Is the Housing Market Crashing Like 2008? | 2022 Recap [Virginia Beach]
The mainstream media has a lot to say about whether the 2022 housing market is about to crash or burst. There are plenty of abnormal things happening in the market, and after two and a half years of unprecedented real estate activity nationwide, you’re probably wondering if you should be concerned about another recession like we had in 2008.
However, looking holistically at housing market trends and statistics, our experts know that the future looks a lot different than it did 15 years ago.
Is the housing market about to crash?
So, will the housing market crash this year or next year? We’re more likely to see a correction than a crash. When prices have risen so high that most potential buyers aren’t able to afford housing, the market will often slowly “correct” itself to offset affordability inequities.
The fact that lending standards are much stricter now means that there’s not the artificial demand of 2008, where people were buying homes they couldn’t afford just because they could get a loan. We do not foresee a flood of loan defaults leading to a surge in home inventory in Hampton Roads as before.
The statistics below indicate that there’s still a high demand for shelter today with little inventory available. What we’re seeing right now could be better classified as an affordability crisis, not a “housing bubble.”
Focus on your local 2022 housing market
What do you need to be concerned about in this housing atmosphere? Look at your local market. Real estate is always a hyper-local industry, and housing market crashes, rises, and corrections are no exception. Some regions, like those that Americans flocked to during the pandemic or with lots of recent construction, are most at risk of a housing recession as 2022 comes to an end.
However, Hampton Roads has limited space to build new homes due to its geography. It also has continual population turnover due to the high concentration of military in the area. These factors bolster the stability of the Hampton Roads housing market even in times of economic uncertainty.
Ok, is the Virginia Beach housing market about to crash?
Homebuyers in Virginia Beach have been heavily impacted by mortgage rates rising this year after they hit historic lows during the pandemic. This has started to stall the insatiable demand for housing, but it certainly hasn’t brought it to a stop.
Rising mortgage rates don’t necessarily mean lower sales prices on houses. Potential sellers - who would also then be buyers - are also looking at rates and choosing to stay put. Because supply has not yet caught up with demand, prices remain high and the market remains competitive.
It’s not likely that Virginia Beach will face a dire market crash next year, despite the hype. It’s important to compare this year’s numbers to a more “normal” market, like the trends of 2019. Let’s take a look at what the market in Virginia Beach and the southside of Hampton Roads has been doing in 2022, compared to pre-pandemic stats.
Southside Hampton Roads 2022 Housing Market Recap
What’s Happening with Home Sales in Hampton Roads
Throughout 2022, a sharp rise in mortgage interest rates coupled with record-high home prices has begun to quell the red-hot demand for homes that we’ve seen over the last couple years.
Home sales decreased in Hampton Roads by 14.6% in 2022 compared to last year (January - October).
However, compared to a pre-pandemic normal like 2019, when home prices and interest rates were both lower, home sales were up by 8.9% this year.
Why it matters:
The speed and competition of the housing market were unmatched over the past couple of years, and now we’re finally seeing demand pull back a bit. Though the year-over-year slow-down may seem alarming; historical data shows that the market is still strong overall.
Fewer home sales mainly reflects how the current rise in interest rates and pandemic-fueled price increases have combined to make housing unaffordable for many.
Slowing demand is only part of what will help the market return to normal. Without an increase in supply, even those who aren’t affected by rate increases will be facing still competition for homes in good conditions and highly desired locations.
Thinking about taking advantage of the demand and selling your home? Use this free Home Sale Calculator to determine how much you can make selling your house.
What’s Happening with Housing Inventory in Hampton Roads
Compared to the last few years - including pre-pandemic - the number of homes listed for sale in Hampton Roads is significantly lower than normal.
New listings added to the REIN MLS are down 14.1% so far this year compared to January-October of 2021, and down 15.0% from this time in 2019.
In good news, we are seeing the month's supply of inventory increase - which reflects how long it would take to run out of inventory at the average rate homes are selling over the past 12 months. In January, there was .75 month’s supply of inventory on the market - with a record low of 1,664 homes in Hampton Roads.
Why it matters:
The inventory situation isn’t as dire as in the beginning of 2022, though supply is still quite low. Even though we saw a 61% increase in total active listings of homes on the Hampton Roads MLS from January to October of this year, the absorption rate has only risen marginally.
An increasing months supply of inventory is key for the market to even out. Remember, a healthy real estate market should have between 3-6 months of supply. Because we’re still far away from that reality, a market correction is much more likely than a crash.
What’s Happening with Home Prices in Hampton Roads
With the inventory of homes still so low, even the pullback in demand from rising interest rates hasn’t resulted in a dramatic drop in home values. Instead of home prices decreasing in Hampton Roads, we’ve seen them climb as high as ever in 2022 – and anticipate them plateauing in 2023 rather than dropping significantly in a “housing market crash.”
In 2019, the median sales price for a home in Southside Hampton Roads for the first ten months of the year was $249,000. By 2021, that had increased to $294,400. This year, we saw another 8.34% increase for a $319,000 median sales price in 2022.
In addition to still-high sales prices, the average year-to-date list prices are also up 8.81% compared to 2021 - which was of course a record-breaking year itself with the pandemic housing frenzy.
Why it matters:
Many potential homebuyers are hoping for prices in Virginia Beach to go down, but that’s not something we foresee happening soon. Rather than trying to get a listing price reduced, buyers should consider bidding for other concessions like closing assistance or repairs made by the seller.
Other regions across the nation may see some sharper downturns in prices in 2023, but Hampton Roads is in a position to ride the plateau for a while.
*Disclosure: we pulled all of our stats and info from the Hampton Roads Real Estate Information Network (REIN). All interpretations, analytics, or derivations were conducted by CGP Real Estate. All stats and graphs reflect the housing market in Hampton Roads Southside (Norfolk, Vriginia Beach, Portsmouth, Chesapeake, Suffolk, Smithfield, Isle of Wight, Franklin, Southampton, Surry, Sussex, Emporia, and Greenville). The information includes data on both existing and new construction homes.
2022 Recap for Virginia Beach Homebuyers
With current interest rates and a still-competitive market, it’s a difficult time for those who need to buy a house. All throughout 2022, people have been asking if it’s smart to buy a house this year.
Earlier in 2022, we shared what our experts predicted buyers would be facing throughout the year. We went back over the post and predictions and can say with confidence that our forecast, considerations, and advice still ring true as we go into 2023.
You can read the full post here, but here are some highlights buyers should keep in mind:
Market times are still fast. Make sure you are working with a real estate professional who can give you access to the MLS so you don’t miss a single listing that appears.
Savvy sellers still have a lot of power. While sellers may be a bit more willing to make some concessions, don’t expect them to accept your low-ball offer. We’re still seeing plenty of bidding wars going on in Virginia Beach.
Cash offers have power. If you can buy a home for cash, that will appeal to sellers who don’t want to risk financial fall-throughs. Cash buyers also don’t have to worry about higher interest rates.
Waiting around for a housing market crash isn’t necessarily wise. Though home prices in Virginia Beach and beyond remain high, there are several reasons to buy now. Less competition means sellers may make concessions at this time. If interest rates come back down in 2023, competition may surge again.
If you’re looking for a home in a desirable area like Virginia Beach, competition is still high and properties in the right condition are still seeing multiple offers. With low inventory and high demand, make sure you’re working with the best real estate professionals.
2022 Housing Market Recap for Virginia Beach Sellers
While moving may seem daunting right now, selling your property in today’s housing market can be a major win. Prices are still competitive and lots of homes are seeing multiple offers come in.
The biggest change we are seeing for sellers is how long houses are staying on the market. Whereas this time last year you might have sold your house in a weekend, now you’ll want to be sure that you have an expert on your side to make sure you still get the top-notch deal you want.
THE BOTTOM LINE
While the 2022 housing market has looked a lot different than the past couple of years, home sales are strong compared to pre-pandemic normal. Demand is softening due to current interest rate increases but is still strong and stable while inventory remains low - factors that indicate the housing market is not likely to suddenly crash this year.
While the Virginia Beach and Hampton Roads real estate markets are trending back toward “healthy,” it’s going to take some time to see demand and supply match more sustainably.