Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 24, 1993 TAG: 9301260395
SECTION: NEW RIVER VALLEY ECONOMY PAGE: 14 EDITION: NEW RIVER VALLEY
SOURCE: KATHY LOAN STAFF WRITER
DATELINE: BLACKSBURG LENGTH: Medium
PENT-UP DEMAND BOOSTS REAL-ESTATE SALES
The real estate market in the New River Valley benefited in 1992 from low interest rates and a stabilization of jobs.But it remains to be seen how layoffs at the Radford Army Ammunition Plant and other businesses will affect the market in 1993.
John T. Mentzer, Virginia Real Estate professor of marketing at Virginia Tech, said many 1992 home sales were the result of people's confidence in their jobs, lower interest rates and the ability to "trade up" to better living quarters.
Mentzer compiles and interprets residential real estate information monthly for the New River Valley Association of Realtors.
"Mortgage rates have been the primary factor that has carried the market," Mentzer said.
"I think there also was a pent-up demand in 1992; 1991 was a very sluggish year."
The number of homes sold was consistently higher in 1992 than the previous year, he said, and "the fact that interest rates have been so low has been the cause of that."
The average sales price of homes increased by about 1 percent, Mentzer said.
The New River Valley saw $8 million in home sales in October, resulting in about $500,000 in commissions for real estate agents and brokers. Averaging that out for the year means that real estate workers earned about $6 million for the year, Mentzer said.
Buyers spent 1992 buying their first home or trading up and owners of the more expensive homes that weren't moving in 1991 were able to sell their homes.
With the closing of AT&T in 1991, the area saw a drastic loss in jobs and home ownership. As jobs stabilized in 1992, the demographic makeup of communities changed as people took advantage of a buyers' market.
For example, the demographic makeup of Stroubles Mill in Blacksburg began to change. Mentzer, who lives in the community, said he has noticed that homeowners there are no longer mainly corporate officers and endowed professors. Instead, young families, middle-age people and associate professors are finding they, too, can afford to live there.
How 1993 will bode for the real estate market remains to be seen.
"I think that 1993 is probably not going to be a good year for the real estate market," Mentzer said, but it may not be as bad as 1991 was.
Interest rates probably will go up and there likely will be more people leaving the area, meaning the number of homes put on the market will go up, "trading up" sales will decrease as well as the number of homes sold.
Mentzer said people who probably would have bought homes in 1993 if jobs had stayed strong likely will continue to rent or not trade up.