The below is a synopsis of a presentation I gave to the Nelson County Home Builders Association, October 17, 2022 at Blue Mountain Brewery in Afton.

A motorist hits the brakes coming down Rt. 664 off of Wintergreen Resort. Similar to the current real estate market, plenty of folks are hitting the brake pedal or shifting gears.

We are all a little too familiar with the smell of burning rubber either coming off Afton Mountain or off of Wintergreen on Beech Grove Road. And if we are to draw an analogy between buyer behavior and being behind the wheel of a truck making its way down the mountain, let’s just say buyers are pumping their breaks as they navigate the market.

Yes, tourism income in Nelson County has surged. Yes, builders remain backlogged as statewide building permits grew in 2021. Yes, existing home inventory remains tight. And yes, mortgage rates have climbed upward discouraging buying activity. All of these factors are reasons enough for buyers to be pumping their breaks and for those of us in the industry to be shifting gears (and to save our breaks for future events).

As I checked the MLS this morning, I saw 32 homes for sale in Nelson County. A quarter of those are in Wintergreen Resort (6) and Stoney Creek (2). The median Days on the Market (DOM) is 52 and the average DOM is 75.

Hard stop: What about all the bidding wars we’ve been hearing about? Why are those homes still on the market?

Two reasons:

Buyers are pickier
Higher rates aren’t helping. Home inspections are back. Many buyers are being more patient and waiting for the “right one.”
Seller market perception
Many sellers haven’t accepted that the market has shifted. Some of them aren’t terribly motivated to sell at a lower price, or they may have the luxury to “hold out for the right buyer.”

Put simply, buyers have reasons not to buy immediately and sellers have plenty of reasons not to sell immediately. Let’s chew on a few scenarios:

If a seller is selling his primary residence, where is he going to go when housing inventory remains low and builder backlogs continue? This landscape may be tricky to navigate, but I’ve been able to successfully negotiate rent-backs (also known as Seller Possession Agreements) to give sellers time to identify their next home. In many ways, we are still in a sellers’ market.
Many buyers — graduates of the Great Pandemic-era Housing Bidding War — have found their homes and are happy. They made their moves when interest rates were below 3%, and now that the stress of the 2021 real estate market is behind them, they can enjoy 2022 knowing their property values continue to appreciate, though not at the rapid rate as we saw in 2020 and 2021.

Comparing 3rd Quarter detached home sales data in 2021 vs 2022, we do see a cooldown:

Is a 19+ % drop in the number of deals closed indicative of a crash, or are we just sliding? “Crash” is a big word and I’m not an economist, so I’m not going to use that term. What I will say — based on my experience this year — is that we are indeed seeing a normalization of the market. Though I am doubtful we will return to a pre-pandemic sales activity, this cooling off reflects a new reality: property ownership is costlier than it has been.

So that’s why we are getting whiffs of burning rubber as we head into the final quarter of 2022. Though this market may present better buying opportunities, we should expect to see plenty of red lights from cautious drivers ahead of us as we all adjust to this new traffic pattern.

Brake lights on Afton Mountain, just before the Rt. 250/151 intersection where road crews are installing a roundabout.

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Are buyers pumping the breaks?