May 2022 Market Update

Introduction:

Hey Richmond homeowners, have you heard the whispers of change in the housing market? Brace yourselves, because in today's May 2022 Housing Update, we'll delve into the evolving landscape and what it means for you.

Not Another 2008: Let's address the elephant in the room right away. While fears of another housing market crash reminiscent of 2008 may be lingering, the current situation differs significantly. We'll explore the reasons behind this in the following sections:

  1. Product & Borrower Risk Then Vs. Now: Comparing the risks associated with housing products and borrowers between then and now, it's clear that the market has undergone significant changes. [Graphic 1]

  2. Foreclosure Activity At An All-Time Low: Contrary to concerns about a surge in foreclosures, recent data suggests that foreclosure activity is at an all-time low. [Graphic 2]

  3. Loans Given to Individuals with a Sub 620 Credit Score: In today's market, loans extended to individuals with a sub 620 credit score have seen a notable decline. [Graphic 3]

  4. Cash Out Refinances Left Mortgage Payments Unchanged: Unlike the past, cash-out refinances in the current market have not led to an increase in mortgage payments. [Graphic 4]

Richmond Metro Stats: Let's zoom in on the local housing market and examine the recent trends observed in the Richmond metro area:

  1. Shifting Market Dynamics: Over the past 2-3 weeks, a noticeable shift has occurred in the market, with less traffic on listings, fewer offers, and decreased bidding wars. [Graphic 5]

  2. Months of Supply Inventory (MSI) Remains Low: Despite the recent changes, Richmond's housing market continues to maintain a low MSI, consistently staying below one month since October. [Graphic 5]

  3. A Drop in Percentage of Asking Price: April witnessed an impressive 105.8% of asking price, but we predict this number will decrease moving forward. [Graphic 6]

  4. Strong Appreciation since Jan 21: With a remarkable 24% appreciation in the median sales price since January 2021, Richmond homeowners have experienced considerable gains. [Graphic 7]

What Is To Come: Now that we've examined the current state of the market, let's take a glimpse into the future and explore what lies ahead:

  1. Home Price Appreciation Averaging at 9%: Experts from Fannie Mae, Freddie Mac, Core Logic, HPES, NAR, Zelman, and MBA predict that home prices will continue to appreciate at an average rate of 9%.

For Sellers: If you're a seller in this shifting market, there are a few key points to keep in mind:

  1. Fear Not: While changes are occurring, it's important to stay calm and informed. Fear should not drive your decision-making process.

  2. Pricing Does Matter: In a market with evolving dynamics, pricing your property appropriately will be crucial to attract potential buyers and secure a sale.

  3. Marketing Matters: With decreased buyer competition, it becomes even more essential to invest in effective marketing strategies to highlight your property's unique features.

For Buyers: If you're a prospective buyer, these insights are particularly relevant to your home search:

  1. Rates Will Continue To Go Up: Expect mortgage interest rates to rise, so it's advisable to act sooner rather than later if you're considering a purchase.

  2. This Is The Break You've Been Hoping For: With a shift in the market, buyers may find increased opportunities, reduced competition, and more negotiating power.

  3. Keep Your Cash: As rates increase, it's wise to preserve your cash reserves for down payments and closing costs.

Conclusion: As the Richmond housing market experiences a notable shift, it's essential for both sellers and buyers to adapt to the changing dynamics. Stay informed, remain proactive, and consult with industry experts to make informed decisions in this evolving landscape. Remember, change often brings new opportunities, and it's how we navigate through them that determines our success.

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