November 2021 Richmond, VA Real Estate Market Update
As we approach the end of the year and prepare to celebrate Thanksgiving, it's a fitting time to reflect on the state of the real estate market and provide an update on its current trends. In this market update, we'll explore the gradual decline in showings, the continued strength of sales, and what lies ahead for home prices and mortgage rates in 2022.
Gradual Decrease in Showings: Since reaching its peak in March, the number of showings in the real estate market has been gradually declining. However, it's important to note that this decline signifies a leveling out rather than a drastic drop. (Graphic 1) While the current trend suggests a potential slowdown, it's essential to view it in the context of previous years.
Above Average Performance: When comparing the current market to September figures from 2017, 2018, and 2019, it becomes evident that we are still well above those levels. (Graphic 2) Despite the slight decrease in showings, the real estate market continues to outperform previous years, indicating robust activity and sustained interest from buyers.
Strongest Sales Since 2005: Renowned real estate analyst Bill McBride, also known as Calculated Risk, has reported that sales are at their strongest since 2005. (Graphic 3) This highlights the underlying strength and resilience of the market, even in the face of shifting dynamics and potential challenges.
Price Appreciation in 2022: Looking ahead to 2022, experts predict a more normalized rate of price appreciation, estimated to be around 5.1%. (Graphic 4) While this marks a slight slowdown compared to recent years, it indicates a healthier and more sustainable growth pattern, fostering stability in the housing market.
Strong Volume of Home Sales: In addition to price appreciation, 2022 is expected to be another strong year in terms of the volume of homes sold. (Graphic 5) This indicates a continued level of demand and activity in the market, providing opportunities for both buyers and sellers.
Inventory Challenges and Mortgage Rates: One significant challenge that persists in the current market is the lack of inventory. The limited number of homes available for sale continues to put upward pressure on prices, intensifying competition among buyers. (Make point of no inventory on the market)
Furthermore, mortgage rates are anticipated to climb in 2022. (Graphic 6) Prospective buyers should be prepared for potentially higher borrowing costs, making it advisable to secure favorable rates sooner rather than later.
Conclusion: As we head into the holiday season and prepare for a new year, the real estate market continues to show signs of strength and resilience. While there has been a gradual decline in showings, we remain well above historical levels. Sales are at their strongest since 2005, indicating a robust market. Looking ahead, experts forecast a more sustainable rate of price appreciation and expect another strong year in terms of home sales volume. However, challenges persist in the form of limited inventory and the projected increase in mortgage rates. By staying informed and adapting to changing conditions, buyers and sellers can navigate the evolving real estate landscape successfully.