The Northern Virginia residential and commercial housing market is still navigating its way toward a post-pandemic normal, as highlighted in the recent 2024 economic housing forecast by the Northern Virginia Association of REALTORS® and George Mason University’s Center for Regional Analysis.
Despite hopes for a moderation in recent mortgage rate spikes, Ryan McLaughlin, CEO of NVAR, anticipates continuing increases in home values fueled by historically low housing inventories. Let us find out what is expected in Northern Virginia in 2024.
Northern Virginia Housing Market Trends in 2024
In the dynamic landscape of the Northern Virginia housing market, January 2024 brought forth noteworthy trends, with a delicate balance of stability and change. The Northern Virginia Association of Realtors® (NVAR) sheds light on key aspects, emphasizing the interplay between sales, prices, and inventory.
Northern Virginia Sales Dynamics:
January home sales in Northern Virginia exhibited resilience, steadying with only a marginal dip of 0.9% from the previous year. However, a significant revelation was the acceleration in the pace of transactions, as homes sold 29% faster than in January 2023, according to NVAR. Veronica Seva-Gonzalez of Compass Realty attributes this to lower rates and heightened demand, bringing a sense of optimism to the real estate market.
Despite the slight decline in sales compared to December 2023, the market showcased stability. The supply, though tight, experienced a slight uptick, with the months' supply of inventory reaching 0.74 months in January 2024, up 1.5% from the same period in 2023. The average days on the market were 29, marking a decrease of 19.4% from January 2023, although a slight increase from the previous month.
Northern Virginia Price Trends:
Amidst the brisk sales and growing inventory, the median sold price for homes in January 2024 reached $650,000, reflecting a robust 6.6% increase from January 2023. Notably, this price was slightly lower than the preceding month's figure of $675,000. Ryan McLaughlin, CEO of NVAR, anticipates further market moderation as sellers test the waters, while buyers continue to act swiftly, albeit at higher prices.
Economic Housing Forecast:
NVAR's 2024 economic housing forecast, developed in collaboration with George Mason University's Center for Regional Analysis, underscores that the real estate market in Northern Virginia has not yet returned to a post-pandemic normal. Despite attracting regional workers and creating jobs, the forecast predicts a potential downturn in overall sales activity for 2024. A noteworthy outcome of the Covid era is the increase in intraregional migration patterns, particularly towards distant suburbs, driven by the rise of remote work options.
Northern Virginia Regional Home Sales Data:
Let's delve into the specific data for January 2024 compared to January 2023, focusing on key metrics derived from Bright MLS as of February 12, 2024:
- Closed Sales: In January 2024, there were 771 closed sales, reflecting a marginal 0.9% decrease from January 2023.
- Sold Volume: The total sold volume in January 2024 amounted to $585,969,537, indicating a 3.1% increase compared to January 2023.
- Average Sold Price: The average sold price for a home in January 2024 stood at $757,327, marking a notable 5.4% uptick from January 2023.
- Active Listings: With 981 active listings in January 2024, there was an 18.9% decrease compared to January 2023.
- New Pending Sales: The total number of new pending sales in January 2024 was 1,033, reflecting a 9.3% decrease compared to January 2023.
These figures provide a comprehensive snapshot of the intricate dynamics shaping the Northern Virginia housing market in early 2024, offering valuable insights for both buyers and sellers navigating this dynamic real estate landscape.
Will the Northern Virginia Housing Market Crash: The Forecast
The Northern Virginia housing market, like many others, is navigating the complexities of a post-pandemic world. A recent economic housing forecast, unveiled on December 13, 2023, by the Northern Virginia Association of REALTORS® in collaboration with George Mason University’s Center for Regional Analysis, sheds light on the current state of the real estate landscape in the region.
Market Dynamics and Expectations
According to Ryan McLaughlin, CEO of NVAR, the residential and commercial real estate market is still finding its footing after the pandemic. Despite recent spikes in mortgage rates, there is optimism that they will moderate and stabilize. However, the forecast suggests that home values are poised to continue their upward trajectory due to historically low housing inventories across the region.
The National Association of REALTORS® Real Estate Forecast Summit, held on December 12, aligns with this sentiment. NAR anticipates a decline in mortgage rates, stabilizing around 6.3%, and projects an overall increase in national home sales for the year 2024.
Expanded Regional Scope
For the first time, NVAR’s Housing Forecast encompasses Loudoun, Stafford, and Prince William Counties, in addition to Arlington, Alexandria, and Fairfax. The shift towards remote work during the pandemic has prompted intraregional migration patterns, extending into more distant suburbs. This movement has led Northern Virginia Realtors® to broaden their presence in Loudoun, Prince William, and Stafford counties.
Examining the broader regional economy, the recent inflation numbers and subsequent response in the market, including a decrease in interest rates on 10-year Treasury notes, provide encouraging signs. NAR anticipates four interest rate reductions by the Federal Reserve in 2024.
Positive Indicators and Challenges in Northern Virginia
Several factors contribute to the region's positive outlook:
- Demand-Supply Dynamics: The balance between demand and housing supply is contributing to price stability.
- Local Government Recognition: Local governments acknowledge the importance of affordable housing for economic success, especially for young professional families.
- Hybrid Work Normalization: The normalization of hybrid work is expanding the effective geographic scope of the Northern Virginia labor/housing market.
- Intraregional Migration: Patterns show that Northern Virginia continues to attract regional workers.
- Appreciation in Housing: Housing in Virginia appreciated by 42%, according to the NAR report.
However, amidst the positive indicators, there are concerns of a downturn. Economic signals point towards increasing levels of weakness and uncertainty, with overall sales activity expected to decline in 2024. Monthly job gains are softening nationwide, as reported by NAR.
Economic Factors and Risks
Several economic factors pose challenges to the region's housing market:
- Rising Consumer Debt: Increasing levels of consumer debt raise concerns about financial stability.
- Company Layoffs: Companies announcing hiring freezes or layoffs contribute to a softening job market.
- Inflation Stress: Despite a moderation to 3.2%, households are stressed by rising prices in recent years.
- Interest Rate Outlook: The Federal Reserve's commitment to a target inflation rate of 2% to 2.5% poses challenges to achieving lower interest rates.
- Uncertain Economic Landscape: The possibility of a recession looms, with conflicting viewpoints among market analysts.
- 2024 Economic Forecast: While some predict a short and shallow recession within the next 12 months, uncertainties persist due to the impact of rising interest rates and overall monetary policy tightening.
Expert Insights and Regional Expectations
According to Terry Clower, PhD, Director of GMU-CRA, the economic outlook for the DC region suggests a slowdown in the first half of 2024, potentially accompanied by job losses in the latter part of the year. However, the correction is not anticipated to be severe or prolonged enough to qualify as a regional recession. Clower, alongside Ryan McLaughlin and other expert panelists, shared these insights during NVAR's virtual briefing.
The 2024 NVAR forecast highlights a noteworthy trend – despite the uptick in mortgage rates, home values in Northern Virginia continue to appreciate. NAR reported a substantial 42% increase in home price appreciation in the Commonwealth of Virginia since the onset of COVID in Q1 2020 to Q3 2023.
NAR's Summit further places the DC-Arlington-Alexandria region among the top 10 markets with the most pent-up housing demands in its real estate forecast. However, the intersection of housing and the broader economy faces challenges, with instability on Capitol Hill affecting the confidence of area contractors and government workers in the near term.
Northern Virginia Regional Housing Market Forecast
Fairfax County Housing Market Forecast
Single Family Homes: The forecast for Fairfax County indicates a slight increase in single-family home prices, with a 3.5% gain in December 2024 compared to December 2023. However, total unit sales are projected to drop by 9.9% for the year due to tightening inventories.
Townhomes: Low inventory levels will impact total townhome sales, primarily driven by existing owners opting to stay put with their 3% mortgages. Despite this, demand for relatively affordable townhomes, considered the best entry point for single-family buyers, is expected to boost prices by 4.4% in 2024.
Condominiums: Condo prices are anticipated to remain relatively flat in 2024, influenced by older units entering the market and rising monthly association fees impacting the overall cost of condo ownership. A decline in condo inventories is expected, corresponding to a drop in unit sales.
As the forecast provides a detailed glimpse into Fairfax County's housing market, it underscores the nuanced dynamics at play, with varying trends across different property types.
Arlington County Housing Market Forecast
Single Family Homes: Arlington County has witnessed aggressive rises in single-family home prices over several years. However, factors such as overall affordability and mortgage rates are softening the rate of price gains. Median prices for homes in December 2024 are expected to be 0.9% higher compared to 2023. Unit sales are projected to decrease by about 10%, and inventories will continue their multi-year decline.
Townhomes: In Arlington, townhome prices are anticipated to rise by 3.4% in 2024, but inventories will drop nearly 26%. Unit sales are expected to decrease by 9.2% during the year. New and existing residents may find it challenging to locate options for single-family homes, reflecting the broader trend of constrained housing availability.
Condominiums: The condo market in Arlington experienced an increase in inventories during the pandemic, contrasting with the market influenced by Amazon HQ2 in 2018 and 2019. Stability has been achieved as remote and on-site work situations have settled. Prices are expected to be flat, with a modest 0.7% increase at the end of 2024, while unit sales are projected to decline by 24.4%. The sensitivity of the condo market in Arlington to mortgage rates remains a notable factor.
Alexandria City Housing Market Forecast
Single Family Homes: Alexandria City's single-family home prices are expected to moderate in 2024. Inventories will continue to drop, causing a 12% decline in total unit sales for the year. Prices are projected to rise by approximately 3.9%, a moderation from the price spike witnessed in late spring of 2023.
Townhomes: Townhome inventories in Alexandria City are expected to decrease by 26%, with sales activity dropping by 9.5% on average for the year. While prices are forecasted to rise by 3.1%, the market shows signs of more normal levels of activity compared to the pandemic-influenced selling of the past two years.
Condominiums: Alexandria's condo market is expected to see more normal levels of activity, similar to Arlington. Average month-end inventories will decline by almost 8.7%, but total sales trends show an increase of 3.1% for the year. Condo prices will rise moderately at 3.1%, remaining substantially elevated compared to long-term trends. The era of affordable deals on Alexandria condos appears to be coming to an end.
Prince William County Housing Market Forecast
Single Family Homes: Prince William County remains a more affordable option for homebuyers compared to neighboring areas like Arlington, Alexandria, and Fairfax. Despite a drop in inventories of single-family homes in recent years, prices are expected to increase by 5.9% in 2024. The notable decrease in inventory by 32%, driven by existing homeowners staying put due to mortgage rates, is anticipated to lead to a 14% decline in total single-family unit sales compared to 2023.
Townhomes: Townhome prices in Prince William County are projected to rise by 7.9%, continuing a multi-year trend of families seeking this more affordable, family-sized housing option. However, townhouse inventory is expected to decline by 28%, constraining total unit sales, which are predicted to drop by 13%. Days-on-market are expected to be tighter in 2024.
Condominiums: While not a large market, condominium sales in Prince William County are expected to remain stable, with a modest 1% drop in 2024. The relatively better inventory conditions for condos (down 17%) will be accompanied by price appreciation at 7.9%.
Loudoun County in Housing Market Forecast
Single Family Homes: In Loudoun County, 2022 saw a break in the multi-year trend of rapidly rising prices for single-family units. However, in 2023, prices went back to an appreciative form, and this trend is expected to continue in 2024 with annual gains of 5.5%. Despite this, inventories and total single-family unit sales are projected to decline by 26% and 12%, respectively.
Townhomes: Townhome prices in Loudoun County will rise by about 6% in 2024, but unit sales are expected to remain below historical averages, decreasing by 5% compared to the drop in sales activity observed in 2023. Townhouse inventory is forecasted to drop by 24%, with the uptick in inventory in Q3 of 2023 considered transitory.
Condominiums: Condominium sales in Loudoun County show resilience with an anticipated drop of only 10%, representing a handful of units. Condo inventory remains remarkably stable, not showing a long-run decline. The comparatively small drop in condo inventories is expected to hold down total unit sales, with prices for Loudoun condo units projected to rise by 5.8% in 2024.
As the dynamics in Prince William and Loudoun Counties unfold, homebuyers and investors alike will navigate the evolving landscape of these housing markets.
Stafford County Housing Market Forecast
Single Family Homes: Stafford County has experienced a substantial drop in single-family inventories, beginning months before the pandemic. The post-pandemic “re-set” indicates a persistent lower level of single-family inventory, with expectations that the usual seasonal surge in summer housing inventories will not emerge. Overall, inventories of single-family units are forecasted to decline by 21% in 2024, accompanied by a 12% drop in sales. Prices for single-family homes are expected to rise, albeit at a modest rate of 2.9% compared to other Northern Virginia jurisdictions.
Influence of Military Bases: Marine Base Quantico and Fort Belvoir have a significant influence on Stafford County's housing market. Base reassignments (transfers) may drive more housing market activity than initially reflected in this forecasting effort. The June 2024 NVAR/CRA Mid-Year Market Update will re-examine current market assumptions.
Townhomes: Townhome inventories in Stafford County are expected to follow broader regional trends, with notable declines of 39% in inventory and a 19% drop in unit sales. Despite these challenges, townhome prices are projected to increase by 6.1% in 2024.
Condominiums: The few condo units in Stafford County have an average month-end for-sale inventory of about five units. Even a small change in the number of condo units sold or listed can lead to dramatic changes in percentage change statistics. Prices for the few condos available for sale are expected to rise by about 6.4%. The anticipation is that this market segment will grow as new units are built and enter the resale housing market.