How's the Hampton Roads Real Estate Market? Sept. 2023

Hello Hampton Roads,

I've been getting a lot of questions lately about the real estate market--where are home prices going? When will rates go down? Is it a good time for buying or selling? Those are great questions and to answer them, let's do a deep dive into the Hampton Roads local market--where we are now and where we are heading!  🏠📈

Current Market

No secrets here – the whole country's been in a blazing seller's market for the past few years. Fueled by those ultra-low mortgage rates (sub 3%), national home values skyrocketed 40% in just 2 years. Believe it or not, homeowners are sitting pretty – 68.7% of Americans who own a home have either paid off their mortgages or have at least 50% equity.

I've got a monthly snapshot for each of the 7cities right here in Hampton Roads neatly divided between attached and detached properties. Looking last month's numbers, it's clear that home values are holding strong, and sellers are raking in slightly above their asking prices for well-priced homes. Things are looking good for homeowners ready to cash in on their equity gains. Just remember, a gain is just a number on paper until you lock it in by selling!

However, this seller's market is getting a little long in the tooth, and just as everything changes at some point, the real estate market is shifting.  

Consequences of Low Rates

Those rock-bottom rates were never meant to stick around forever. In a bid to tame inflation the Fed jacked up rates causing the market to shift gears in a hurry. Rates are now almost three times what they were in 2021 (remember that sweet 2.65% in Jan 2021?). According to Mortgage News Daily, the average 30-year fixed rate is lounging at 7.92%. Higher rates have made it less affordable and less attractive for both buyers and sellers. For instance, a $300K loan at 3% was roughly $1263 in principal and interest, but the same loan at 7.8% is around $2184 in principal and interest. Also, homeowners who snagged low rates back in the day don't want to trade them in for a higher payment that buys them less house.

The Trend is Your Friend

To truly grasp the market, you've got to look at trends, not just the latest sales data. Trends offer you insights to make smart decisions about when to buy or sell.

Take a look a the table below for detached single family homes in the 7 cities. In terms of median sales price, number of homes sold, and the average percentage of list price received, the market hit its peak back in June. Plus, days on the market and months' supply of inventory have been on the rise since then.

For detached single family homes in the 7 cities:

Metric	June	September
MSP (Median Sales Price)	$350,000	$336,500
# Homes Sold	1,636	1,204
Avg % List Price Received	101.1%	100.3%
Days on Market	11	18
MSI (Months Supply)	1.2	1.9

It's important to keep an eye on inventory to see which side holds the advantage, buyers or sellers. A balanced market – one where buyers and sellers are on equal footing – sits at 6 months of inventory. Anything below that is a seller's playground, while anything above it leans towards the buyer's side. We're not anywhere near 6 months, but I'm sensing a shift favoring buyers. Homes are lingering longer on the market, and there's less competition as interest rates skyrocket, nudging some folks out of the market. I'm noticing more price drops and buyers managing to negotiate some closing costs. Sellers are also realizing that what was affordable at 3% is out of reach at rates hovering close to 8% so if they are motivated to sell, they are more open to concessions like rate buy downs. 

Back to those initial questions!

Are home prices going up or down? 

Median sold prices have been sliding since June, but home values have climbed due to massive appreciation. As of September 2023, homes in Hampton Roads are still selling above their asking prices, but that might not hold if the current trend continues.

Will interest rates go down? 

The experts are weighing in, and they're saying rates will drop, but not back to the pre-pandemic 3% range. Fannie Mae (FNMA) predicts rates will hit 6.5% in 2024; Wells Fargo sees rates below 6% by the end of 2024; and the National Association of Realtors (NAR) expects rates to land at 6% by that same time.

Is now a good time to buy or sell?

It's all about your situation. Sometimes you may not have a choice, like with a job move or life change. But if you're a buyer, understand that the market's softening, giving you an opening to negotiate on closing costs or get a  deal on a price-reduced home. Plus, depending on your circumstances, there are programs out there for first-time buyers and repeat buyers, offering low or even no down payment options. Keep an eye out for incentives from new construction builders too. And for you sellers, if you've held onto your home for a while and locked in a great rate, chances are you've got a nice chunk of equity. Selling now could land you your asking price or even more if your home's priced right. Worried about losing that low rate? There's the possibility of a loan assumption if the home you are buying has an FHA or VA mortgage. A trusted lender can guide you with this and I'm happy to give you a referral if you need one!

Hope this paints a clear picture of where we stand today. If you're looking to chat more about your real estate plans, go ahead and schedule a no-obligation strategy call! 😊

Thanks for Reading,

_________________________

Home values throughout the country have gone up tremendously over the past couple of years! Your home could be worth more than you think. For an instant home value, click the image below!