The Virginia Realtors group has released their second quarter home sales report. The short version of this report:
The economy is strong.
Inventory is low.
Prices are high.
The national economy experienced moderate growth. Trade issues and global economics remain a looming concern on the U.S. economy, but there is an expectation the Fed will cut rates in an effort to maintain a healthy status quo.
Central Virginia reflects the national economic trends pretty closely. Job growth remains strong, with only one major industry seeing a loss,retail. Unemployment continues to plummet, and this actually presents a strong indicator that there may be a severe labor shortage in many industries. These metrics provide a sturdy foundation for the housing market, but the ongoing shrinkage of inventory and climbing housing prices presents challenges to the market, specifically with affordability.
Home sales inched up 2% year to year, but pending sales climbed 8% indicating a possible burst in the next quarter. Despite the low growth in sales, prices climb higher and higher with such a small inventory available to the ongoing demand from homebuyers.
Chesterfield led the Richmond-Metro Area with a 7% increase compared to last year, and a 6% increase from the first to second quarters. Henrico remained flat and Hanover declined by 7%. The Tri-Cities dropped 5% from last year, with Petersburg leading the way at 21% decline.
Pending sales made their first upward trend since the beginning of 2018. Chesterfield and Henrico were the leaders with the Richmond-Metro 8% increase, and Prince George and Dinwiddie led the Tri-Cities 9% increase. Interesting note here with Prince George, they were down 20% in the first quarter compared to 2018.
Sales prices continue to have big climbs as well. The second quarter climbed another 3% or $9,500 on average to $296,840. The first quarter was $287,645. Chesterfield elevated to $303,738 or a 6% increase from last year. The Tri-Cities as a whole saw a major climb of 14% or $21,000 with Prince George itself up 15%.
The days on the market metric remained flat, at 32. The overall inventory continues to trend downward, with an 11% decrease from last year, with the Tri-Cities itself seeing a 23% decline.
The housing market in Central Virginia remains stable. The demand for housing is there, but there is concern that affordability may be an issue as the demand is not being met by the supply. As the days on the market remains flat, there may be an issue developing as well where what is available is not what is being sought after. Even though the pending sales metric is climbing, meaning the closed sales should as well, the price hike will remain. The question that will have to be answered is whether these price hikes lead a continued slowdown as buyers maybe wait till they slow OR sellers wait till they climb more.
Buyers remain in an interesting situation. Rates are at all time lows but the supply is so low it makes it hard to buy. It remains a seller’s market due to the inventory levels and the demand that exists. The Richmond-Metro area remains a strong market. Revitalization continues and is seeping into the Tri-Cities, as we noted in the last report. The question and challenge is when the affordability issue becomes a significant hurdle to the market’s seemingly continued prosperity.