2018 was another solid year for local real estate. Here in Richmond, closed sales finished down 2.15% for the year, with a 6.2% increase in 2 years overall. The final month showed pending sales down 12.3% compared to the year prior.
We are entering 2019 with less than 1.84 months of active inventory, and homes selling, on average, in only 32 days. On average, sellers accepted offers at over 99.75% of their asking price last year. That is good news for sellers who are priced properly and in good condition, or for prospective sellers who are thinking about diving into the market. Nationwide, most markets are experiencing inventory shortages, which is the single biggest factor keeping a lid on the number of sales.
Prices remained remarkably steady during the past 12 months, with the median sales price in Richmond slightly above $290,000 for most of the year and finishing up at $293,539.
Here is what I see in the coming 12 months:
A shortage of listings has been our biggest challenge for the past 18 months. My expectation is that we will continue to see more listings come on the market as we move into the Spring. We have seen a significant jump in new listings over the past few months, signaling that wise sellers recognize the importance of beating the competition to the Spring market.
As the typical Spring seasonal demand builds, consumers will realize that moves need to be made ASAP in order to take advantage of a 9 year streak of historically low rates and home values. It’s important to note that the market can shift quickly, and it will not surprise me to see a highly competitive Spring season for homes selling below $350,000.
Interest rates will begin a slow and steady climb this year. Interest rates have been perplexing over the past 12 months. Most predicted the inevitable ascent would begin as the economy gained steam, but rates remained lower than predicted, most likely because the feds were hesitant to do anything that might inhibit the momentum of the recovery.
I believe that 2019 will be the year that interest rates incrementally increase, but the question remains by how much and how frequently. The good news is that this is a sure sign of a strengthening economy, but the bad news is that each hike raises the bar on home affordability. My prediction is that this will add some urgency to the market this year, particularly in the lower price ranges.
Prices will finally begin to show improvement in many neighborhoods. Prices are neighborhood specific, and some areas are definitely improving faster than others. Appreciation was up in the Richmond Metro market last year (with the median sold price up just over 3.72%), and I expect will continue to trend toward more normal appreciation rates (4 to 5%) in 2019 and beyond.
If a home purchase is on your New Year resolution list, buy early in the year, as interest rates have a much greater impact than most realize. For instance, waiting for prices to drop 5% to save $12,500 on a $250,000 purchase may cost you an extra $225 per month in payments; if rates increase from 4% to 5.5%, then your payment increases from $1194 to $1419. For most buyers, the affordability index of monthly payments is a more critical consideration.
We were fortunate to be a part of the Richmond Real Estate Market. Your support and referrals are much appreciated, and we promise to deliver the extraordinary client experience that has become our hallmark!
*All stats based on Broker Metrics for Central Virginia Regional residential home sales in 2018
If you are looking to buy or sell a home this year, email us at info@lizmoore.com. We'd love to help!