RVA Housing Segment Summary
It is a difficult time to buy and favorable time to sell due to the lack of ample supply; it is a seller’s market for detached homes priced from $200,000 to $449,999 based on a review of CVRMLS data, retrieved 5/21/2020. Looking at YOY April figures reveals the inventory (supply) indicators are down and demand indicators are up. The number of New Listings, number of Homes For Sale, and Months Supply of Homes For Sale are down; respectively, -23.6%, -29.5%, and -41.2%. Conversely, demand indicators of Closed Sales, Median Home Prices are up, while the Median Percent of Last List Price ratio (sale price ÷ list price) is nearly neutral; respectively, +6.8%, +2.9%, and +0.2%. There is no doubt that the Wuhan Virus/COVID slowed the sales velocity and volume of sales as shown in the Pending Sales drop of 9.5%, but the declines are due to a lack of supply. In short, the number of new listings dropped steeply with the COVID lock-down, so inventory did not get its typical spring bump while buying out-paced additions to inventory to push days-on-the-market (time to sell) downward and inventory (supply) to below a ”balanced-market” level to result in a market that favors sellers; the graphs used in this analysis are found after this narrative.
It is noted that the national home mortgage delinquency rate experienced its largest single-month increase on record (usatoday.com, 5/21/2020, J. Menton). This is not a surprise given the unemployment rate due to COVID reached levels in two and one-half weeks that took nearly two and one-half years to hit during the Great Recession. The national home delinquency figure is skewed by particularly hard-hit employment segments (for more go to https://www.philadelphiafed.org/covid-19/covid-19-equity-in-recovery/which-workers-will-be-most-impacted) and the high rates experienced at large population areas such as Miami at 7.2%, NYC at 5.9%, the states of Nevada at 8%, and California at 5.7% (on the bright-side, California’s current delinquency rate is better than its peak rate in February 2010 of 15.7%). Richmond Metro’s economic base is not highly dependent on the most impacted employment segments and it is well-positioned to benefit from many of the long-term economic shifts predicted to occur due to the COVID such as the increase in remote workers and dispersion from 24-hour cities.
It will be interesting to see May and June figures given the start date of Virginia’s lock-down, and normal closing lag-time from pend to close.
