Health of the Hampton Roads Housing Market
2020 ECONOMIC FORECAST
To put things in perspective, the U.S. was in the 11th year economic expansion when it all came to a screeching halt in March 2020. Current conditions reflect the biggest economic contraction since 1946, bigger than the recession in 2008, with national unemployment rates the highest recording since 1940 (April 14.7% and May 13.3%). However, this recession is completely different than what happened in 1946 when the US was coming out of a war and retooling its manufacturing industries. This time around, the economy is forecast to start rebounding by 3rd quarter 2020, though it may take 18-24 months before the economy feels “normal” again.
Though the Hampton Roads area did experience a large spike in unemployment (jumping from 3.7% in March 2020 to 12.5% in April), our region has fared better than nationwide.
Long-term mortgage rates are at a record low. For the week ending June 12th, a 30-year fixed rate mortgage was just 3.2%. These low rates provide affordability for some buyers that would not otherwise exist.
LOCAL VS. NATIONAL HOUSING
Prior to the pandemic, we were headed into a record-breaking selling season. Not unexpectedly, once the President declared a national emergency on March 13th, things started to change. The good news is that the Hampton Roads market has rebounded much quicker than other areas of the country.
New listings input into the MLS began to fall mid-March, bottoming out in mid-April (falling approximately 33% locally and 50% nationally), but have since begun to bounce back. The Hampton Roads region’s inventory is rebounding faster than nationally, with local new listings down just 2% year-over-year for the week of June 6th, compared to national new listings down 19% year-over-year the same week.
Pending sales, the leading indicator of future sales/closings, has remained relatively steady for our local market, with the week of June 6th seeing an 18% year-over-year increase, whereas nationally pending sales dropped more significantly, down 2% year-over-year for the week of June 6.
Though the Hampton Roads region has experienced 8 straight years of price appreciation (23% cumulative growth), concerns that national recovery may be sluggish could dampen homebuying activity and soften prices. Dr. Nothaft forecasts a 1.3% decline in home prices by April 2021.
MORTGAGE APPLICATIONS
Locally, the number of loan applications being applied for remained strong in March and April (up 5-10% year-over-year), compared to nationwide, where applications were down 5-20% from last year. Of those applications, most were first time buyers and millennials, indicating that millennials are taking this opportunity to transition into home ownership.
IN CLOSING
It is clear that the housing market has been significantly impacted by COVID-19, but the Hampton Roads region has outperformed national metrics and appears to be weathering the storm better than many metro areas across the country. Home sales stand to support an economic recovery sooner than later. The Spring market may just be pushed back into the Summer months, where the bigger challenge maybe if there is enough inventory (which has been steadily declining for 5 years) to support a resurgence. To hear Dr. Nothaft’s full presentation
About Mr Williamsburg
Psssst! I wanted to let you in on a little secret. While I am a real estate agent…I am a different kind of real estate agent. I am creating a revolution in realty by combining everything you love about this area all into one place. Known around town as Mr. Williamsburg, I combine my extensive knowledge of the Williamsburg, Richmond, and Hampton Roads areas with my expertise in helping buyers and sellers navigate the ever-changing local real estate market to create a top-notch experience that checks all of your boxes.
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John Womeldorf, Mr. Williamsburg