The past few years have been eventful for both the local and the national real estate markets. Home prices soared in the months after the onset of the COVID-19 pandemic due to plummeting interest rates that led many people to enter the market for a new home. This strong activity continued through 2021 before slowing down in 2022. Higher interest rates and heavy inflation have many people asking questions about the short-term future of the housing market. Current property owners also want to know how these events will affect the long-term value of their homes. This article will provide a housing market forecast that takes a deeper look at what’s going on right now while making predictions about how things could change and develop in the future.
How does the market currently stand?
Right now, the Midlothian real estate market is very competitive. Homes sell quickly after going onto the market. Most won’t spend more than one week available for sale, and many properties receive multiple offers above the listing price. Average prices have increased over the past several months, and the average price for a single-family home in the Metro Richmond Market is sitting at $422,112 as of Spring 2023.
How will the market change in 2023?
Home prices in Northern Virginia could rise slightly in 2023
, but it’s unlikely that they will see much growth. The entire nation is facing the reality of a slight recession in 2023. Activity in the Midlothian area remains strong, but most markets across the country haven’t been as fortunate. Buyer demand is slowing down as many people struggle to keep up with the rapidly rising cost of living. Others would prefer to wait for interest rates to come down before they begin shopping for a new home. It’s difficult to say when the climate could change. The Federal Reserve is hopeful that interest rates could drop sometime during 2024
, but this probably won’t happen until inflation gets under control.
How much does the market usually change during the year?
Average sales prices usually increase in the late spring and early summer
before dipping back down in October and November. Buyer activity starts to heat up in March and April along with the temperatures. Once people receive their tax refunds, they are eager to put the extra cash toward their down payments. Families with children prefer to move soon after the school year ends so that they can use the summer to settle in before classes resume in August. The market stays active through September before slowing down in October, and it’s normal to see average sales prices dip as the holidays approach.
Is the market going to crash?
It’s unlikely. While a recession is possible in 2023, nobody thinks the market will take a significant step back. There are reasons to believe the market is still in a strong position overall. The mortgage delinquency rate rose in November
, but it’s still lower than pre-pandemic levels. This is a key statistic that many industry leaders believe tells a greater story about the overall health of the market. A higher mortgage delinquency rate would suggest greater concern about the future of the market. It’s also worth mentioning that home prices remain significantly higher than they were only a few short years ago. Prices grew quite a bit in the months after the pandemic started, and the market could just be balancing out right now.
How will current events affect long-term home values?
It’s unlikely that long-term home values are impacted in a negative way by what’s currently happening. Homes are hard assets
, meaning that they have visual and tangible value. Their prices don’t change as quickly or as frequently as the price of stocks. If a home was ever going to experience a significant change in its value, it would take several months to notice an impact. A recent study also revealed that home prices are outpacing inflation over the past 100 years by nearly three percent
. This means that homes are truly growing in value - they aren’t just remaining consistent with inflation. It’s especially interesting when you remember the significant financial challenges that have occurred over the past 100 years. Trials such as the Great Depression of the 1930s and the housing market crash of 2008 were unable to permanently derail the market or produce a significant long-term effect. The market continues to show its resilience and will likely follow suit in the future.
Will 2023 be a buyers’ or sellers’ market?
It’s not clear if 2023 will be more advantageous for buyers or sellers, but there are reasons to believe that 2023 could be a great time to buy or sell a home. Buyers will benefit from sales prices that aren’t expected to rise far beyond where they currently are. They may prefer to wait until interest rates drop before they shop for a new home, but this may not produce the results that they are looking for. There’s a good chance that prices will begin to rise again once rates are lower. You can start building equity if you buy now while maintaining the flexibility to refinance your loan later when rates drop. On the other hand, sellers will still have a chance to make a strong profit on their homes since prices remain high after the increases from the last few years.
Who can help me shop for a home?
The Team Hensley at Compass
knows the Midlothian, Chesterfield, and Richmond real estate markets inside and out. They take time each day to research the current state of the market so that they can provide expert advice to each of their clients. They are equipped to help their customers earn the best deals when buying or selling homes regardless of what shape the market is in. Reach out to Team Hensley when you’re interested in buying or selling Chesterfield County real estate.
*Header photo courtesy of Team Hensley