Hampton Roads Real Estate Market: October 2024 Update

As we move into October 2024, the Hampton Roads real estate market remains dynamic, reflecting national trends while maintaining its own unique regional characteristics. Covering areas like Virginia Beach, Norfolk, Chesapeake, and the surrounding communities, this region continues to attract homebuyers for its blend of coastal living, military presence, and vibrant economy. Here's an overview of the key trends shaping the market this fall.

1. Slower Pace, But Stable Demand
The Hampton Roads real estate market has experienced a slight slowdown in transaction volume since the summer, typical for this time of year. However, demand remains stable due to several factors:

Military Relocation: Hampton Roads is home to several military bases, including Naval Station Norfolk, the largest naval base in the world. Military families continue to move in and out of the region, driving consistent demand for homes. PCS (Permanent Change of Station) seasons, particularly in fall and winter, ensure a baseline level of activity.

Coastal Appeal: Proximity to the Atlantic Ocean, Chesapeake Bay, and scenic waterways remains a key draw for buyers looking for waterfront or vacation homes. While the peak summer season for such purchases has passed, interest in coastal properties remains solid among those looking to invest in secondary homes before the end of the year.

2. Interest Rates and Affordability Challenges
Rising interest rates have been a major national concern in 2024, and Hampton Roads is no exception. Mortgage rates have climbed, impacting the affordability of homes for many buyers, particularly first-time homebuyers. Despite this, the region remains more affordable compared to many East Coast metro areas like Washington D.C. or New York.

Buyer Caution: Higher rates are causing some potential buyers to delay their home purchases, waiting for potential rate cuts in 2025. The risk here is that home values are projected to continue rising into next year, potentially canceling out any money saved by lower interest rates. Buying now could be a faster road to building equity.

Seller Adjustments: With fewer bidding wars than in previous years, sellers are increasingly open to price negotiations. However, homes that are priced competitively and in desirable locations are still moving quickly.

3. Inventory Shortage Continues
Inventory in Hampton Roads remains limited, reflecting a nationwide trend. As of October 2024, the region is seeing a shortage of homes available for sale, particularly in the mid-range price brackets ($300,000 to $500,000). This shortage can be attributed to a few factors:

Reluctant Sellers: Many homeowners with low mortgage rates are hesitant to sell, knowing they would have to purchase a new home with a higher interest rate. Again, this is a recipe for missing out on building equity. Home prices aren't forecasted to go down any significant amount any time soon.

Construction Delays: New construction has been slow to catch up with demand due to rising material costs, labor shortages, and delays in permitting. This has limited the number of new homes entering the market, particularly in rapidly growing suburbs like Chesapeake and Suffolk.

4. Hot Markets: Virginia Beach and Chesapeake
Certain cities in Hampton Roads continue to outshine others in terms of demand. Virginia Beach and Chesapeake are the most sought-after markets, thanks to their proximity to the coast, strong school systems, and desirable suburban communities.

Virginia Beach: As the largest city in the region, Virginia Beach remains a top destination for homebuyers seeking a mix of urban and suburban lifestyles. Neighborhoods like Sandbridge and Great Neck continue to attract buyers, especially those seeking luxury properties.

Chesapeake: With its balance of suburban charm and proximity to nature, Chesapeake is also highly desirable. Greenbrier and Hickory are particularly popular for families, while new developments in the southern part of the city are drawing interest from buyers looking for more space.

5. The Rental Market is Heating Up
As homeownership becomes more challenging due to higher interest rates and limited inventory, the rental market in Hampton Roads is growing. Both single-family homes and apartment units are seeing increased demand, with rental prices rising accordingly.

Military and Student Renters: The large military population and a significant student presence, including at institutions like Old Dominion University, are fueling demand for rental properties. Property owners in Norfolk and Newport News are benefiting from this trend.

Investors: Real estate investors are taking advantage of the tight rental market, purchasing homes to rent out, especially in areas like Norfolk, which attract both students and military personnel.

6. Outlook for 2025
Looking ahead to 2025, the Hampton Roads real estate market will likely continue to be shaped by broader economic factors, including interest rates and inflation. However, the region's strong local economy, driven by its military presence, tourism, and port activities, should provide stability.

Potential Rate Cuts: If the Federal Reserve begins to lower interest rates in 2025, we could see a surge in demand as more buyers re-enter the market.

New Construction: Efforts to increase new housing developments may help alleviate some of the inventory pressures, particularly in growing suburbs.

In conclusion, the Hampton Roads real estate market in October 2024 is characterized by steady demand, limited inventory, and affordability challenges. While higher interest rates are causing some buyers to hold off, the region remains an attractive destination for its military-friendly atmosphere, coastal charm, and relatively affordable home prices compared to other East Coast metro areas. Buyers and sellers alike will need to stay informed and agile as they navigate this ever-evolving market.