November 2022 Market Update
Welcome, Richmond homeowners, to your November 2022 housing market update! In this blog post, we'll discuss the current state of the housing market in Metro Richmond and debunk some common misconceptions. Additionally, we'll provide housing market forecasts for 2023 and offer three tips for both buyers and sellers to navigate the market successfully.
Housing Market Forecasts for 2023: Let's start by examining the housing market forecasts for 2023. According to the six major forecasters, three anticipate minimal appreciation, two predict minimal depreciation, and Ivy Zelman Associates forecast a 5.1% depreciation in Metro Richmond. It's crucial to note that doomsday predictions of a 20-30% drop are baseless, and even the gloomiest projection by a reputable housing economist is a 5.1% depreciation. Beware of clickbait headlines that aim to instill fear rather than provide accurate information.
The Reality in Metro Richmond: Now, let's focus on what is actually happening in Metro Richmond. Looking at the median home prices of resale homes over the past two years, we observe a significant increase. In January of this year, the median price was $306,000, and as of October, it has risen to $348,000, indicating a 13.7% appreciation in home values. Even if there were a 10% decrease in home values, which is an extreme scenario, homeowners would still be above their initial values at the beginning of the year.
Understanding the Normal Market Cycle: It's essential to understand the normal seasonal cycle that Metro Richmond experiences. Over the last six years, median home prices have consistently peaked during the spring and summer, followed by a temporary decrease in prices during December and January. This cycle is typical for the region. Additionally, the median home value can be skewed by the seasonal sales pattern of different price points in the market.
Debunking Myths: Let's debunk some of the common myths and misconceptions surrounding the Richmond housing market.
We're in a buyer's market: Contrary to popular belief, we are still in a seller's market. The month's supply of inventory, a metric used to determine market conditions, stands at 0.8 months in Metro Richmond. A buyer's market is typically considered to have a six-month supply or more, while a seller's market has less than six months of inventory.
No one is buying due to high interest rates: While interest rates may fluctuate, the number of pending home sales remains consistent. Comparing the five-year data, we see that the number of pending home sales is similar to previous years, suggesting ongoing buyer activity.
Buyers are getting steep discounts: Sellers are still receiving close to 100% of their asking price. Although sellers are not experiencing the same frenzy as earlier this year, discounts are not as drastic as some may think.
Homes are taking forever to sell: While it's true that homes are taking slightly longer to sell, the median days on the market increased from five to seven days. This still indicates a fast-paced market.
Three Tips for Sellers and Buyers: Here are three tips for sellers and buyers to navigate the Richmond housing market successfully:
Take your time: Don't panic or rush into a sale. Start preparing your home for a 2023 sale by consulting with a knowledgeable real estate professional well in advance.
Focus on the fundamentals: Pay attention to staging and pricing your home appropriately. Returning to these fundamental practices will ensure a successful and profitable sale.
Understand the market cycle: Recognize that the market experiences normal seasonal fluctuations and that you can still achieve