The National Association of REALTORS projected the following for 2017:
As of September, existing home sales were at 5.39 million, which is below the yearly projection but is an increase of 0.7% above this August. National reports show that existing home sales have fluctuated monthly since a strong start in January. The median home price of $245,100 was up 4.2% over last year, which is 0.2% better than predicted. September’s price increase is the 67th straight month of year-over-year gains. Interest rates rose through the winter and spring and fell through the summer months. According to Freddie Mac, the 30-year mortgage rate is currently 3.94%, up 0.47% from last year. It does not appear to be able to reach the predicted rate of 4.6% by year’s end. This is good news since the Federal Reserve has threatened to increase interest rates over the past two years. As of September, employment rates look relatively stable year to year.
Hampton Roads Market
It has been a good year for the Hampton Roads economy. According to Old Dominion University Economics Professor, Robert McNab, Hampton Roads has seen positive signs of growth in all the major areas. Defense spending has increased slightly, and Congress is expected to pass a bigger defense budget which will increase jobs in 2018. The port has seen an increase in volume along with the housing market and ongoing developments in Downtown Norfolk. These are all positive factors that will continue to grow our economy.
Active listings for the Hampton Roads area, as of September, were down 4.74% to 12,879. The limited supply increased the median list price by 6.62% year-to-year. Year-to-date sales for 2017 are up 3.22% over last year-to-date, while the median sale price is up 2.27% and days on market are down 7.5% year-to-year.
New construction can be seen throughout Hampton Roads. In September, new construction listings were up 8.33% over last year, and the median list price was up 4.08%. Sales are continuing to remain strong compared to last year. The change in units is less than a 1% increase, and the median sale price is less than a 1% decrease. Therefore, the number of sales and sale prices are relatively stable year-to-year.
Hot Real Estate Topics
Flood insurance was a big topic this year with the aftermath of Hurricane Matthew and the impact of rising sea levels. After Hurricane Matthew, many neighborhoods that had never seen flooding before were severely damaged and are still recovering one year later. This year Hurricanes Jose and Maria impacted the area. According to CoreLogic, Hampton Roads is among the top five areas in the country at a high risk for storm surge. You would think that with all the recent damage and emphasis on flooding in the area that flood insurance policies would be the norm for most homeowners; however, this is not the case. Over the past five years, fewer homes in the area are covered. Homeowners with federally insured mortgages must carry at least a national flood insurance plan if they are in a flood zone. The homeowners without a federally backed mortgage are the ones letting their policies lapse because of the increasing premium rates. As more people drop their policies, fewer are paying into the fund to cover losses like what we have just seen in Texas and Florida. The large losses and fewer policies will create a burden for those currently paying into the fund. December will determine the future of FEMA since the government must decide how the agency will be funded.
This year was a strong year for the local economy and real estate market. Housing inventory is low, which increased sale prices. Changing interest rates had no impact, and new construction is a player in the market but has remained stable over the past three years. Looking at the trends since 2016, I would predict that 2018 will be similar to the past two years with low inventory, short market times, and stable to increasing sale prices.
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