Although home sales fell throughout the Hampton Roads region, many areas saw median sale prices increase in September, according to Long & Foster Real Estate’s Market Minute reports.
In Norfolk City, the median sale price rose by 9 percent, followed by a 5 percent increase in the cities of Chesapeake and Virginia Beach. The number of homes sold declined by 7 percent in Norfolk City, while other areas saw declines that ranged from 18 percent to 28 percent.
Active inventory continued its steep decline in the Hampton Roads region in September. The smallest decrease was a 36 percent drop in Newport News City, and the largest was a 46 percent decline in Chesapeake City. Homes in the region sold at a steady pace, spending about six to nine weeks on the market on average.
The lack of housing inventory has depressed the number of properties sold month after month, which was particularly evident in September, said Gary Scott, president of Long & Foster Real Estate. Looking ahead, prices are likely to climb beyond the reach of more buyers as mortgage interest rates stretch toward the 5 percent mark and wage growth fails to keep up with current cost trends.
Historically speaking, 5 percent interest rates are still quite low, but consumers have become accustomed to the lower rates seen in recent years. There’s a limit to how much money most people can budget for housing per month, if wage increases are not keeping up, Scott said.
“This is the first time in about five years that we think demand will be affected from an affordability perspective,” Scott said. “It’s worth noting, however, that all real estate trends are hyper-local and this may not apply to everyone. Buyers and sellers should connect with a local Long & Foster agent to help them navigate their own marketplaces.”
The broader story that we’re seeing is a market where the limited supply has been consumed by demand, which is now eroding the number of units sold, Scott said. The mix of high demand and low supply can lead to much higher home prices. However, in this case, consumers don’t have more money to spend, especially with rising interest rates.
The combination of these trends are almost certain to lead to higher housing costs in the future, so delaying a home purchase could end up being costly, Scott said.
“Homeownership is still the surest way to build wealth,” he said. “It’s an appreciating asset and there are tax benefits to it, but it’s also an investment that you can touch, enjoy and create memories in.”
The Long & Foster Market Minute is an overview of market statistics based on residential real estate transactions for more than 500 local areas and neighborhoods and over 100 counties in eight states. The easy-to-read, easy-to-share reports include information about each area’s units sold, active inventory, median sale prices, list to sold price ratio, days on market and more.
Information included in this report is based on data supplied by Real Estate Information Network multiple listing service and its member associations of Realtors, which are not responsible for its accuracy. The reports include residential real estate transactions within specific geographic regions, not just Long & Foster sales, and they do not reflect all activity in the marketplace. Information contained in this report is deemed reliable but not guaranteed, should be independently verified, and does not constitute an opinion of REIN or Long & Foster Real Estate.