The Richmond metro real estate market weathered a wild ride during the exuberant mid-2000s, when many homes sold for more than list price with multiple offers being common, through the Great Recession, which officially lasted from December 2007 to June 2009, when being able to sell a home in less than five to six months was considered an achievement. This led to a large inventory of foreclosure and short sale homes and declining home prices, which finally dissipated during the following few years. I have no doubt that the Great Recession had a lasting psychological and economic effect on our population in Richmond and throughout the U.S. This led to many in the baby boomer generation remaining in their homes longer (aging in place) and the millennial generation delaying purchasing homes in great numbers because of economic fears. New home construction declined to very low levels during this post Great Recession period.
Over the past several years, millennials have entered the Richmond real estate market in full force, while Richmond-area, baby boomers have started to move into first-floor master suite homes and out of their long held two- and three-level family homes.
But what does all this mean for the coming Richmond spring housing market and the remainder of 2020 and beyond? Familiarize yourself with the term: "silver tsunami.” The "silver tsunami" is a metaphor to describe the increase in the aging U.S. population and the significant changes to our society that will be a result of this aging. As the bulk of baby boomers enter their mid to late 60s they are now feeling comfortable moving out of their current homes.
In conjunction with this trend of the boomers finally moving on, residential new home building has shown a steady increase, with construction of new homes surging nationally in December 2019 to the highest level in 13 years. There has been a proliferation of new age-restricted communities as well as active lifestyle communities in the Richmond suburban areas. Home sales are brisk in these neighborhoods, and will remain so. Chesterfield has seen the largest number of these communities being developed but Hanover and Henrico are also seeing growth in this segment of the market.
Millennials have jumped into the Richmond area real estate market in full force. Lending Tree just named Richmond the 19th of the nation’s 50th largest metro areas in new purchase mortgage requests from millennials on their online marketplace from January to November 2019. Richmond had 51.2% of mortgage requests coming from this age group, with an average age of 30.8 years old.
The bottom line, as I forecast for my business for the coming year, is that there should be a noticeable increase in the inventory of homes coming on the market, with higher demand especially from buyers in the millennial generation. Mortgage rates are predicted to be below four percent for a 30-year fixed rate mortgage throughout 2020. The overall Richmond area market will see pockets that continue to have multiple offers and higher than list price offers, but most other areas will see a healthy supply and demand curve with slight and steady increasing home prices. In short, look for 2020 to be a solid year to buy or sell a home.