At the start of each year, the Nest Realty NRV team locks ourselves in a room with buckets of popcorn and coolers of cold drinks - shout out CMY - and we dig into the real estate market that was. When we at last come up for air, we do so having looked at hundreds of data points in order to best advise our clients on the state of the NRV's real estate market past, present, and future. We call it our Nest Report, and we present it here for The Key Play. We know that not everyone is going to be interested in the nitty gritty details, but we've found that all of us have two things in common - (1) we're all Hokies, and (2) everyone is at least a little curious about what's going on in the real estate market. So our goal with this report is to hit the highlights, do it in a way that everyone can appreciate visually, and present it in a truthful and informed way. You can see the whole report at nestmarketreports.com.
The real estate market in the New River Valley, like nearly every other market across the country, was absolutely bonkers in 2021. Multiple offers in every price point, bidding wars, and the like, were commonplace. Average sales prices were up 11% across the NRV, Days On Market fell 42%, and nearly every micro-market saw a similar story. Some have pointed to this as a sign that the real estate market is primed for a recession, but before we jump to that conclusion, there are three indicators we feel best forecast where the market is currently, and where it's going. Those are Mortgage Rates, Consumer Confidence, and Unemployment Rates.
Mortgage Rates - Mortgage rates almost certainly impact affordability more than any other metric we study. And while rates have ticked up in 2022, they continued to remain artificially low in 2021, which drove much of the frenzy we saw throughout the year. As rates move upward in 2022 it's natural to think this will slow sales, but the likelihood is that continued low inventory will just diffuse buyers across more price points.
Consumer Confidence - Consumer confidence in the real estate market has continued to remain relatively steady over the period studied. While there was a definitive drop at the outset of the pandemic, consumer confidence has remained stable overall, and we expect that to continue. So while it's easy to point to things like inflation and rising interest rates as threatening the market, the truth is that at the moment, confidence continues to remain strong.
Unemployment Rates - With nationwide unemployment ending the year at 3.9%, and the NRV seeing an unemployment rate almost two points lower (2.1%), we continue to see an extremely strong labor market in the New River Valley. That's good news for the NRV because employed people often buy homes; should inflation rise it's even better news for homeowners in the New River Valley because equity will continue to grow, while mortgage payments remain fixed.
Is the market challenging? Yes, without a doubt. Will that continue into 2022? All signs point to yes. But whether you're in the market to buy or sell here in the NRV, or just curious as to what's happening in your favorite college town in Virginia, we'll be here, happy to chat. Reach out on our website, NestRealtyNRV.com, or find us on our socials @NestRealtyNRV. We'd love to hear from you, and Go Hokies!