March 8, 2022
Fauquier County housing market weak on inventory, but commercial real estate remains strong
Photo by James Jarvis
Lisa Sturtevant, chief economist for Virginia REALTORS, addresses Fauquier County Chamber of Commerce members Monday.
Photo by James Jarvis
Doug Parsons, director of the Fauquier Department of Economic Development, said during the chamber event Monday the county is thinking of embracing the development of industrial facilities in the county because it would create more growth and tax revenue for the county.
The residential housing market in Fauquier County has been unable to keep up with demand in the two years since the pandemic, but commercial real estate in the county is showing growth and resiliency, according to local experts.
During the Fauquier Chamber of Commerce Economic Summit Monday, Dr. Lisa Sturtevant, chief economist for Virginia REALTORS, outlined the challenges facing first-time home buyers in Fauquier and why the county’s commercial real estate market has stayed relatively strong throughout the pandemic.
Sturtevant opened up by saying that despite concerns from consumers about rising inflation, the economy is bouncing back much quicker than it did following the Great Recession.
The U.S.’s total GDP (value of goods and services a country produces) is 11 percent higher than before the pandemic, consumer spending has surged, the unemployment rate has fallen and wages are up. (The caveats of those positive marks, it was noted, is that spending on services remains weak and labor force participation is low.)
Still, Sturtevant noted that by the end of 2022 the state projects it will have added 79,000 new jobs – back to pre-pandemic totals – and unemployment could fall below 3 percent.
Sturtevant said one big issue the local economy in Northern Virginia and Fauquier continues to face is a significant decrease in the supply of homes. Consequently, home sales are down compared to where they were a year ago.
In Fauquier, because of the dramatic increase in home sales over the course of the pandemic, the supply in the county had dropped to 81 as of earlier this month.
“The challenges for homebuyers and renters in Fauquier County are pretty major,” Sturtevant told Fauquier Now following the chamber event.
And this is a big problem, she said, because the real estate market is a key driver of the local and national economy. If workers can’t move somewhere because of a lack of housing affordability or availability, then businesses can’t attract or retain workers, she noted.
“If those businesses can't attract and retain workers, then those businesses will not locate in Fauquier County,” Sturtevant said.
She noted there are two primary reasons why the supply of housing is so low. First, people are remaining in their homes longer, which ties up housing inventory. And second, not enough housing is getting built.
In Northern Virginia generally, the reason not enough housing is being built is due to several factors, including a shortage of workforce in the construction industry, a lack of raw materials to build homes and zoning laws.
These have been obstacles to increasing the supply of homes over the last 20 years, Sturtevant said, and the pandemic has exacerbated the issue.
Many people – young people in particular – are now able to work remotely, which has caused places like Fauquier to see a higher demand for housing due its natural rural appeal, according to Sturtevant.
However, construction of new housing in Fauquier also faces “a lot of community opposition,” which can deter or slow down growth in the county, she said.
“And this is not a criticism of the county,” she said. “But folks move to Fauquier County for a certain reason, a certain lifestyle, a certain character. And a lot of that has to do with large lots and rolling hills and sort of a rural mindset. And once you start talking about multifamily housing or apartments or townhomes, you get a lot of pushback from folks who like Fauquier County the way it is.”
On the flipside, however, Sturtevant said commercial real estate in Northern Virginia and Fauquier is faring well, particularly retail and flex space (hybrid office and industrial space).
“The commercial real estate market has been the big winner during the pandemic,” Sturtevant said.
The commercial market boomed because companies wanted to keep supply chains closer, and many people were doing a lot more online shopping, Sturtevant said.
In terms of retail and office space, Sturtevant maintained the market has been very “resilient.”
“The vacancy rate in the office market in Fauquier County is 7.5 percent … in Fairfax County, the vacancy rate is something like 18 or 19 percent,” she said. “Vacancy is not a problem.”
As for larger-scale warehouse and flex space, Doug Parsons, director of the Fauquier Department of Economic Development, said the county is thinking of embracing the development of industrial facilities because it would create more growth and tax revenue for the county.
“The Board of Supervisors has a strategic plan for the county, and their hope for economic development as you can see is to assist with a balanced economy or economic base and enhance the quality of life for our citizens ... ” Parsons said.
He did note, however, his office’s commitment to preserving the agricultural industry in Fauquier.
“We have been working with the agricultural community here to build a livestock exchange in Marshall,“ he said. “We're looking at trying to bring in an abattoir, which is a butcher for that operation, to try to build the peripheral capabilities of the livestock exchange to help them out a little bit. So that's one thing we're working on.”
Looking ahead at the housing market, Sturtevant said the conditions are unlikely to change anytime soon, even opining it could take another decade or more before inventory frees up.
“It's going to be tough for anyone over the next decade who wants to buy a home, unfortunately, I think,” she said.
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