March 2022 Market Update

Introduction:

With all the uncertainty and volatility in the world today, many are wondering about the state of the Richmond Metro Housing Market. In this March 2022 Real Estate Market Update, we'll delve into the current market conditions and discuss the burning questions on everyone's minds. Are we in a housing bubble? When will the bubble burst? Let's explore the latest data and trends to gain insights into Richmond's residential real estate market.

1. Housing Bubble Concerns: A recent study by Realtor.com reveals that 77% of consumers and 44% of agents believe we are currently in a housing bubble (Graphic 1). However, it's essential to examine whether this is a repeat of the 2008 scenario or a result of supply and demand dynamics.

2. Supply and Demand: To gauge the market's health, we can compare the months supply of inventory from 2007-2010 to the last four years (Graphic 2). This analysis helps us understand the balance between buyer demand and available housing stock.

3. Credit Score and Loans: Examining the volume of loans in billions with credit scores below 620 (Graphic 3) provides further insights into the market. Understanding the creditworthiness of borrowers helps determine the stability and potential risks associated with the real estate market.

4. Home Prices: Price appreciation is a crucial indicator of the market's strength. In January, Richmond experienced a year-over-year price appreciation of 19.1% (Graphic 4). It's important to differentiate between price appreciation and price appreciation acceleration to comprehend the market's dynamics.

5. Price Appreciation Forecasts: Experts from the seven major forecasters project an average appreciation of 6.1% for 2022 (Graphic 5). However, external factors such as the Ukraine conflict and inflation may impact these projections, depending on their effects on consumer confidence.

6. Months Supply of Inventory (MSI): Monitoring the MSI helps assess the market conditions for sellers. In Richmond Metro, the MSI continues to decline (Graphic 7), indicating a seller's market where demand outpaces supply.

7. Tips for Sellers: a. If You Have To Buy, Buy First: In a competitive market, it's advisable for sellers to secure their next home before listing their current property. b. Spring Is Here: Springtime often brings increased buyer activity, making it an opportune time for sellers to list their homes. c. As-Is Is An Option: Providing the option for buyers to purchase the property as-is can attract more offers and streamline the selling process.

8. Tips for Buyers: a. Bring Your Inspector: Engaging a qualified inspector helps buyers make informed decisions and identify potential issues before finalizing a purchase. b. Search Off-Market: Exploring off-market properties expands the pool of options and may lead to finding hidden gems. c. It's Only Getting More Expensive: With accelerating price appreciation, waiting may result in higher purchase prices. Acting sooner rather than later can be beneficial.

Conclusion: The Richmond, VA residential real estate market in March 2022 reflects a dynamic and competitive landscape. While concerns about a housing bubble persist, examining supply and demand dynamics and other market indicators can provide valuable insights. Sellers can benefit from strategic approaches, while buyers should consider market trends and act promptly. As we navigate the evolving real estate landscape, staying informed and seeking professional advice are crucial for making informed decisions in Richmond's housing market.