The housing market in Northern Virginia is facing a slowdown due to rising mortgage rates. The Northern Virginia Association of Realtors refers to this as a “slow market correction.” In August 2022, homes sold in Northern Virginia remained on the market longer, and the overall number of sales decreased by 25% from the previous year. The median price of sold properties increased by 3.2% to $627,500. Although it was greater than a year ago, it was less than the median selling price of $650,000 in July.
The pending sales, or contracts made to buy a house but not yet closed, decreased by 30.5% compared to August of the previous year. The housing market is decreasing compared to earlier in the year, but it's still difficult to find a property and prices are still high. This indicates that it is still a seller's real estate market in Northern Virginia.
- Last month, homes sold in an average of 19 days.
- The number of available homes for sale was down 19.6% from August 2021.
- Inventory supply has decreased to 1.1 months, which is a seller's housing market.
- The median price of what sold was $627,500, a 3.2% increase from the previous year.
Will the Northern Virginia Housing Market Crash: Forecast for 2023
Northern Virginia is currently a seller's market, as the inventory supply has decreased to 1.1 months. It is unlikely to see any major price declines or a housing market crash in the foreseeable future. The Northern Virginia Association of Realtors® (NVAR), in conjunction with the Center for Regional Analysis at George Mason University (GMU-CRA), issues a consensus forecast for the NVAR region’s housing market.
The association convenes a panel of key experts from differing sectors of the real estate industry to review preliminary forecasts developed by GMU-CRA economists and offer their insights into current and near-future market conditions. Overall, home prices in the NVAR region will continue to climb, albeit at a slower rate than in the previous 12 to 18 months.
The recently announced increase in the upper bound for conforming loans in the NVAR region to $970,800 will assist mitigate mortgage rate increases. We will closely watch how Freddie and Fannie's policy changes affect house prices and make adjustments to this projection as warranted, with updates posted on NVAR.com/marketstats.
With the exception of a few market cohorts, inventories will drop in line with pre-pandemic trends, as indicated by month-end market counts. Buyers will need to be patient as house alternatives in several Northern Virginia neighborhoods remain limited. Nonetheless, our analysis indicates that overall unit sales across all locations and market sectors will fall by less than 1% in 2021 compared to a very busy 2021, and will grow in some market groups. The market will be slightly cooler than in 2021, but it will most likely continue to track the region's strong pre-pandemic sales activity.
NVAR's Forecast For Fairfax County, VA
After a year and a half of rapidly growing prices, the region's largest jurisdiction will experience rising prices (approximately 3.3%) and robust unit sales figures only below 2021 levels (-0.8% or around 70 fewer units). Single-family home inventories will fall. We predict 10-year low inventories.
The prediction team anticipates Fairfax County and surrounding townhouse inventory growth to track closely with 2021 for much of the year but remain elevated in the fourth quarter. Inventory increases annual revenues. Fairfax-located condominium prices will rise 3.2% in December 2022 compared to December 2021, although the general trend line is flat for most months next year. Condo inventory will remain higher than in pre-pandemic markets but lower than last year. Our projection predicts that 9.7% fewer condos sold in Tysons and Reston than in 2021.
Here are the current home values in Fairfax County (Zillow Home Value Index)
- Fairfax County Typical Home Value: $701,555
- 1-year Value Change: +6.9%
- 1.005 Median sale-to-list ratio (August 31, 2022)
- 50.8%Percent of sales over list price (August 31, 2022)
- 28.9%Percent of sales under list price (August 31, 2022)
NVAR's Forecast For Arlington County
Arlington (and Alexandria) are small markets, therefore median property values can vary greatly from month to month. Few properties can significantly alter data trends. Monthly price volatility for Arlington single-family house prices has increased significantly.
This is not market volatility, but rather home size, age, school catchment area, and other considerations. Before the pandemic, volatility was high, but since early 2020, price points have been volatile. In 2022, peak prices will be lower than this year, but the trend will be good. Unit sales would rise 1.7% despite fewer inventories than in 2020. Arlington's hottest property is single-family homes.
Arlington townhomes, which had significant inventory gains over the past year and a half, will see fewer sellers with month-end inventories down 10% for the year. 2022 will return this market sector to long-term trends before Amazon HQ2. In late 2022, total unit sales will be persistently positive, unlike in 2021. Prices will rise 3.1% overall, stabilizing.
Arlington condo inventories will reduce but remain at 2017 levels. Though sellers have pricing power, condo buyers inside the beltway will still have significant market prospects. Due to substantial inventories, prices will rise less than 2% in this market sector, and annual unit sales will drop by 36 units (-2%). Units from Amazon-related National Landing initiatives may weaken the demand for existing units. Older condo complexes in the region will still need good paperwork to ease worries about condo associations' financial stability and property conditions.
Here are the current home values in Arlington county (Zillow Home Value Index)
- Arlington County Home Values: $805,608
- 1-year Value Change: +4.0%
- 0.998 Median sale-to-list ratio (August 31, 2022)
- 35.6% Percent of sales over list price (August 31, 2022)
- 39.0% Percent of sales under list price (August 31, 2022)
Sources:
- https://www.nvar.com/realtors/news/market-statistics
- https://www.zillow.com/home-values/4655/fairfax-va/
- https://www.zillow.com/home-values/30258/arlington-va/
- https://www.nvar.com/realtors/news/blogs-multimedia/default-blog-page/real-estate-news/2021/12/16/2022-nvar-region-forecast
