Market Update June 11, 2022

Mid-Year Market Update

Given the fact that housing sales and mortgage rates are in the headlines on almost a daily basis, I thought it would be helpful to provide a mid-year market update. Real estate is local – and the information you use to make decisions about buying or selling a home should be local as well.

One of the misconceptions I frequently hear is that the “market is going to crash” like it did in 2007-2009. When I hear this, I try to explain that circumstances regarding the competition for homes is very different. There are completely different dynamics at play in today’s real estate market.

My January market update addressed the critical shortage in the number of homes for sale which was driving the prices upward and creating competitive offer scenarios. At that time there were only 79 single family homes for sale in our local market. Today, we have 111 single family homes and 34 attached homes for sale. Strong demand for homes remains as a balanced market is typically when there are 500-600 homes for sale.

Will the market slow down? Sure, it will. But will there be a crash? I don’t believe there will be unless there are other world events that come into play. Here are some factors which I feel are influencing the real estate market and demonstrate the differences between today’s market and that of 2007-2009:

  • Americans have greater wealth due to the run-up of the housing market, federal stimulus, and a long bullish stock market.
  • Approximately 26% of home purchases in April 2022 were cash (National Association of Realtors).
  • Interest rates are rising and are greatly impacting first time home buyers. However, we are still seeing multiple offers for listings in the Williamsburg area.
  • Inflation is increasing in almost all product segments. How will this impact those with excessive consumer debt? Even if they start defaulting on loans, I believe that the current housing shortage will absorb a good portion of the defaults should they occur.
  • Borrowers and lenders are much more cautious than they were during the financial crisis of 2007-2009.
  • Current millennial demand is strong and is forecasted to continue to grow as an increasing number of millennials begin to purchase homes.
  • The supply of new construction homes is below normal levels and will take time to catch up to demand as we work through labor shortages and supply chain issues.

I believe that home prices will continue to rise in our housing market. They won’t rise at levels that we have seen in the past couple of years but will continue at a lower rate until the market balances out. As I have said before – supply and demand vary by location and price point.

If you want an estimate of your home’s value, information about home sales in a specific neighborhood, or general questions about the local real estate market – just let me know. I would be happy to provide this information.


Data Source: WMB MLS 6.9.22