Economy and Real Estate in Richmond Virginia

 It's been a prime time to invest in real estate. Mortgage interest rates have been around 5%, real estate prices are low, and sellers are motivated. To make things better, the government has offered huge incentives to buy real estate. First time buyers get $8,000 in tax credits just for buying a house. The government incentives have had an impact. First time home buyers include over 45% of real estate transactions. In Virginia, we've also seen an extensive increase in the purchase of new construction homes.Notwithstanding these favorable buying conditions, Richmond, Virginia home sales have been down. Last month, Petersburg (a Richmond suburb) home sales were down considerably compared with May of last year. MechanicsvilleReal Estate also saw a considerable decline from last year.Why is it that home sales are down even though purchasing real estate is so favorable? People can't buy because they can't sell their current homes, they have no equity, no down payment, and can't get mortgage financing, or they just don't feel confident with their job stability.Some of the government incentives have stopped. The sub 5% interest rates now fall around the 6% range. A one percent increase in interest rates is a big deal for housing affordability. A $150,000 home loan at 6% is almost $100 a month more than at 5%.What will happen when the government incentives end? It's impossible to say. The economy and housing market do show signs of improvement, but It looks like the Richmond Real Estate market won't greatly improve in the near-distant future.