The above image is provided by our local MLS with data pulling throughout the Peninsula and surrounding cities, whereas my evaluation below is narrowed down to the Southside of Hampton Roads. "Real Estate is Local" and the closer we can get to the area of discussion, the better the data for you. Performing a monthly analysis of key economic indicators allows me to provide the best guidance and advice to my clients. Buyers, sellers, and investors need market knowledge that is as recent and close to their area of interest to make the best decisions. When you are considering making any decisions about your home or investment properties, contact me for a report specific to your neighborhood. You won't be disappointed in the level of analysis that I will provide for you!
Whether you are a buyer, seller, or investor, you must be able to understand your marketplace in order to make the best decisions. By collecting data on the Supply and Demand of homes in a neighborhood, I can determine the absorption rate (the number of months it will take to sell existing inventory at the current sales rate) and the absorption ratio (the number of homes sold as compared to those listed). An analysis of this snapshot can give the seller an idea of the time it should take to sell their home if priced appropriately. It also tells us if it is buyer or a seller's market, which will help us develop our pricing or offering strategy. Statistics are available mid-month for the previous month, so you will note the date I report is for last month. At an absorption ratio for Southside Hampton Roads of a record-breaking 79.44% we are out-performing exceptional 2019 by 13 percentage points despite the Coronavirus Pandemic. Listings (supply) continued a downward trend though, down 6% from 2019, as people put their plans to sell on hold during this time, which could be a combination of cash-out refinances to NOT sell and not wanting strangers possibly bringing a virus in the home. Another issue is the availability of contractors and materials in order to get a property in sellable condition! The pain is real! Sales (demand) are up 12.19% year over year. Pending Sales, which I examine on a month/month comparison to have the closest snapshot of current trends, was actually down 7%. There aren't homes to sell! Serious buyers are shopping and we have very little choices for them! Time on the market is down in all of the SSHR cities, and sales prices are up. Sellers should know that in Virginia Beach, a median priced home listed at $299,900 should take 1.57 months to sell on average. Get your neighborhood-specific data by asking me.
Mortgage Interest Rates are important in determining the affordability of a home and is a key ingredient to analyzing buying and selling activities. Purchase (not refinance) loan applications are up 20% from this time last year. Mortgage rates are still low, but riskier type loans are harder to come by and expect to pay some points in some scenarios. Effective rates are 2.75-3%. Ask me, and I will get you in the hands of a great lender. On a $400K loan, each quarter point increase will cost about $60/month more. An 1/8th% increase in the interest rate is approximately the same as a $5000 price increase on a $400K loan. Another guideline to know the impact: on a $200,000 purchase, a 1% increase in the interest rate is equivalent to a 10% reduction in the buying power of a purchaser (or $20,000) or $100/month more in payment. What this means for a person considering buying a home, do it now!
The Unemployment Rate is a critical factor in forecasting the real estate climate and consumer confidence in buying a home. In the US the Unemployment rate went from 3.5% in Feb to 14.7 in April. Besides the largest spike ever, it reached the highest number since they began collecting data back in 1948. June numbers showed a recovery in the works--down to 11.1%--the largest one month drop in history. August rolled on to 8.4% and Nov reports 6.7%. We lost 22 million jobs and have reclaimed half of them! Our stats for VA went from 2.6% to 10.6 and now we are down to 4.9%. And for the VB Metropolitan area we see 5.9% in November. Conditions for employment are still very good in our area with a new olive oil factory in Suffolk to the tune of $11M. And a $7.8B windfarm off of our coast will add 9800 jobs to the area. Virginia hotel revenue is down over 50%, and my opinion is that the hotels will seek to put pressure on the city of Virginia Beach to further regulate independent short term rental operations.
Distressed sales (foreclosures and short sales) account for only 3% of all residential home listings and sales in our area, the lowest point since tracking began in 2009. The crystal ball of foreclosures is the Vacancy Rates. This factor is an early indicator of the health of the market. It is a numeric value calculate as the percentage of all vacant housing units. These can forecast upcoming foreclosures and also effect an investor's decision on purchasing in a particular area. Rates are normal at a factor of 1-2. Homeowner vacancy rates in Virginia was 2.2 in the third quarter. Rent prices are going up. With the moratorium on evictions expiring this month, we are going to see this number tickig up.
In summary, we need listings. It is not a balanced market and that is not healthy for buyers. We are seeing multiple offers on every property in a good location with good condition that is properly priced. We are also seeing challenges to appraisal values. Talk to me if you are considering a change and I can help you with the information you need to make the right decision for you.