On the Market
Hampton Roads Real Estate Is Gaining Ground
Positive Economic Indicators In Hampton Roads
For area residents who have been looking for some good news in relation to the slumping economy, there are some positive signs on the horizon. To break the cycle of downward trends, one factor of the economy needs to show positive movement in order for the other trends to feed off of that growth. In 1982, 1991 and 2001 respectively, the one factor that has broken the downward spiral and moved the economy back in a positive direction has always started with growth in the housing market.
Based on the Regional Quarterly Forecast Analysis provided by Old Dominion University’s Economic Forecasting Project, things are definitely looking up.
Year-to-date economic data through June 2012 for Hampton Roads showed steady improvement with the regional economy adding about 3,300 jobs and the unemployment rate declining from 7 percent to 6.5 percent during the first six months of 2012 when compared to the first six months 2011. The value of single-unit residential building permits saw an increase of 7.9 percent and taxable sales during the same time period increased by 4.0 percent, indicating that consumers have gained confidence in the economic improvement of the region. Dr. Vinod Agarwal, Professor of Economics at Old Dominion University and Director of the Economic Forecasting Project, states there are four things to consider when assessing the health of the local real estate market:
- Sales volume, year over year
- Median pricing
- Number of days on the market (does not include new construction)
- Proportion of distressed (bank owned and short sale) sales and active listings of distressed homes
According to Economic Forecasting Project data, the number of housing permits issued for single-unit residential homes during the first six months of 2012 increased by 20.3 percent compared to the same time period in 2011.
In addition, the market has begun to improve as median home prices began to increase since April 2012. Note that median home prices have been declining since May 2008. With a decline in homeowner equity, and a large proportion of distressed inventories, the market may still take a slight slip backwards before making a significant positive impact on the median prices of homes in the area.
However, if recent statistics are an indication, things are moving in the right direction. Based on the latest data gathered by the Economic Forecasting Project, active listings of distressed homes as a proportion of active listings of existing homes in Hampton Roads were 24.8 percent in August 2012, compared with its peak of 27.64 percent in December of 2011.
Likewise sales of distressed homes as a proportion of sales of all existing homes are down to 24.4 percent compared with a peak of 42.8 percent in March of 2011. And, for the first time since 2008, the median sale price of existing homes in Hampton Roads has begun to increase. Year to date August 2012 data shows that median price of existing homes has increased to $185,000 compared to a median price of $182,000 for the same time period in 2011 or increase of 1.65 percent. However, compared with the peak median price of $223,000 in 2007, there is some room for improvement, but the numbers are moving in the right direction.
Couple that with the fact that mortgage rates are still incredibly low, this is an excellent time to buy a home in Hampton Roads or to refinance your current mortgage to a lower rate. As consumer confidence continues to grow, the cycle will fuel job growth, which will lead to a shrinking of the existing housing inventory, which will push median home prices back up. This is particularly good news for people who are “underwater” with their homes—where their mortgage is greater than the value of the home.
In summary, the housing market in Hampton Roads is making some real, positive improvements that are expected to continue for the remainder of 2012 and definitely into 2013. If you’ve been thinking of getting into a home or moving up to a more accommodating abode, now is the best time to act if you want to get the most for your investment.