The Latest Hampton Roads Real Estate Market Update

Hello Hampton Roads,

The MLS numbers for February (last month) are out allowing us to take a look at what's been happening in the local real estate market on a city wide level. Remember, real estate is hyper local and if you would like information about your specific neighborhood, you can get a free market activity report here http://marketreport.hamptonroadsrealestate.us/

Let's take a look at the table below which is broken down by city showing information for detaached properties at the top and attached properties at the bottom:

This table tells us the following:

1. Home prices are up and selling at a healthy pace, indicated by low DOM (days on market). DOM is not how long it takes a home to close but rather how long it takes to obtain an accepted offer. I would consider anything below 30 days an aggressive time frame. 
2. Sellers are selling their homes for above asking or very close to asking as indicated by the average percentage of list price received (Avg. % LP Received).  This tells us tbat there is competition for homes driving up the price.
3. Month's supply of invenory indicates a seller's market. Anything below 6 months is a seller's market and anything above 6 months is a buyer's market. 

So if you just look at the numbers, it appears that things are the status quo and similar to what we've seen over the past couple of years. However, while the current market is great for sellers, what the table doesn't tell you is that there are tailwinds that portend change:

Pay Attention to Tailwinds

DOM

I keep track of the monthly numbers in Hampton Roads and see that the DOM has been steadily increasing. Last year, it was common to see single digit DOM numbers and no we are into double digits. 

Interest Rates

The 30 yr fixed rate interest is now in the 4.6% range--remember last year when they were in the mid 3% range?. This is important because for every 1% increase in mortgage rate, a buyer loses 10% of purchasing power.  For example,  a buyer who qualified for a $300,000 mortgage would qualify for a $270,000 mortgage given a 1% increase in rates.  Rising rates also lower the pool of potential buyers for home owners trying to sell their homes and fewer buyers would mean less competition and fewer bidding wars.

Inflation

It's no secret that inflation is high, a simple trip to the grocery store or gas station will show you that. People are paying above asking not just for houses but also for cars! More than 80% of consumers now pay above sticker for a new car according to CNBC.  In an attempt to control inflation, the Fed is extremely hawkish on raising rates to control prices. Last week, it increased the federal funds rate by 25bps and is expected to do at least as much in it's next meeting in May.   Rising rates have a dampening effect on prices and we'll find soon enough how prices will correct or possibly over-correct. 

Whether you are buying or selling in this market, it's important to be well prepared. There are a lot of great reasons to buy in this market just like there are a lot of great reasons to sell. Let's talk about your plans and let me help you with your next best steps! Schedule a call and lets chat. 

Thanks for Reading,

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