West Virginia Real Estate Market Trends & Analysis
Real estate in West Virginia boasts a lower median home value than every other state in the country. Consequently, the West Virginia real estate market has developed a reputation for rewarding prospective buyers with incredibly affordable housing. With the average home valued at $112,902, it is fair to say buying is considerably more affordable than renting in most parts of the Mountain State, which bodes really well for long-term investors.
The positive momentum generated by the rest of the country should benefit West Virginia and its respective investor community. While the state will certainly need to overcome a few economic hurdles to realize its true potential, things are headed in the right direction. All things considered, real estate in West Virginia looks to be an affordable investment with the potential for attractive profit margins, despite recent run-ups.
The Top West Virginia Real Estate Markets
While the best real estate market in West Virginia is up for debate, here’s a list of the cities investors may want to pay special considerations to:
Huntington
Morgantown
Parkersburg
Wheeling
West Virginia Real Estate Fees & Regulations
Real Estate
| Closing Conducted by: | Attorneys, Lenders, Real Estate Agents |
| Conveyance: | Warranty Deed |
Foreclosure Procedure
| Primary Foreclosure Method: | Non-Judicial |
| Process Period: | 2 - 3 months |
| Notice of Sale: | Trustee |
| Redemption Period: | None |
Taxes
| Income Tax: | 3% - 6.5% |
| Corporate Tax: | 7.75% |
| Sales Tax: | 6.00% |
| Estate Tax: | No |
| Inheritance Tax: | No |
| Median Property Tax: | 0.49% |
| Property Taxes by County: | http://www.tax-rates.org/west_virginia/property-tax#Counties |
Average Transactional Costs
| Closing Cost: | $2,516.00 |
| Transfer Fee: | 0.33% |
| Origination Fee: | $1,805.00 |
West Virginia Housing Market Overview
Median Home Value: $112,902
1-Year Appreciation Rate: +4.1%
Median Rent Price: $1,000
Price-To-Rent Ratio: 9.4
Average Days On Market: 85
Unemployment Rate: 6.3% (latest estimate by the Bureau Of Labor Statistics)
Population: 1,805,832 (latest estimate by the U.S. Census Bureau)
Median Household Income: $44,061 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 15.76%
Foreclosure Rate: 1 in every 127,040
West Virginia Median Home Prices
The median home price in West Virginia is $112,902, which is the culmination of more than eight years of progress. In fact, as recently as October 2012, West Virginia saw its median home value drop to about $89,896. Since that time, the state of West Virginia has ridden a wave of positive indicators, not the least of which was responsible for a 25.5% increase. For context, real estate in West Virginia appreciated at a much slower rate than the national average.
To put things into perspective, the median home value in the United States is $266,222—or $153,320 more than that of West Virginia’s median home value. Since October 2012 (right around when the national real estate market started to recover), median home values across the country jumped approximately 62.3%. Taking a step back, it's obvious real estate in West Virginia has underperformed the national market, but local investors should view its current position as an opportunity.
As it turns out, West Virginia was less insulated from the Coronavirus than most other states. Due largely to the state's already struggling job sector, unemployment has held back the local housing sector. With an unemployment rate of 6.3%, the West Virginia real estate market has a lot of ground to make up. Subsequently, the relatively high unemployment rate hasn't enabled many buyers to participate in the market as many other states are currently seeing. Ultimately, real estate in West Virginia is only as strong as its job sector. Fortunately, things are improving, and both jobs and home values should increase sooner rather than later.
Fewer people employed meant fewer buyers on the market. Uncertainty and economic turmoil kept many people from participating at all. While record-low mortgage rates have enticed some people to start buying homes again, West Virginia has a long way to go until the pent-up demand returns to normal. In the meantime, West Virginia may lag behind the rest of the country, albeit modestly.
West Virginia Foreclosure Trends & Statistics
The West Virginia housing market has come a long way since the recession, but improvements must be made across the entire state. However, it is worth noting that foreclosures aren't as much of an issue in West Virginia as many of its national counterparts. More specifically, West Virginia has a very low foreclosure rate. With one in every 127,040 homes in some state of distress (default, auction, or bank-owned), West Virginia’s foreclosure rate is officially negligible. The foreclosure rate across the United States is approximately 0.7%.
Despite a healthy foreclosure rate, the following counties have the largest distributions of distressed homes in all of West Virginia:
Harrison: (1 in every 10,544)
Logan: (1 in every 16,840)
Jefferson: (1 in every 22,813)
Cabell: (1 in every 46,407)
Kanawha: (1 in every 92,487)
While local foreclosures haven't increased dramatically, the economic uncertainty left in the wake of a high unemployment rate will most likely increase the number of distressed homeowners. As a result, it's safe to assume there will be an influx of foreclosures sooner rather than later. Local investors who position themselves well now may be able to lend a helping hand.
Tax Lien Investing
- Tax Lien or Deed: Tax Lien state
- Interest Rate: 12%
- Redemption Period: 17 months
West Virginia Real Estate Investing
The West Virginia real estate market has been making slight improvements for the better part of ten years. Since pulling itself out of the Great Recession in the first part of 2012, the local housing sector has constantly been trending upwards. Since then, rehabbers, flippers, and wholesalers have benefited from market conditions that favored their particular exit strategies. While not as much as other states, appreciation rates leaned heavily in favor of investors who could get in at the right time. That said, the same appreciation rate that has helped investors over the last eight years has turned into an obstacle. Rehabbers are finding profit margins harder and harder to come by because of increased home values.
That isn't to say rehabbing and wholesaling aren't currently great exit strategies to consider moving forward (they very much are), but rather that there's a more enticing exit strategy emerging from the new market landscape: building a rental property portfolio. New market indicators created by the Coronavirus appear to favor investors who approach real estate with longer investment horizons. Let's take a look at some of the new developments in the West Virginia real estate market, which make rental properties more attractive at the moment:
In response to the pandemic, the Fed announced it would keep interest rates low to spur more buying activity. In doing so, today's monthly average commitment rate on 30-year fixed-rate mortgages is 2.74%. The move makes it cheaper than ever to borrow institutional money, which may simultaneously lower monthly payments for those who purchase rental properties and increase cash flow.
Inventory levels are constrained across the country, and the West Virginia real estate market is no exception. A distinct lack of available listings is part of why home values have increased so dramatically over the last eight years. The pandemic only compounded the issue when it prevented builders from doing their job. As a result, it is growing harder to buy a home, even for those who have the funds. Consequently, those who aren't able to buy will ultimately be relegated to the renter pool. Landlords will find the demand for rental properties increasing for the foreseeable future, or at least until more inventory is brought to the market.
The same competition driving people to rent will mitigate the risk of vacancies and allow landlords to increase rental prices. The market created by the pandemic is essentially a perfect storm for rental property owners.
West Virginia real estate investors are awarded the luxury of perusing all of today's most popular exit strategies. However, the disruptive Coronavirus's new market fundamentals have favored rental property owners more than any other type of investor.
West Virginia Housing Market Predictions
Real estate in West Virginia has done its best to mimic national trends. For the better part of a decade, in fact, real estate in West Virginia has exhibited many of the same characteristics as its national counterpart. Price increases, confidence in the market, and several other indicators are in line with national trends, but what does that mean moving forward? What can West Virginia real estate investors, homeowners, and prospective buyers expect for the foreseeable future?
Parkersburg could see an influx of buyers: With a median home value roughly 14.9% less than the state average, Parkersburg looks like it may represent a bargain. That said, there’s reason to believe Parkersburg should see an influx of younger buyers looking to find cheaper alternatives. Having already appreciated more than the state average in the last year, Parkersburg's median home value should continue upward. The attention generated by the city's relative affordability will potentially attract new buyers and stimulate higher appreciation rates.
Inventory will drive appreciation: Not unlike every other state across the country, the West Virginia real estate market has found itself lacking in the inventory department. Most of West Virginia’s largest cities, for that matter, have far fewer available listings than balanced markets typically exhibit, and the pandemic only made things worse. As a result, competition over the available houses has simultaneously increased prices and made it more difficult for buyers.
More people will move to the suburbs: Without a need for many people to live close to an office, many people are expecting a mass exodus from large cities. Today's work-from-home culture has enabled everyone to pack up and move to less-expensive and larger living spaces. We may see metropolitan prices decrease while suburban prices increase over the course of this year.
Summary
The West Virginia real estate market currently has one of the lowest median home values across the United States. That said, the state has still experienced many of the same tailwinds as the rest of the country. Despite its low home values, West Virginia is much more expensive to live in than just a few short years ago. Nonetheless, the state is comparatively affordable for anyone looking to buy, and local investors are still awarded the luxury of rehabbing and wholesaling. Prices have made buying rental properties much more attractive, and investors can't deny the fundamentals supporting becoming a landlord.
Sources:
https://www.zillow.com/wv/home-values/
https://www.zillow.com/home-values/
https://www.zillow.com/parkersburg-wv/home-values/
https://www.bls.gov/eag/eag.wv.htm
https://www.census.gov/quickfacts/WV
http://www.freddiemac.com/pmms/pmms30.html
https://www.realtytrac.com/statsandtrends/foreclosuretrends/wv/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/