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house sales in the region

Home prices surged last year in the Richmond region as inventory remains low: 'The demand is so incredibly strong'

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House sold in Richmond

A sold sign stood in front of a house on Stuart Avenue in Richmond on Wednesday. At the end of 2021, the median home price in the Richmond region stood at $325,000, which is up 11.3% from the $292,000 figure the year before.

RTD - A1 Feb. 2, 2022

Home prices in the four core jurisdictions of the Richmond area soared last year as strong demand outpaced the prior year and caused inventory of previously occupied homes to shrink.

The median home price, with half the houses selling for more and half for less, stood at $325,000 at the end of 2021 for previously occupied homes sold in the city of Richmond and in Chesterfield, Hanover and Henrico counties, according to a report by the Central Virginia Regional Multiple Listing Service.

That’s up 11.3% from the $292,000 figure a year ago.

The average price jumped 11.2% to $366,629 compared with 2020, the report said.

Home prices surged at a double-digit rate in 2021, which is the first time this has occurred in years, showing how competitive the area’s housing market is, said Laura Lafayette, the CEO of the Richmond Association of Realtors.

The tight supply of homes available and strong buyers demand is fueling the price growth, Lafayette said.

“I think the dynamics that exist today are the cause of the double-digit year-over-year price appreciation. I don’t see them changing,” she said.

“So that’s insufficient supply and when demand outstrips supply this is what you get. We do have some new construction coming online but the majority of our data reflects resale,” she said. “I really think that this is a supply-demand issue. It’s some natural growth and price appreciation, but historically that’s more around the numbers of 5% to 7% year-over-year. But just generally speaking, a significant portion of this price appreciation is absolutely supply [and] demand.”

Chesterfield led the area in median home price growth on a percentage basis with an increase of 13.9% to $326,000 last year from 2020. Among the four localities, Hanover had the highest median price dollar figure — at $384,408.

The median home price has been increasing for several years. For instance, the median price for the Richmond area was $218,937 during the fourth quarter of 2014. It stood at $184,975 at the end of 2011.

Residential sales in the Richmond region rose 7% last year compared with 2020.

Richmond had the highest sales growth on a percentage basis, with the number of homes sold jumping 10.5% from 2020. Chesterfield had the most unit sales year-over-year among the four localities at 7,762 homes sold.

Sales activity in the Richmond area moderated in recent months, the report said. There were 4,781 home sales in the four jurisdictions in the fourth quarter, a decline of 3% or 157 fewer sales than in the fourth quarter of 2020.

Home sales in Chesterfield were down 8% in the fourth quarter compared with the same period in 2020, while Hanover had 4% fewer sales. Sales in Henrico rose 1% and increased 0.3% in Richmond.

In the 16 jurisdictions, which encompasses the four core localities plus the Tri-Cities and nine other localities in Central Virginia, 25,120 homes were sold last year, up 8.4% from 2020.

For a comparison, about 20,000 homes were sold at the peak of the market in 2005, Lafayette said. The number declined during the housing downturn and recession in 2008 and 2009 and stood at about 10,000 in 2010. “Since 2011, we’ve been steadily growing,” she said, noting that last year had a record number of home sales.

Pending sales activity also moderated in the core Richmond region during the fourth quarter with 4,109 pending sales in the area, down 5% from the same time in 2020. The sharpest slowdown occurred in Hanover where pending sales fell 15%, followed by a decline of 8% in Chesterfield.

Inventory of homes also continues to tighten with low supply being the biggest factor as demand remains strong, but buyers have very few options from which to choose.

The four core jurisdictions saw a 40% drop in the number of active listings at the end of the fourth quarter compared with the same time in 2020. There were 815 active listings on Dec. 31, which was 539 fewer listings than at the same time a year earlier.

Chesterfield had a 46% drop in the number of listings, followed by a 38% decline in Richmond and a 36% drop in Henrico.

The overall supply of homes available for sale was less than a month in the 16 jurisdictions that make up the entire area, which includes the region’s four core localities. That’s down from two months of supply that was available at the end of the fourth quarter of 2020.

“There’s been incredible activity in the market. The issue is that homes sell so quickly, so I think that exacerbates this feeling of there’s no inventory because as soon as something comes on the market, it comes off the market so that heightens the sense of there’s no inventory,” Lafayette said. “The demand is so incredibly strong.”

Homes continue to sell faster in the Richmond region with the average number of days on the market during the fourth quarter at 16 days, or five days faster than the same time in 2020.

Statewide, homes sold in an average of 26 days in the fourth quarter, down from 34 days the year earlier period.

The housing market has become so competitive that 12 of the 16 jurisdictions that make up the entire area had an average sold-to-ask price ratio exceeding 100% during the fourth quarter. That means most homes sold are selling above asking price.

Homes in the 16 jurisdictions sold on average for 102% of the asking price in the fourth quarter, up from 101% at the same time in 2020. Within the four core localities, homes had a 102.6% average ask-to-price ratio, up from 101.4% in 2020’s fourth quarter.

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