If you’re anything like me, you might wonder where the first quarter of 2023 went, but here we are! Spring has officially arrived in Richmond, and our first quarter market update comes with it. Whether you’re a longtime RVA resident keeping an eye on your property’s value or exploring the possibility of moving to the area for the first time, you can depend on The Beran Group to provide you with meaningful market data to help you make informed decisions.
With that said, is the Richmond real estate market off to a strong start this year? Let’s take a look.
Housing inventory remains low
Low inventory continues to be a challenge nationwide, and Richmond is no exception. After 2008 builders were reluctant to start too many homes because they had been left holding so much stagnant inventory during the recession. That reluctance led them to build fewer homes for 14 years straight. As a result, we now have about 5 million homes fewer nationally than our population requires.
Also contributing to low inventory, we see fewer homes being listed than during the COVID years. Some potential sellers remain on the sidelines because they are unsure how to navigate this market. Should they wait to list until they find a new home, or sell now and hope they can find something to buy? An experienced REALTOR can help you turn these challenges into “can’t lose” solutions.
Lower interest rates lead to increased activity
As predicted, interest rates are coming down – about half a point in March – and potential buyers are starting to adjust to rates in line with historical averages. Most predictions have us finishing the year with mortgage rates in the mid to upper 5% range, which should continue to help here.
(Image courtesy of River City Lending Team)
Sales in Richmond have increased drastically since winter. March 2023 saw a 71% increase in the number of homes under contract versus December 2022. In many ways, we’re seeing conditions consistent with a “normal” (read: pre-COVID) spring market, although at slightly lower overall sales levels.
Not surprisingly, given inventory conditions, we see multiple offers on homes in many areas of greater Richmond. The resultant bidding wars are keeping sales prices high, with many properties closing at or above list price.
Interestingly, properties not priced in alignment with their condition are staying on the market longer. With higher relative interest rates and an uncertain economic outlook, buyers seem unwilling to settle for a property that doesn’t check all the boxes, regardless of availability.
What are Richmond’s home prices doing?
All the factors we discussed above – diminished construction efforts, stabilizing interest rates, local population growth, and seller hesitancy – have contributed to prices remaining high in our area. In fact, home prices in the first quarter of 2023 were higher in all three months (Jan, Feb, Mar) than their 2022 counterparts. The median home price in Richmond was $344,900 at the end of the first quarter of this year, an all-time high for March, according to CVRMLS. To put this in perspective, the median price in March of 2019, just 4 years ago, was $254,000—a difference of almost $91,000, or an almost 36% increase.
What is the right move for you?
In the intervening years since the dawn of COVID, we’ve had some potential clients tell us that they will wait until prices come down to purchase a home. Those who chose that path missed an opportunity to create wealth through the growth in equity they would have realized. Any way you slice it, housing costs are not getting cheaper. For those “on the fence” buyers we continue to believe that investing in a home for the long term is one of the strongest ways to build wealth.
The decision to buy, sell, or build a home is a complex process, and some factors will be more important to you than others. An experienced REALTOR will seek to understand your unique situation and help guide you toward the best path for you.
If you are thinking of buying or selling, reach out to your Beran Group agent so they can develop a custom plan for you and stand by your side every step of the way. If you’re simply curious about your home’s current value, don’t hesitate to reach out to us for an analysis, no strings attached. The results – and the options available – might surprise you!
Kristin is the founder and owner of The Beran Group, a real estate team of over 20 agents and the #1 team at Shaheen, Ruth, Martin & Fonville in Richmond, VA. Her 18-year career in real estate has resulted in over 1,200 transactions with a total of more than $310 million in residential sales.
Kristin was born and raised in RVA. Throughout her career, she has impacted Richmond by serving in industry leadership roles at the national, state, and local levels. She holds a B.S. in Mass Communications from Virginia Commonwealth University and has achieved numerous industry awards including Rookie of the Year, and is certified by the Institute for Luxury Home Marketing.
Kristin currently helps her clients buy and sell homes throughout the Greater Metro Richmond area, and works with Realtors to grow themselves and their businesses to achieve new heights.
In her free time, Kristin can be found on her farm with her family and horse, reading, listening to podcasts, or taking tennis and pilates classes. She enjoys watching her son Anders play squash, tennis, and golf with Bryan, her husband of nearly 20 years.
Mair Downing is the editor at BeranGroupHomes.com. She oversees the development and creation of all of our articles here, so if you like them, be sure to let her know!
Mair is also an amazing Realtor with The Beran Group. She’s never met a stranger, so it’s no surprise if you feel like old friends after the first meeting. Mair is passionate about helping sellers and buyers navigate the sometimes complex world of real estate. If you’re a podcast junkie, check out Obsessed with Homes, where Mair shares the information she’s learned along her real estate journey.