The Northern Virginia housing market in October 2023 showcased a blend of challenges and positive developments. The housing market exhibited characteristics that suggest it is still leaning towards being a seller's market. Despite a 5.6% decline in home sales, median sold prices continued to rise, indicating sustained demand. The limited inventory and quick turnover of houses, with an average of 17 days on the market, further emphasize the competitive nature of the market.
While there are positive signs, such as a slightly higher inventory and the potential impact of lower mortgage rates benefiting buyers, the overall dynamics, including the 3.1% increase in median sold prices, suggest that sellers still hold a considerable advantage in the current market conditions.
Realtors® and industry experts anticipate that as rates moderate, the market may see a more balanced supply and demand relationship, providing buyers with increased options. However, until this equilibrium is achieved, the Northern Virginia housing market can be considered to favor sellers.
Northern Virginia Housing Market Trends 2023
What is the housing market like right now? The Northern Virginia housing market exhibited signs of moderation in October 2023, according to the latest report from the Northern Virginia Association of Realtors® (NVAR). Despite a 5.6% decline in home sales, there was a 3.1% increase in prices compared to the previous October, indicating a more balanced market. This article delves into the key indicators and trends shaping the real estate landscape in Northern Virginia.
Positive Signs and Promising Developments
Arshia Kia, a board member of NVAR, highlighted several positive signs in the October market. The decline in home sales was less dramatic, and the supply of homes grew, moving closer to the five-year average. This increase in supply implies that homebuyers now have more choices than they did a year ago. Kia also emphasized the potential impact of lower mortgage rates, suggesting that improved rates could stimulate more activity in the market.
The months' supply of inventory in October 2023 was 1.23 months, showing a 3% increase from October 2022 but still below the 5-year average of 1.3 months. The slightly higher inventory figures in October compared to September (1.22 months) indicate a positive trend. However, the tight supply meant houses were being quickly snapped up, with an average of 17 days on the market—down 32% from October 2022.
Median Sold Prices
Despite limited options, median sold prices continued to rise, albeit at a slower pace than in recent months. October 2023 witnessed a 3.1% increase in median sold prices compared to the previous year, reaching $670,000. This was also a 3.1% rise from September 2023 when median home prices were $650,000.
Market Stability and Outlook
October's housing market displayed more stability than in recent history, offering hope for a more balanced supply and demand relationship as rates moderate. Ryan McLaughlin, NVAR CEO, expressed optimism about the potential for a more settled market, emphasizing the importance of realtors in navigating the complexities of buying and selling homes.
NVAR Region 2023 Residential Real Estate Market Forecast
In June, NVAR released a mid-year update to its market forecast, co-created with the Center for Regional Analysis at George Mason University (GMU-CRA). The forecast predicted ongoing challenges such as a lack of housing inventory, pent-up buyer demand favoring sellers, and positive economic conditions amid emerging risks. This forecast set the stage for the remainder of 2023 in the Northern Virginia housing market.
Key Statistics for October 2023
- Closed Sales: In October 2023, there were 1,204 closed sales, marking a 5.6% decrease from October 2022 but a 2% increase from September 2023. The five-year average for October closed sales is 1,691.
- Sold Volume: The total sold volume in October 2023 was $924,173,690—down 5.6% from October 2022 but up 6.4% from September 2023.
- Average Sold Price: The average sold price for a home in October 2023 was $768,417, representing a 0.9% increase from October 2022 and a 4% increase from September 2023.
- Active Listings: In October 2023, there were 1,656 active listings, reflecting a 24.73% decrease from October 2022. New listings were down 20.03%, totaling 1,254 in October 2023.
- New Pending Sales: The total number of new pending sales in October 2023 was 1,187, indicating a 3.5% decrease compared to October 2022.
The Northern Virginia Association of Realtors® reports on home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax, and Falls Church, and the towns of Vienna, Herndon, and Clifton.
Will the Northern Virginia Housing Market Crash: The Forecast
The Northern Virginia Association of Realtors® (NVAR), in collaboration with the Center for Regional Analysis at George Mason University (GMU-CRA), is at the forefront of providing insightful forecasts for the housing market in the NVAR region. As we delve into the mid-year update of the NVAR Region 2023 Residential Real Estate Market Forecast, we gain a deeper understanding of the trends and factors shaping the housing landscape in Northern Virginia.
The Collaborative Forecasting Approach
The NVAR forecast is a product of collective expertise, where key experts from diverse sectors of the real estate industry come together to analyze and refine preliminary forecasts crafted by GMU-CRA economists. This collaborative approach ensures that the forecast is informed by a comprehensive range of insights, resulting in a more accurate projection of market conditions.
Economic Context: Favorable Yet Uncertain
Despite favorable economic conditions, the forecast highlights mounting risks stemming from the Federal Reserve Bank's response to persistent inflation and challenges faced by companies across various industries. The impact of layoffs announced by major technology firms adds to the uncertainty. While mortgage rates have eased from recent highs, they still remain significantly higher than pre-pandemic levels, influencing both buyers and sellers.
Demand and Supply Dynamics
The tug of war between elevated mortgage rates and pent-up demand sets the tone for the housing market. While affordability concerns are causing some households to reconsider, the pent-up demand remains a driving force, contributing to the continuation of a sellers' market. Interestingly, buyers appear to be adapting to higher mortgage rates, spurred in part by rising rental costs. Despite the increase in monthly expenses, owning a home remains a financially viable option for many.
One of the standout challenges is the dwindling housing inventory. Existing homeowners, benefiting from historically low mortgage rates, are reluctant to leave their homes for properties with higher prices and potentially doubled loan rates. This reluctance to sell further tightens the supply, creating a scenario where the inventory crunch is expected to intensify, even in the face of slightly softened demand pressures.
Projected Unit Sales and Pricing Trends
The forecast anticipates a decline in unit sales, albeit not as sharp as experienced in the previous year. This decrease in unit sales is expected to impact the revenues of Realtors and brokers. On average, unit sales for 2023 are projected to decline in the range of 10% to 15% across most market segments compared to 2022. Despite the challenges, stable prices are on the horizon. The delicate balance between affordability concerns and limited housing availability is expected to lead to modest price increases of about 1% to 2%. Well-priced properties are likely to be swiftly sold, often at or near the original list price.
The forecast delves into specific jurisdictions within the NVAR region, providing localized insights:
For single-family homes, after a period of rapid price increases, the market is expected to stabilize in 2023 with a modest price gain of 0.7%. Unit sales are projected to drop by 10%, driven by tight inventories.
Arlington's single-family home market remains resilient, with prices anticipated to rise by 9.2%. Townhome prices are expected to remain stable due to dropping inventories, while the condo market may experience price stability despite a decrease in unit sales.
Alexandria's single-family home prices are predicted to remain mostly flat, with a modest annual increase of about 1.6%. The townhome market is projected to see a modest rise in prices, while the condo market might witness a pullback in price spikes.
As the data shows, the NVAR Region 2023 Residential Real Estate Market Forecast Mid-Year Update provides a comprehensive outlook on the Northern Virginia housing market. As we navigate the intricate balance of demand, supply, and economic factors, these insights equip both buyers and sellers with the knowledge needed to make informed decisions. With collaborative expertise and a data-driven approach, NVAR continues to serve as a beacon of guidance in the dynamic realm of real estate.