The Hampton Roads housing market has ‘normalized.’ Here’s how buyers and sellers can take advantage. – The Virginian-Pilot

For Chesapeake real estate agent Ryan Benton, the late 2022 residential real estate environment is notably different from the booming 2021 market, where clients bought homes without ever stepping inside and open houses had lines through the front door.

The market has normalized from the heyday of 2.5% interest rates, but buyers and sellers can still take advantage of a slower real estate landscape, he said.

“It’s a price war and a beauty contest,” Benton said. “That’s the classic line.”

At the height of the pandemic, several factors led to booming sales and bidding wars in Hampton Roads. A record low supply of homes, combined with bottomed-out interest rates, meant residents cooped up inside and eager for more living space had limited options.

Now, interest rates have risen to levels not seen since at least the Great Recession. The average interest rate for a 30-year fixed mortgage was 6.31% on Dec. 15, according to Freddie Mac. That figure is more than double the 3.12% interest rate from about a year ago, and the highest since Nov. 13, 2008.

Higher interest rates are a factor influencing one of Benton’s prospective buyers, Chesapeake financial adviser Susan Newman. She bought a 1,700-square-foot condominium in the Great Bridge neighborhood in 2013. Newman said she’s put a lot of love into the property, renovating it in 2014.

She is getting married in 2023 and wants a new home to grow into with her Virginia Beach fiancé. The monthly condo fees, which include items such as several utilities, have gradually crept from roughly $300 a month to $461.

The house-hunting process has been fairly successful thus fair, she said. The couple is looking for a home with about 2,500 square feet and two to four bedrooms.

“We’ve had a couple come close, but we just have not pulled the trigger,” Newman said.

Beyond the interest rates and her renovations, Newman said a smaller supply of houses for sale has led to some reluctance. The housing inventory, or the number of properties currently on the market, has improved somewhat since the height of the pandemic housing boom, but is still relatively low.

In November, there were 3,863 active listings in Hampton Roads, according to the Real Estate Information Network listing service, up around 11% from 3,484 listings in November 2021. If no new homes went on the market, it would take a little over a month for the supply of houses to dry up. But the 1.42-month supply is up from the tighter 1.09-month supply recorded in November 2021.

The tight supply and rising mortgage rates affected home sales, which dropped 35.6% in November from a year earlier, according to REIN. And the median home price dipped slightly from October to November, from $310,000 to $302,000, but still remained higher than $295,000 in November 2021.

“Home prices are dropping here in our local real estate market, but certainly not at the level they are in some areas of the country,” REIN Board President Liz Moore of Liz Moore & Associates said in a blog post. “It’s typical for the market to slow as we enter the winter months, so when you factor in the impact of mortgage rates and inflation on consumer spending, it’s kind of a double-whammy.”

Even though interest rates are the highest they’ve been in more than a decade, Benton said buyers can still take advantage of the market. For example, many who are active-duty military or veterans could secure a Veterans Affairs-backed loan with no down payment. It’s also unlikely that buyers will be paying 10% over the asking price, as was common a year ago.

Benton said sellers should work with an experienced agent to help with understanding neighborhood dynamics, and noted the average home was now selling in a matter of days, rather than hours. The median home spent 20 days on the market in November, according to REIN.

Trevor Metcalfe, 757-222-5345, trevor.metcalfe@pilotonline.com