Hampton Roads housing market due for a slowdown, says ODU
ODU real estate researchers said they see a slowdown in our future.
3 things happening to home buying
- About 80% of Hampton Roads homes sold over their asking price last year. The median home price at the beginning of 2022 was $291,000 – it peaked in May at $328,797. Homes were flying off the proverbial shelves: at the beginning of the year, the median time for a house to stay on the market was 7 days. But in the second half of 2022, it took about 24 days to sell.
“24 days is lightning quick,” said J. Van Rose, principal owner of Rose & Womble Realty. “But it didn’t feel like it after 7 days.”
- When interest rates and inflation picked up in the second half of the year, buyers choked. The market is adjusting, but Rose said home buyers’ uncertainty after the interest rate hike is the key factor in watching home sales in 2023. “Buyers are frozen. Sellers are frozen,” said Rose.
- After 2022’s skyrocketing home sales, Hampton Roads started this year with 300 more homes on the market than last January. Rose said although those homes are selling, rising inflation and interest rates may keep buyers hesitant. “We don’t know what’s gonna happen with interest rates. So it keeps that uncertainty out there,” said Rose.
3 things going on with rentals
- Buoyed by the pandemic, Hampton Roads’ multifamily rentals experienced record-low vacancy rates in 2021 and 2022. People took advantage of flexible work-from-home policies and moved out to smaller suburban markets.
“We hit our strong point in 2021 with vacancy rates dropping down to 3.2% locally, and 4.7% nationally,” said Paul Van, CEO of Croatoan Investments. “By the end of 2022, those vacancy rates had spiked to over 6% nationally, and we actually doubled locally to 6.4%.”
But ODU researchers anticipate a job market slowdown and economic slump this year. They said the push to move back to urban employment hubs is likely to take hold again. The rental market is likely to remain strong, though – because of rising interest rates and the still-exorbitant cost of homes in Hampton Roads, many locals will stay renters for a while longer.
Another factor is the chronic undersupply of housing in Hampton Roads.
“This is really just a matter of supply and demand,” said Van. “We’ve been underhoused in this country for the past five years, and we believe this trend will continue.”
Because construction financing is suffering from those same interest rate hikes, construction on new multifamily units is taking a hit – which will keep the current multifamily supply steadily in demand.