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March 6, 2019

"Housing industry experts express high hopes for damp home sales"

Take a look at Cornerstone Homes featured in the Chesterfield Observer.

By Kate Andrews
Credit: Chesterfield Observer

While Chesterfield still leads the region in new home sales, the second half of 2018 saw a slight slowdown in growth, with some industry experts blaming factors like the labor shortage, fluctuating lumber costs and last year’s abnormally heavy rainfall for building delays and keeping prices high. Meanwhile, one area of building continues to heat up: age-restricted housing.

Chesterfield County’s new housing market remains strong going into 2019, says Tom Tyler, director of Integra Realty Resources in Richmond, but he notes that most of last year’s growth happened in the first half of 2018 and slowed in the fall and winter.

“A lot of the increase did occur in the first half of 2018,” he says, referring to the 4 percent growth in newly constructed homes in the Richmond metropolitan area from 2017 to 2018, “and leveled off in the third and fourth [quarters], producing a very, very slight decline. I would say it’s basically flat.”

Chesterfield still has the most robust new housing market in the Richmond region, Tyler notes, especially in the western part of the county. The slowdown in market growth throughout the region is due to a rise in interest rates, as well as a decreased supply of vacant lots – although Tyler says land availability is much less of a problem in Chesterfield than in Hanover County and the city of Richmond.

“It just continues to be one of the most desirable areas in the market,” he says. “In the short-term, demand may be off a little bit, but it’s nothing like the recession of 2008.”

In 2018, the county saw 1,602 new homes sold, an increase of 50 from 2017, he says, and Henrico County was in second place, with 1,091 new homes sold last year.

The market in Chesterfield continues to be mostly positive for builders.

“January has been a strong month out the gate with [building] permits. They’re very positive about 2019,” says Danna Markland, CEO of the Home Builders Association of Richmond. But for buyers interested in newly built homes, prices remain high due to a variety of factors: labor shortages, land availability and material costs. Last year’s record rainfall hasn’t helped matters either. “The weather, of course, was a big factor,” Markland says. “That put some [builders] behind as much as six months. That was the element that was different in 2018.”

Heavy rainfall makes it difficult to ready sites for construction, and mud can prevent workers from getting to sites. Bad weather exacerbates delays due to labor shortages, too, since workers are in high demand when it’s dry.

Roger Glover, president of Cornerstone Homes, which is behind two growing 55-plus communities in Chesterfield, says the weather was a major challenge for his business. “It wasn’t just the volume, but the consistency” of the rain, which seemed to fall “every four or five days,” preventing the land from drying out between downpours.

Rainfall aside, the fluctuating cost of lumber has affected builders across the country. Last May, lumber costs spiked at $639 per 1,000 board feet as the U.S. tariff battle with Canada heated up, but costs decreased by nearly 24 percent by the end of 2018. However, as of January, lumber futures rose by 25 percent to $439.50 per 1,000 board feet.

The average sale price for a newly built home in Chesterfield in 2018 was $404,205, Tyler says. “If you look at existing homes, especially in older neighborhoods, you’ll find more affordable housing. Builders are just having trouble building homes and selling them for under $250,000.”

However, many communities are diversifying their offerings, building more condos and townhomes that are often priced lower than newly built detached single-family homes. Crofton Village at Charter Colony, in the western part of the county, has new attached townhouses for sale below $300,000, Tyler notes, and Harpers Mill and Magnolia Green also offer new houses at prices starting around $250,000 and up.

A big area of growth in Chesterfield is in communities for people ages 55 and older, Tyler says. Some are age-restricted, while other neighborhoods are simply targeted toward older customers with offers of full lawn maintenance and other amenities.

Since 2014, the county’s Planning Department has been inundated with development proposals for senior housing, approving 18 projects with a total 2,724 new senior housing units over the last five years.

Among the newer “55 and better” communities are Townes at Notting Place in northern Chesterfield, with single-story townhouses starting in the $260,000s; Villas at Ashlake, a luxury community near Swift Creek Reservoir, in the $300,000 to $360,000 range; and the Villas at Ashford Hill, near the intersection of Midlothian Turnpike and Courthouse Road, in the $330,000 to $400,000 range with lawn maintenance included.

Cornerstone built the Villas at Ashlake and just broke ground in Chester for the Cove at Magnolia Lakes, both of which are age-restricted neighborhoods. Glover says nearly 80 percent of Villas at Ashlake homeowners already lived in Chesterfield and are empty-nesters looking to downsize.

“They’re finding their houses are too big, too hard to maintain, thinking: ‘We don’t need the big house, and we don’t even know most of our neighbors anymore,’” Glover says, but they still want to stay in the county because of family, friendships and relationships with doctors and houses of worship.

The Cove, with 67 houses planned at a range from the lower-to-upper $300,000s, is the second phase of the Magnolia Lake community, following the Villas at Magnolia Lake, which has 105 residences and community gardens. In the Cove, which has more open land, Glover plans more gardens, a trail network, an open-air pavilion, an orchard and outdoor sports area.

Another similarity between Magnolia Lake and the Villas at Ashlake are clubhouses, which give neighbors a place to meet and follow their interests – everything from a gambling club to Bible study. These are all amenities that aging boomers are after, Glover says. “You have to help people connect and engage.” 

By Kate Andrews
Credit: Chesterfield Observer

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