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Richmond Real Estate April 2014 Market Update
Richmond Real Estate April 2014 Market Update
- Mortgage Rates: 30-Year Fixed rate mortgages are going
up, which shouldn't be a surprise to anyone. We have to look back at
2008 when the real estate bubble burst and the Federal government went
about buying mortgage bonds to stabilize the economy. As our economy has
strengthened since then, the Feds are tapering their purchases of
mortgage bonds. They are reducing their purchases by about $10 billion
dollars per month. This is why rates are slowly hiking back up.
- What we need to pay attention to is what happens when they completely remove this mortgage band-aid and whether or not rates stabilize.
- Interest rates are projected to rise to 5.5% by the end of 2014. For my buyers in Richmond, this means that your window of opportunity to buy a home at an affordable rate is shrinking.
- Don't Listen to the Media, the Market is fine: There has
been a lot of talk in the media about the market staggering. Pending
home sales and existing home sales, both nationally and here in
Richmond, are falling considerably. What people are not talking about is
the rough winter that we experienced in 2013 and 2014, so there are
some seasonal factors that the media wasn't talking about. It's also
expected that inventory and home sales will pick up as we head into
spring and summer.
- Another factor at work here is nationally low inventory. There simply aren't enough homes for people to purchase, and this would partially explain the negative outlooks on the housing industry.
- If you take a look at this chart showing the % change in house sales, you will see that the American West is driving the national decline in homes sales with a -8.1% change. All other areas of the US saw an increase, with the Northeast seeing a huge jump of 7.1%. Richmond, part of the Southern region, saw a 3.6% gain.
- Year-over-year price change by state also tells us something. Virginia saw a 2.8% increase, but I expect that updated figures for the first quarter of 2014 will show an even greater rise for Virginia. This is a safe increase compared to states out west like California and Nevada that are seeing unstable rises in home values. I would like to see some stabilization in those markets because what happens out west tend to move our way.
- ROI for real estate is higher than the DOW, NASDAQ and the S&P: From January 2000 to February 2014, the ROI for real estate, on average, has been 65.7%. The Dow had a 49.2% return, the S&P had a 33.3% return, and the NASDAQ had a 9.3% return. These figures include the massive housing collapse that occurred in 2008.
So, if you need any help searching for real estate in Central Virginia or in the Richmond area, please contact me and I would be glad to assist you. I can be reached at (804) 545-6648 or you can email me at info@thegitsgroup.com.
