you are regularly renting out your property, like an Airbnb, you need a conditional use permit and pay hotel taxes.
Virginia Beach real estate properties allowed to be rented out are single-family homes and condos as short-term rental houses, not a garage or carriage-house apartments.
At the same time, real estate properties can be rented out to two tenants in the same week, to lessen instances of confusion or interference from guests coming and going.
You will just need to provide a parking spot, at least one for each tenanted bedroom, and not have more than three people occupying one bedroom.
Housing Market
Famous for its three-mile boardwalk on its Atlantic side, Virginia Beach has under 5M residents and receives around 20 million visitors annually.
The Hampton Roads Realtors Association reported that the Virginia Beach real estate market was on a continuing cool in the 2022 first quarter, home sales had gone down for three successive quarters. But the figures were higher than those two years ago.
Median home price for Virginia Beach in the first quarter was $326,050, $30,000 or a 10% rise from the previous year. Currently, the median sales home prices are $53,000 more than the previous year. However, sales declined sharply even with these higher home prices and effected a lower sold volume compared to the past year.
In Virginia Beach real estate home sales were 23 days on average, in the first quarter, this was faster by a week than in the previous year and more than three weeks than in the 2020 first quarter.
There is also a continuing supply decline in the Virginia Beach housing market. By the first quarter-end, the 723 active listings were a decrease of 13% compared to the same period in the past year, with 112 fewer active listings.
Historic Price Changes and Housing Affordability
Monthly reports by the Freddie Mac House Price Index (FMHPI) present changing housing prices in every US real estate market. It measures normal home price inflations based on loans bought by Freddie Mac or Fannie Mae. In these reports, December 2000 is assigned with a 100 benchmark and this is compared to the monthly housing price changes in each state and metro area to 100.
Latest FMHPI for the Virginia Beach-Norfolk-Newport News, VA-NC MSA housing market presents the HPI for October 2021 of 242.6 compared to October 2016 of 178.1. This reveals a 5-year change in home prices of 36.2%, a one-year change of 13.2%, and the monthly change of 0.5%
Another standard used by rental property investors to analyze demand for property, current, and potential future, is housing affordability. Generally, when it is more expensive to buy a house, it becomes attractive for rents.
Kiplinger’s Personal Finance conducted a survey of home prices in the 100 largest metro areas, using an affordability scale of 1-10, with 1 as the more affordable market to buy a home in and 10 as the least affordable.
Job Market
The city of Virginia Beach, together with Chesapeake, Hampton, Norfolk, Portsmouth, Newport News, and Suffolk are part of the Hampton Roads Metropolitan Area.
The city’s suburban vibe and its hybrid beach community make it attractive to live in with jobs in nearby towns. Around 100,000 Virginia Beach residents commute regularly to and from Norfolk and Chesapeake.
According to the Virginia Beach Economic Development (a program of the city government), the city is a highly desirable location for a high-tech workforce. There is a “Right to Work” labor structure plus the city belongs to an employer-friendly state.
Key industries that have headquarters in Virginia Beach are advanced manufacturing, defense, professional services, information services, biomedical, maritime and logistics, and data centers.
Top employers include the Naval Air Station Oceana-Dam Neck, Sentara Healthcare, Joint Expeditionary Base Little Creek/Ft. Story, GEICO General Insurance Company, General Growth Properties, and power tool producer STIHL Incorporated.
Population Growth
Virginia Beach has the second-highest population state-wide (after Prince William County), getting more than 21,000 new residents since a decade ago. Population growth has been slow and steady, increasing by 4.9% since 2010 and growing by 2.08% in 2019. Currently, almost 500,000 live in the city.
Unemployment rate has gone down, to 3.6% in November 2021, and job growth went 2.7% higher year over year.
Investors in real estate wanting long-term predictable market performance would be glad to know that Virginia Beach is ideal for a buy-and-hold investment strategy.
Conclusion
If you are a home buyer or real estate investor, you may find mixed opinions about real estate investment in Virginia Beach real estate.
It may not have a good track record or hype for real estate investment but Virginia Beach has a good variety of housing available for investors, including single-family homes, condominiums, and rental apartments. Tourism results in some key beachfront locations being used as vacation rentals for which the returns are outstanding.
As a home buyer or interested in real estate investing, you would want to know the housing market forecast in the city to get Virginia Beach’s real estate investing content.
Get in touch with one of the top real estate agents in Barry Jenkins – Better Homes & Gardens Real Estate | Real Estate Agency in Virginia Beach, VA for assistance or to learn more about real estate investment rental market trends.
