Insider market knowledge to help you master Richmond real estate in 2020.
Richmond real estate was hot in 2019! And it’s not showing signs of cooling in 2020.
This is great news for anyone with a Virginia real estate license; this fast-paced market will provide lots of opportunity to land listings and represent buyers. If you don’t have your Virginia real estate license, 2020 could be your year to launch your new Virginia real estate career!
Let’s take a closer look at the Richmond real estate trends for 2020 and discuss how these trends will affect you and your clients.
Real Estate Values Continue to Climb
The Richmond real estate market performed exceptionally well in 2019 with the average sales price rising to $239,000 by December, up 6.2% since December 2018.
The Zillow Home Value Index (which estimates the median value of all local homes, as opposed to using the sales prices of recently sold properties) also indicates a strong real estate market in Richmond. The index reported a growth of 3.5% in 2019 and is projecting Richmond home values to rise by another 2.9% over the coming year.
What does this mean for Real Estate Agents?
This is good news for Virginia real estate agents and their sellers. Sellers benefit from the higher sales prices, and agents benefit from the higher commissions.
This value increase is also good news for the estimated 8.9% of Richmond homeowners who are currently underwater on their mortgages. Virginia real estate agents would be wise to check on these homeowners, who may be interested in selling as soon as their home equity outweighs their mortgage debt.
Heavy Buyer Competition (Particularly Among First-Time Buyers)
Because Richmond will continue experiencing a strong seller’s market in 2020, buyers will face some heavy competition. Cash offers, multiple offers, and homes selling above asking price will continue to be common.
The Richmond Times-Dispatch reported that competition is especially fierce among first-time buyers, who are naturally looking to jump on the property ladder at lower price points, which are particularly scarce.
If you’re a Virginia real estate agent representing buyers, there are a few things you can do to prepare your buyers for this competitive market:
Make sure your buyers are pre-approved for a mortgage loan to assure the seller that financing won’t be an issue.
Advise your buyers to bring their highest and best offer price; this isn’t the time for low-ball offers.
Remind your buyers to avoid complicated contingencies that could create friction with the sellers.
Mortgage Interest Rates to Remain Low
Lower-than-expected inflation and uncertainty in the global economy have kept interest rates low in 2019. And rates are expected to remain low through 2020.
Leading housing authorities are all projecting interest rates on 30-year-fixed mortgages to remain under 4% for 2020.
Finally, some good news for Richmond buyers! It’s not too late to lock in a mortgage at an exceptionally low rate.
Virginia real estate agents should remind buyer clients of the importance of interest rates. A lower interest rate means buyers can afford more house. In fact, an interest rate increase of just 1% can lower a buyer’s purchasing power by 9-11%! That should motivate your buyer clients to make their move in 2020.
Overall, the Richmond real estate market had a strong 2019 and is expected to have a healthy 2020 as well. Make sure you and your clients take advantage of it!