Hampton Roads Housing Inventory is Slowly Disappearing
The National Association of Realtors (NAR) released their latest Existing Home Sales Report last week. According to the report:
Sales of existing homes rose 1.2% from January, and outpaced year-over-year figures for the fifth consecutive month
the total unsold housing inventory is at 4.6-month supply. This is down 0.5% from last February and remains below the 6 months that is needed for a historically normal market.
consumer confidence is at the highest level in over a decade and
interest rates still under 4%, new programs available for down payments as low as 3%
Nationally February marked the 36th consecutive month of year-over-year price gains as the median price of existing homes sold rose to $202,600 (up 7.5% from 2014).
When you put all of these together it makes an attractive market for buyers.
Buyer demand for housing remains twice as high as this time last year. Yet the inventory options are limited, especially in certain price ranges.
The same thing is being seen in Hampton Roads. There are currently 10,230 resale homes on the market according to REIN, which is down from previous levels within a three month period. Sales last month were up 5% month-over-month and up 2.7% year-over-year, and this is despite the bad weather in February. What is more interesting is that in Virginia Beach and Chesapeake there is less than 5 months of inventory of homes priced under $300,000.
The chart from Keeping Current Matters below shows the impact that inventory levels have on home prices.
NAR’s Chief Economist, Lawrence Yun gave some insight into the correlation:
"Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices. Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before (interest) rates rise."
A basic economic principle is that price of any item is determined by the supply of that item, and the market demand. When the demand exceeds the goods available, prices will increase or more goods are put into the market to meet demand.
The largest pool of emerging buyers are the Millennial generation, and they are looking for homes under $300,00, in good school districts with lower commute times. And that is the same price range that shows the lowest available homes right now in our market.
Locally every city has a different supply and demand absorption rate, they also differ with the price ranges, but there are some similarities. Here is a chart produced by Rose & Womble Realty’s Research Department that shows the absorption rates for the local area. The absorption rate gives us a glance into what type of market we’re dealing with: buyer, seller, or balance.
If you are debating moving or selling your home this year, now may be the time. The amount of buyers ready and willing to make a purchase is at the highest level in years. Contact a PerfectHouse Team Realtor to get all your questions answered with no sales pressure and a world class experience.