June 2022 Market Update
Greetings, Richmond, Virginia! It's time for your June 2022 Housing Market Update. In this blog post, we'll address some of the prevailing concerns surrounding the housing market and shed light on the promising trends that are shaping the industry. So, grab a cup of coffee and let's dive in!
Are we in a housing market correction? One of the key worries circulating among homeowners and potential buyers is whether we are experiencing a housing market correction. However, when we look at the technical definition of a correction—10% or greater decline in the price of an asset—we find that neither the national nor the Metro Richmond market has witnessed such a decline.
But what about mortgage rates? Undeniably, mortgage rates have a significant impact on the housing market. While we did observe a sharp increase in rates earlier this year, they seem to have plateaued over the past two months. It's essential to consider the context: although rates may be higher than what we've seen in the last decade, they remain lower than the historical average of the past five decades.
Aren't we supposed to be in a recession? It's crucial to remember that a recession doesn't necessarily imply a decline in home values. In fact, during only two of the last six recessions did we see a decline in home values. The 2008 recession, which caused a significant drop, was primarily driven by issues specific to the housing market, such as bad loan products and overbuilding. The current economic landscape differs significantly from that time.
Are we not seeing any impact in the Richmond Metro Housing Market? Contrary to the prevailing concerns, the Richmond Metro Housing Market continues to show positive indicators. Median sales prices have been steadily climbing, reaching $375k in May. Pending sales, representing homes going under contract, have also been on the rise. Although the average days on the market have increased slightly from 5 to 6 days, the months supply of inventory has remained low at 0.7, indicating a strong seller's market. To reach a balanced market, we would need to see a significant softening, around 850%.
Conclusion: In conclusion, the June 2022 Housing Market Update reveals a housing market that defies some of the concerns and rumors currently circulating. Despite fears of a correction, the market remains stable, with no significant decline in prices. Mortgage rates, although higher than recent years, are still historically favorable. Moreover, the Richmond Metro Housing Market continues to display positive growth, with increasing median sales prices and pending sales. While it's essential to stay informed and cautious, it's equally important not to let unfounded concerns overshadow the promising trends shaping the housing market.
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