As 2023 draws to a close, the Metro Richmond real estate market presents an intriguing landscape for homebuyers, sellers, and investors alike. This comprehensive analysis delves into the current state and future outlook of the Richmond market, offering what I hope are some valuable insights for those navigating this dynamic environment.
Current State of the Richmond Real Estate Market
Richmond, known for its affordable housing market, vibrant culture, and rich history, is part of a larger metropolitan area encompassing Chesterfield, Hanover, Henrico, and Richmond City, home to nearly one and a half million people. In 2023, the market exhibited several key trends:
- New Listings and Sales: There was an 8.3% decrease in new listings compared to 2022, with a 27.8% drop in closed sales, reflecting a challenging environment for finalizing transactions.
- Median and Average Sales Prices: The median sales price in Richmond saw a 6.9% increase, reaching $405,000, while the average sales price rose by 8.5% to $472,515.
- Market Performance Metrics: Properties were moving quickly, with median days to pending at just 6 days. About 66.6% of sales were transacted over the list price, suggesting a competitive market. Anecdotally, I can definitely speak to this, as nearly no transaction with which I’ve been involved has had only one offer.
Predictions for 2024
Looking ahead to 2024, several predictions and trends are shaping the Richmond real estate market:
- Economic Growth and Mortgage Rates: A backdrop of modest economic growth and slightly higher unemployment is expected. Mortgage rates are anticipated to begin a slow retreat, improving housing affordability but potentially increasing demand as more buyers get into the market after having been waiting out the higher rates.
- Home Prices and Sales: A slight dip in the growth of home prices is expected, with a continued trend of stable but low home sales levels. Don’t misconstrue this- it doesn’t mean prices are dropping, just that prices may not continue at the same level of growth over the next year. (I definitely predict they’ll still increase, though.)
- Housing Inventory: The number of existing homes for sale is expected to remain low due to insufficient building in past years. Mortgage rates are expected to exceed 6.5% for the year, maintaining the gap between market mortgage rates and rates on existing mortgages. (It’s harder to sell when you know you’re giving up 3% and going to 6%, so fewer homes are likely to hit the market.)
- Rental Market: The rental market is expected to see a mild decline in median asking rent, with a robust supply of new multi-family homes tempering rent growth.
- Opportunities for Buyers and Sellers: First-time homebuyers may find some relief as the market becomes slightly more buyer-friendly in some respects. Home sellers, on the other hand, might face increased competition from new construction homes.
- Richmond Specific Forecast: For the Richmond area, a 3.3% growth in home prices is predicted for 2024, despite a projected 11.6% decrease in sales.
The Richmond real estate market as 2023 closes shows resilience and potential for growth, offering a dynamic landscape for both buyers and sellers. While sellers remain in a strong position due to high demand and quick sales, buyers should still be prepared for competitive conditions, especially for well-prepared homes.
However, with the expected easing of mortgage rates and a slight adjustment in home prices in 2024, the market may offer more balanced opportunities for both buyers and sellers. So if you’re thinking of buying, let’s meet and create a strategy to get you where you want to go.
If you’re thinking of selling, the market is still yours- I’d love to help you figure out how to maximize the value of your home, and get it sold to give you the most in your bottom line.