Introduction: The real estate market in Richmond Metro is currently experiencing significant changes that are impacting both sellers and buyers. In this market update, we will delve into various statistics and trends that shed light on the current state of the housing market.
1. Resale Home Inventory Down 52.5% (Graphic 1): The number of available resale homes in Richmond Metro has plummeted by a staggering 52.5%. This sharp decline in inventory is a clear indication of the highly competitive seller's market that currently prevails. As a result, sellers are finding themselves in an advantageous position, with fewer homes available, and demand from buyers remains strong.
2. New Construction Below 50 Yr Build Average For the Last 13 years (Graphic 2): In an interesting turn of events, new construction in Richmond Metro is now below the 50-year build average for the past 13 years. This dip in new construction activity could be attributed to a range of factors, such as supply chain challenges, labor shortages, and increasing material costs. The lack of new construction has further intensified the housing shortage and put additional pressure on the resale market.
3. Richmond Metro MSI was at 0.8 MSI - 24 Days (Graphic 3): Months of Supply Inventory (MSI) is a crucial metric to gauge the real estate market's health. Currently, Richmond Metro boasts an impressively low MSI of 0.8, which means it would take only 24 days to sell all the existing homes on the market if no new listings are added. This figure highlights the strong seller's market conditions, where homes are selling rapidly due to high demand and low inventory.
4. Difference In MSI from 2004-2007 vs Last 4 years (Graphic 4): Comparing the MSI from the pre-recession period (2004-2007) to the last four years, we observe a significant shift in market dynamics. The MSI during the pre-recession period was notably higher, indicating a more balanced market. However, the recent years have seen a steep decline in MSI, signifying the current seller's market where demand far outweighs supply.
5. YOY Equity Growth is $31k in Virginia (Graphic 5): Homeowners in Virginia are benefiting from substantial year-over-year equity growth, with an average increase of $31,000. This equity growth is a result of robust demand and rising home prices. For sellers, it presents an excellent opportunity to capitalize on their investments and make profitable sales.
6. Mortgage Rates On The Rise (Graphic 6): Buyers should be aware that mortgage rates are on the rise, marking a potential shift from the historically low rates experienced in recent years. With interest rates increasing, buyers may face higher borrowing costs, making it imperative to act swiftly if they wish to lock in a more favorable rate.
It’s Go Time: Given the current market conditions, sellers have a prime opportunity to list their homes and attract eager buyers. With low inventory and high demand, there is a strong likelihood of receiving competitive offers.
If Buying & Selling, Buy First If You Are Able: If you're planning to sell your current home and purchase a new one, it's wise to buy first if financially feasible. This way, you won't risk being caught without a place to live in case your home sells quickly.
Don’t Overplay Your Hand: Although sellers are in a favorable position, it's crucial not to overprice your property. Buyers are still discerning and may be wary of overpriced listings, potentially leading to longer days on the market.
A Casual Approach Simply Won’t Work: In this competitive seller's market, a laid-back approach to home buying is unlikely to yield the desired results. Be prepared to act quickly and decisively when you find a suitable property.
Do Your Homework: With limited inventory, it's essential for buyers to stay informed about new listings and act promptly to schedule viewings and make offers.
Lower Your Target Price: Given the rising home prices and potential increase in mortgage rates, buyers may need to adjust their target price range. Flexibility and willingness to compromise will be valuable traits in this market.
Conclusion: The current real estate market in Richmond Metro heavily favors sellers, with low inventory, rising home prices, and high demand. Buyers face the challenge of navigating a competitive market and adjusting to the possibility of higher mortgage rates. As the market continues to evolve, both sellers and buyers must remain agile and well-informed to achieve their real estate goals.