According to the National Association of Realtors (NAR), statistics have shown that as of November 2016, reports indicated around 1.85 million houses were put up for sale in the United States. This was a 9.3% drop compared to the previous year.
During the housing crisis in 2007, the inventory of houses for sale was at 4.04 million. This is a 54% difference between 2007 and 2016. This means that there are fewer houses out for grabs in the market which also means that there are fewer sellers out there.
If you are looking to invest, you can see two factors that come to play under these circumstances: fast inventory turnaround and increase in demand. Either way, both are beneficial to an investor.
Prices are on the way up
As mentioned, the law of supply and demand is evident. In a separate report by NAR, the national average home price in November 2016 was $234,900, compared to the same period in 2015 where it was priced at $220,000 – an increase of 6.8%.
As a real estate investor, this becomes an advantage. When you see prices go up, every day that passes also takes its toll on your house’s wear and tear. This can be a contributing factor in the property’s appraisal.
Mortgage rates are steady at a low level.
Low mortgage rates mean lower maintenance or monthly costs- this is a come-on for buyers. The NAR also pointed out that mortgage rates continue to hover slightly above 4%. Although it is picking up slightly and may be able to hit 4.6% to 4.8% by the end of the year, it is within good range, as the tipping point is around 5% when home prices would eventually start to drop and you lose value on a real estate property.
How does this affect Hampton Roads real estate properties?
The flurry of the diversified economic activity at Hampton Roads has resulted to a surge in the new residential construction market. These are evident in the increase in issuance of permits, average sales price, closings and revenues.
The residential market has started taking off with a substantial increase of permits in 2015 by up to 13.5% compared to the previous year. Average sales prices saw an increase of 30.2% with revenues up by as much as 30%.
Hampton Roads (overall)
Inventory levels for residential properties stayed low for 2015 due to strong sales performance, particularly on the Southside where there was an average 3.1 months to absorb for detached product and 1.67 months for attached product.
Hampton Roads (per City)
The strong sale performance in 2015 was primarily responsible for low inventory. Detached new construction sales on the Southside went up by 17.21% and 18.73% for attached product. The same trend was seen in the Peninsula with hikes in sales of 16.57% for detached and 5.88% for attached. Overall, prices are expected to rise throughout the year due to strong sales performance.