The Rebound of the Virginia Housing Market

According to housing market forecasters, the Virginia housing market is on the rise, making this a critical time for the prospective home buyer. Due to the housing collapse of recent years, prices had dropped to such low levels that more often than not, sellers would more than likely end up losing money trying to sell their homes and instead kept them off the market. This turnaround in the housing market makes now a great time to buy a new home, rather than later and there are several key factors that contribute to this conclusion.

Inventory

Since December of 2012, the total active inventory of homes for sale in the Richmond Metropolitan area has been lower than ever according to a market conditions report issued by Realtors Long & Foster recently. This April’s inventory was 2% higher than March’s, although it was 14% lower than it was a year ago. Typically, as inventory rises, home prices drop as there are more homes available on the market, giving buyers more options. But due to the housing collapse, many homes were listed much lower than they would sell for normally, and the lack of inventory created a buyer’s market as there were fewer homes available per buyer. Those who had to sell during this rough period found themselves having to compete for the attention of home buyers which drove prices even lower. As the market rebounds, even though home prices are rising, now is the time to buy before home prices rise to even higher levels.

Financing

Another result of the housing collapse was a drop in interest rates on home loans to spur interest in home buying. As the market got worse, the rates dropped lower. Now that confidence in the housing market is returning, expect interest rates to rise with it. Banks will feel freer to raise interest rates once home buying levels increase, another good reason to buy now, while interest rates are still historically low. Lock in that low APR before you end up paying more than you wanted because you waited too long and missed the boat of low financing.

Builders Prices

Not only did the decline in the housing market affect builders’ bottom lines, but rising costs of building materials has also put the squeeze on contractors. The collapse of the housing market had other effects besides driving down home prices, one of these being builders’ pricing. In much the same way sellers had to ask less for their homes during the downturn, Virginia home builders also had to charge less to stay competitive in a smaller market, despite rising costs. Now that it appears that the worst is behind us, the builders’ rates are going to climb in a similar fashion as home prices. Yet again, one more reason to strike while the iron is hot.

Sources:

1      Hazard, Carol (2013-04-24). “Richmond area housing market improves“ www.timesdispatch.com

2      The Long & Foster Market Conditions Report, April 2013 Release. www.longandfoster.com

3      Cafferty, Jack (2012-02-02). “How have collapsing home prices impacted you?” caffertyfile.blogs.cnn.com

Cariaga, Vance (2013-05-02). “Homebuilders Getting Nailed By Rising Materials Costs” news.investors.com