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Midsummer Market Update 2022

Well, mostly midsummer, at least. It’s hard to turn on the news without some sort of daily update about the real estate market, but with so much click bait, so many opinions, and headlines crafted to grab your attention, what is the real story?? (And how much does the national news impact what’s going on here in Central Virginia?) I’m here to break it down for you!

What’s Been Happening for a While?

Well, it’s no surprise that the real estate market has been going full steam for the last couple of years. The reasons for that are numerous. To name a few:

  • The pandemic created different needs in the home- more work from home situations, more desire for home to be a “get away” when so many get aways were closed (think pools, putting greens, and more outdoor kitchens), and more people becoming something of digital nomads, with the ability to move anywhere.
  • Interest rates dropped to historic lows, so money became so cheap to borrow, and that absolutely spurred the market, make home ownership more attainable for many.
  • Millenials/older millennial buyers dropped into the market in force. Being the most populous generation, they made up 43% of the buyers out there in 2021 and those numbers continue to grow.
  • The production of new housing units dropped after the mortgage crisis in ’08, and the supply has diminished since.

All of those factors created a serious supply and demand issue, where there were quite literally more buyers than homes. That’s been going on for a couple of years now.

What we’re seeing now and how it’s changed over the last few months. 

  • Obviously, rates have risen quite a lot in the last few months, going from a low of 2.68% in December of 2020 to the current rate (as of July 2022) hovering around 5.5%. That has pushed some buyers out of the market completely, and more into different brackets of their price range.
  • In our market, in Central Virginia and the Metro Richmond area,
    • We’re still seeing a good number of multiple offer situations. But, instead of 15 offers, we’re seeing more 4 or 5 offer situations.
    • Every home is not selling immediately. The homes that have don’t have great curb appeal, show a lot of deferred maintenance, or are priced too ambitiously are not flying off the market like they were a few months ago.
    • Buyers are able to be, and are being, a little more picky, and a little more cautious. Fewer buyers are waiving “all the things-” Inspections, appraisals, etc.
    • More price reductions. Price reductions have tripled since early May. Those days of pricing homes by throwing a dart up high, and having offers that still exceed it, seem largely over. In most cases, at least.

What is projected in the next few months/looking into next year? (And how will it all affect you if you’re looking to buy or sell?)

  • Despite some people’s predictions of a housing market crash, that’s VERY unlikely to happen here in the Richmond area. Demand is still high, and supply is still pretty low.
  • While we may see a more “normal,” market, it is doubtful that we’ll shift completely from a seller’s market to a buyer’s market. It will likely just be more balanced.
  • We’re already seeing more home inspections and fewer high appraisal waivers, so if you’ve wanted to buy and those things have scared you, that window is opening just a bit.
  • All of the experts do predict that rates will continue to rise over the next few months to a year, and that homes prices here will continue to go up (not at the same rate, but still, up) for the next few years, so if you’re thinking of buying, don’t wait for prices to go down. Buy when it’s right for YOU.
  • If you’re thinking of selling, you may have missed *much* of the crazy peak of the seller’s market, but with supply still low, it is still a good time to sell and leverage the equity you have in your home.

Do you have more questions about the market? Follow me on social media and here for more market updates, or give me a call to give you a customized assessment of your unique situation.