If there’s no boom, then there can be no bust and that’s just fine with those who shepherd West Virginia’s housing market. Because that still doesn’t mean the state can’t have a robust housing business.
Industry experts said a trend that began a couple of years ago continues in the Mountain State, indicating it’s a hot market for potential home buyers. How much growth isn’t easily quantifiable, however.
Ray Joseph, CEO of the West Virginia Association of Realtors, admits, “It’s not something tracked very well. But we know it when we see it.” Still he said he’s seen over the past year an increase in home sales from the Eastern Panhandle to the coalfields and all points in between.
There has particularly been a surge of transactions in the counties bordering other states, something Joseph attributed to buyers from more densely populated areas such as New York and New Jersey. He said they’re either seeking refuge in light of pandemic conditions or simply just want another home.
Regardless of the reason, it’s contributed to a strong second-home market in those parts of West Virginia.
“It’s been a really strong year for the real estate industry in West Virginia — and that encompasses everybody,” Joseph said. “All the folks involved, all the affiliate industries such as lenders, home inspectors, appraisers. It’s just been a solid year all around.”
Solid, though not seismic — and that’s a good thing.
According to industry experts, West Virginia isn’t experiencing a financial movement that can elevate an economy across the board — but it’s also not the kind that can cripple things for a generation when things inevitably settle, if not shatter. And other parts of the country often exhibit similar patterns.
“There are markets that very much behave like that,” said Ken H. Johnson, a real estate economist at Florida Atlantic University. “They’re not going to boom and they’re not going to bust.”
Yet that doesn’t mean it’s not intriguing, especially to an expert like Johnson.
The Alabama native spent part of Thursday afternoon in his Boca Raton, Florida, office crunching numbers in order to wrap his arms around the Kanawha Valley’s housing market. That included trying to properly position a projected 8.5% decrease in population over the next 10 years (according to Indiana University’s U.S. Data portal) next to a quarterly repeat sales index of 176.34.
Johnson said that index is nearly 5% “below where it fundamentally should be.” That indicates property in the Charleston metro area is underpriced, though he said prices have been trending upwards for the past couple of years.
“Based on what I’m seeing, it’s a good time to buy,” Johnson said. “There’s a bit of mixed results — the population decline is a little scary, but you’ve got record-low interest rates and buying below whatever the price should be. And we all want to buy something where it should be. All in all, it’s probably a pretty good time to buy.”
That is, if the availability is there to be leveraged.
The biggest challenge for West Virginia’s housing market isn’t necessarily the coronavirus pandemic — something industry analysts have said has actually boosted the market, what with more people focusing on work and life at home. Instead, sales are constrained by a lack of property or units that is partly the result of COVID-19, but also the lingering residue from the Great Recession.
A decade-plus later, home builders in 2021 are dealing with the pandemic. They’re also contending with high impact fees to local authorities that pay for such services as road maintenance along with potential future considerations.
The result has been more builders likely to tackle projects for more profitable, high-end properties to offset those additional fees rather than cheaper or mid-priced work. All told, it means less availability.
That will be a challenge nationally, though Danielle Hale, chief economist for Realtor.Com, said in her 2021 forecast that sales will still continue to rise.
“We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year,” Hale wrote. “As vaccines for the coronavirus become broadly available to the public, and economic growth reflects the resumption of more normal patterns of consumer spending, home sales gain even more in the second half of the year.”
Joseph said there have been sporadic shortages in areas of West Virginia for more than the past decade. But it’s the first time during that span it’s essentially been an issue across the Mountain State.
“In the 18 years I’ve been in this position [as CEO], I haven’t seen it like this,” Joseph said. “We’ve seen inventory shortages here and there on occasion, but never on a statewide basis.”
Once more, that double-sided coin of the traditional West Virginia housing market comes into play.
No, there currently isn’t enough inventory to meet demand. And that also means there aren’t plenty of tempting opportunities for potential buyers to overextend themselves — and the state economy — with them.
“We’ve been traditionally blessed in West Virginia,” Joseph said. “You’ll see some parts of the country where it’s ‘this market really exploded’ and then the market collapsed and busted. We’ve never really had that experience in a significant way in West Virginia. Because when we have increases — ‘booms’ so to speak — they’re good and solid, but not explosive.
“When they slow down the bottom doesn’t fall out, it just kind of goes back to a steady market again. We’ve always been fortunate with a market in that sense. It sounds silly, but it never exponentially booms, it never exponentially busts, either. It’s always steady.”