VIRGINIA BEACH — Let’s face it, nowadays the Internet is overrun with list after list of the best city for this and the worst city for that.
Virginia Beach has certainly appeared on a few of those lists — sometimes even at the top.
But many such lists should be taken with a grain of salt.
However, one list recently released by Realtor.com is an interesting one and well worth paying attention to. It’s also one on which Virginia Beach appears at the top.
And in this instance, it’s a great thing.
In March of this year Realtor.com’s data team compiled a list of the U.S. markets where home buyers are forced to make the biggest down payments and a list of markets where down payments were the smallest for home buyers.
It’s on the latter list that Virginia Beach appeared at No. 1.
Much of the credit for the low down payments required goes to the military.
“The military is driving it, but everyone benefits,” said Lisa Parker, president of the Dragas Mortgage Company, which has been doing business in Hampton Roads for 50 years. “We’re a military town and close to two bases.”
She said that roughly 60 percent of their loans are VA (Veterans Affairs) loans.
According to the report, over the past 12 months Virginia Beach home buyers paid an average down payment of just 6.8 percent.
The next lowest city on the list was Cincinnati, at 8.6 percent.
Parker said it’s not just the VA loans that are keeping down payments low.
Virginia Housing Development Authority loans often require no down payment and Federal Housing Administration loans can be 3.5 percent or less. Both are available to all potential homebuyers, not just military personnel.
For many years down payments of 20 percent were required when buying a home.
Sally Horvath, vice president of sales and marketing at Dragas agreed that the military presence helps the housing market.
“It gives us a constant supply of homes and helps to keep the market at a consistent pace,” she said.
Both Parker and Horvath agree the supply of small family homes in the low-$200,000 range is tight. Sellers in at that price-point are often able to get multiple offers, particularly on resale properties, causing home buyers to sometimes over pay, which can lead to issues down the road with resale.
“The lower down payments do allow new homeowners to use that money for repairs and improvements, which is often required on older resale homes,” Parker said.
Horvath said that new construction home buyers have the advantage of multiple new home warranties that come with the home, which can protect them from sudden, unexpected costs.
Both agreed that it’s often that initial outlay of money that keeps a home-renter from becoming a homebuyer.
Parker said interest rates are starting to rise, in some instances nearing 5 percent — a level they’ve been below for the last 10 years. That’s still quite an improvement from 1968 when Dragas went into business and interest rates were 18 percent.