For the Hampton Roads real estate market, the news is good with a little bit of caution sprinkled in for good measure.
A recent report by the Real Estate Information Network shows that the area is bucking the national trend of declining sales, but is facing the same problem that’s causing issues across markets nationally.
Using numbers from April, which is the most recent for which statistics are available, the National Association of Realtors reported a drop in existing home sales of 1.4 percent over the previous year and a dip of 1.3 percent nationally in pending home sales. A property is considered “pending” when all contingencies have been removed from the contract.
However, the reason citied for the sales drop nationally – inventory shortages – is also a trend Realtors and home buyers are facing in Hampton Roads.
“I think a few different phenomena are in play here,” said Karlene Cupp, Realtor with Beach South Realty. “Current homeowners aren’t selling, and even if they wanted to sell, with the low inventory, their choices are limited.”
Cupp said the thinking among current homeowners could be that since they already have a decent place to live, why give that up to look for a new home in a market with few options, while they probably would face a more expensive interest rate.
“Another reason could be lack of new construction. Since the big peak in the housing market 10 years ago, lumber, land, laws, and labor have all become more expensive. A builder who could make 20 houses 10 years ago will now make 15,” she added.
According to the REIN report, April’s pending sales were up over last year in Hampton Roads by 19.3 percent and settled sales were up by 9.36 percent.
The region is somewhat insulated from national trends, mainly because of the large military presence here, Cupp said.
The region
However, active residential listings were down in the region by 6.62 percent over last year, with 9,974 homes listed at the time of the report. The active inventory shrunk in each of the region’s seven major cities: Norfolk, Virginia Beach, Portsmouth, Chesapeake, Suffolk, Hampton, and Newport News, with Norfolk (12.94 percent) and Hampton (12.67 percent) showing the biggest declines.
The region’s active inventory has declined year-over-year for 34 consecutive months.
Conversely, residential pending sales in Hampton Roads have risen year-over-year for four straight years, with last month showing a 15.46 percent increase and 3,151 homes going under contract.
Can the shrinking inventory of homes for sale eventually impact Hampton Roads?
“There’s definitely a risk of stagnation,” Cupp said. “When high demand meets low supply, that’s a recipe for high prices.”
High prices and rising interest rates mean decreased buying power and can create a new spiral that prevents home sales, she said, for reasons such as that they are unattainable to the poor, or because the millennial generation may be crippled by student loan debt.
“Our strong military presence will insulate us from the worst of that trend, but it will still affect a lot of working people,” Cupp said.
