That is definitely the $64,000 question all sellers are asking themselves in today’s real estate market in Richmond Virginia and other places! I know we have heard for years now how hot the real estate market is, and they are right, but market conditions change day to day, week to week, month to month and year to year! So when you are thinking of sellng your home, the first thing you want to learn about is the market conditions in your area.
When looking at the market conditions for a house, there are really 4 things I like to look at:
- Days on the Market – lets you know how long a house was on the market before an offer was accepted!
- Are prices going up or down – lets you know if the market is favoring buyers or sellers or if it is neutral!
- Months supply of inventory – this just says how long it would take for all of the homes that are currently on the market will sell!
- Interest Rates – in this very weird real estate market, interest rates definitely factor into a decision to sell or not!
So what are the market stats for our area? And how does this translate to how hot the market in Richmond really is?
Let’s take a look at the statistics here.
DAYS ON THE MARKET
For the Richmond metro areas I normally work in (City of Richmond, Hanover, Henrico and Chesterfield Counties), there were 1,128 homes sold in July 2023. The average days on the market was only 17 days!!! This means that it took only 17 days for a seller to accept a contract from a buyer! In addition, the average sales price of the homes sold was 103% above the list price. This means that sellers were actually accepting offers that were above the listing price!!! And sellers only paid $2,223 towards the buyers closing costs! By city or county:
- Chesterfield County – 471 homes sold in July – in an average of 16 days – with an average sales price 2% above the asking price – and sellers paying an average of $3,108 of the buyers closing costs!
- Henrico County – 343 homes sold in July – in an average of 14 days – with an average sales price 4% above the asking price – and sellers paying an average of $1,492 of the buyers closing costs!
- Hanover County – 89 homes sold in July – in an average of 24 days – with an average sales price 1.3% above the asking price – and sellers paying an average of $1,575 of the buyers closing costs!
- City of Richmond – 225 homes sold in July – in an average of 19 days – with an average sales price 3.4% above the asking price – and sellers paying an average of $1,743 of the buyers closing costs!
ARE PRICES GOING UP OR DOWN?
Here we will want to see what the trend has been over the last few months on prices of homes. If buyers are willing to pay more for a home in the area, they may be also willing to give up on some of the contingencies in their offers. We have been seeing this over the past couple of years as the real estate market continues to be very very tight. In some cases the buyers are not only willing to pay more for the house than the seller is asking, but they are also willing to give upon the appraisal contingency, or are willing to limit the scope of their inspections (if they do an inspection at all), they may be willing to pay the difference between a low appraisal and the purchase price, they may even be willing to pay some or all of the sellers closing costs. This market has led to some very innovative concessions in the offers. However, you should keep in mind that not all buyers are willing to make these concessions, so you should not count on getting offers with these innovative concessions.
For the metro area, the average sales price in July 2023 was $448,972 – in January 2023 the average price was $388,536 – an increase of 15.5%. By city/county areas:
- Chesterfield County – the average sales price in July 2023 was $429,408 – in January 2023 the average price was $399,700 – an increase of 7.4%.
- Henrico County – the average sales price in July 2023 was $468,413 – in January 2023 the average price was $372,421 – an increase of 25.8%.
- Hanover County – the average sales price in July 2023 was $461,967 – in January 2023 the average price was $473,543 – a decrease of 2.5%.
- City of Richmond – the average sales price in July 2023 was $455,321 – in January 2023 the average price was $346,170 – an increase of 31.5%!
As you can see, even if an area has a decrease in the average sales price, the area as a whole has appreciated over 15% over a 7 month period of time in 2023! It suggest that sellers have the upper hand in negotiating because buyers are paying more for the limitedinventory that we have on the market right now!
MONTHS SUPPLY OF INVENTORY
This metric just tells you how long it will take for all the homes that are currently on the market right now to sell! Of course, it assumes that nothing new will come on the market, which we know is probably not reality! But in order to calculate this figure, you just take the number of active listings on the market at the end of the month and divide it by the number of homes that sold in the last month! As a rule of thumb, a market with less than 4 months supply is considered a sellers market, meaning that homes are more likely to sell fast, as there are more buyers in the market than there are homes available for them to buy! And if there is more than a 6 month supply, it is considered a buyer’s market, meaning that buyers will be in the drivers seat when it comes to negotiating.
Looking at the inventory levels and the number of homes sold last month, it would seem that everything you have been hearing about the real estate market is true!. As of 8/14/23 there are 1,246 homes active on the market in City of Richmond as well as Henrico, Hanover and Chesterfield Counties. In July 2023 there were 1,128 homes sold! Dividing 1,246 homes active on the market by the 1,128 homes sold in July, this means that it would take only 1.1 months for all the available inventory to sell! By city/county:
- Chesterfield County – there are currently 541 homes available for sale – in July 471 home sold – that means that there is 1.15 months supply of homes!
- Hanover County – there are 199 homes available for sale – in July 89 homes sold – that means that there is 2.2 months supply of homes!
- Henrico County – there are 252 homes available for sale – in July 343 homes sold – that means that there is .7 months supply of homes!
- City of Richmond – there are 255 homes available for sale – in July 225 homes sold – that means that there is 1.1 months supply of homes!
For many homeowners, what interest rates are today plays a huge role in deciding whether or not to sell your home! Per Bankrate.com, the average rate on a 30 year mortgage was up to 7.12% from 7.09%. This matched the rate on October 2022 and was the highest since April 2002. For many homeowners (myself included) that have a 3% +/- rate, thinking about selling a home means that you will get great equity from your current house to put down on the next house, but that also means that if you do need to take out a mortgage, you may be paying a higher interest rate!
If you are in this situation, you may decide not to sell your current home but to stay where you are and perhaps even renovate your home! But there are some ways to be able to sell your home and buy another! This is where you lender and your Realtor can help you navigate this weird housing market!
Looking at these statistics, the only word you can say about the real estate market is HOT! HOT! HOT! – even with the high interest rates!
Want to know what is happening in your area? Thinking of selling your home and buying another but not sure? Feel free to contact me and we can talk!