The Virginia housing market faced challenges in 2023, marked by a notable slowdown in sales activity. However, the resilience in median home prices and the potential for a rebound in 2024 offer a nuanced perspective. As the market navigates the impact of mortgage rates and inventory dynamics, stakeholders will be closely watching for signs of recovery and stability.
Virginia Housing Market Trends
The year 2023 marked a significant slowdown in Virginia's housing market, experiencing its lowest activity in nine years, as reported by the December 2023 Virginia Home Sales Report from Virginia REALTORS®. The data revealed that a total of 98,464 homes were sold statewide during the year, reflecting a substantial 20% drop compared to the annual total in 2022.
Primary Causes of Slow Market: Climbing mortgage rates and a persistent lack of inventory were identified as the primary culprits behind the subdued market performance. The impact was widespread, with approximately 88% of counties and cities across the commonwealth experiencing fewer sales in 2023 compared to the previous year.
Median Home Price Trends
Interestingly, despite the sluggish sales activity, Virginia's median home price exhibited a robust climb throughout the year. The December statewide median sales price reached $382,725, marking a noteworthy 6.6% increase from the previous December. This upward trajectory in median home prices added an element of resilience to the market amidst challenging conditions.
Inventory and Active Listings
The end of December 2023 saw 16,244 active listings in Virginia, representing a modest increase of just below 1% compared to the same period the previous year. This uptick marked the commonwealth's first year-over-year increase in nine months, indicating a potential shift in market dynamics.
Outlook for 2024
Anticipated Rebound: Virginia REALTORS® President Tom Campbell expressed optimism for the housing market in 2024, anticipating a rebound in sales activity. The expected boost is attributed to lower mortgage rates, which, if they continue to trend downward, are likely to stimulate activity on both sides of the housing market. There is pent-up demand from both first-time buyers and those looking to move up in the market.
Insights from Chief Economist: Virginia REALTORS® Chief Economist Ryan Price offered insights into the upcoming year, stating, “This year, we expect to see a respite from the sluggish home sales of 2023.” While some gains in inventory are anticipated, the overall supply is expected to remain tight, contributing to a competitive market environment.
Virginia Housing Market Forecast for 2024
As we look ahead to the year 2024, the Virginia housing market is poised for an interesting and potentially challenging journey. The Virginia REALTORS® association has released its 2024 Economic & Housing Market Forecast, shedding light on what we can expect in the coming year.
Key Projections
1. Home Sales
After a sharp decline in sales in 2023, the forecast anticipates a rebound in 2024. The projection is for an 11.4% increase in home sales compared to the previous year. This improvement is a positive sign for the market, indicating that the impact of rising mortgage rates might stabilize, allowing for increased sales activity. However, it's important to note that while this is an improvement over 2023, it remains lower than the market's performance in much of the past decade.
2. Home Prices
The median home price in Virginia is expected to see a modest increase of 1.2% in 2024 compared to 2023. While home prices may continue their upward trajectory in many regions across the state, the forecast suggests that the pace of growth will continue to ease in the coming year. This indicates that the aggressive price growth observed in recent years may slow down, potentially offering some relief to buyers.
3. New Housing Permits
The demand for additional housing supply remains a critical concern, particularly for newly constructed homes. The forecast predicts a 7.1% increase in new housing starts in Virginia during 2024. This increase in housing permits is an essential step in addressing the ongoing issue of low housing inventory, which has constrained the market's activity. It suggests a positive trend toward providing more options for potential buyers.
4. Mortgage Rates
In 2023, mortgage rates hit a 20-year high, contributing to the challenges in the housing market. The 2024 forecast indicates that 30-year fixed-rate mortgage rates are likely to remain volatile but are expected to gradually trend downward. By the end of the year, the forecast suggests a potential decrease to around 6.15%. This shift in mortgage rates may provide some relief for buyers and potentially encourage more activity in the market.
While the Virginia housing market faced significant hurdles in 2023, the 2024 forecast offers a glimpse of hope. With an expected increase in home sales, a modest rise in home prices, a boost in new housing permits, and a potential decline in mortgage rates, the market is poised for a year of change and adaptation.
However, the challenges of low housing inventory and affordability constraints are expected to persist. Buyers and sellers will continue to navigate a competitive market. The Virginia housing market in 2024 is a dynamic landscape, and staying informed about these projections will be crucial for those looking to participate in this evolving market.
Home Values Forecast for the Virginia Housing Market
Average Home Value in Virginia
According to Zillow, the average home value in Virginia currently stands at $371,302, reflecting a notable increase of 5.3% over the past year. This robust growth underscores the resilience and desirability of the Virginia real estate market. Homes in the state also boast a swift turnaround, going pending in around 19 days, indicative of a dynamic and competitive landscape.
Housing Inventory and New Listings
As of January 31, 2024, Virginia has 15,668 homes for sale, offering a diverse range of options for potential buyers. Additionally, the state experienced 5,168 new listings during the same period, reflecting the continuous influx of properties into the market.
Median Sale and List Prices
The median sale price in Virginia, as of December 31, 2023, is $345,997, while the median list price as of January 31, 2024, is $361,333. This disparity between the sale and list prices indicates a dynamic negotiation process, influenced by market demand and seller expectations.
Median Sale to List Ratio
The median sale to list ratio as of December 31, 2023, stands at 1.000, suggesting a balanced relationship between the listed and sold prices. This metric is essential for both buyers and sellers, providing insights into the negotiation dynamics within the Virginia housing market.
Percent of Sales Over and Under List Price
Examining the market dynamics, 36.3% of sales in Virginia were conducted over the list price, while 38.6% were completed under the list price as of December 31, 2023. These percentages highlight the diversity of transactions, showcasing the varied strategies employed by buyers and sellers in the state.
Are Home Prices Dropping in Virginia?
Contrary to concerns about a decline in home prices, the data suggests that, at present, home prices in Virginia are not dropping. The consistent appreciation in the average home value points towards a resilient market. However, it's essential to monitor the situation closely for any emerging trends that may impact pricing dynamics in the future. As of the latest data, the market appears to be more favorable to sellers. The average home value increase of 5.3% over the past year indicates strong demand, potentially resulting in a more competitive environment for buyers.
Will the Virginia Housing Market Crash?
Assessing the risk of a housing market crash involves considering various factors. Currently, there are no indications of an imminent market crash in Virginia. The steady growth in home values, coupled with the balanced median sale to list ratio, provides a stable foundation. However, market conditions can change, and vigilance is key for both buyers and sellers to adapt to potential shifts.
Is Now a Good Time to Buy a House in Virginia?
Considering the current state of the Virginia housing market, determining whether it's a good time to buy a house depends on individual circumstances and goals. While the market leans towards sellers, opportunities may still exist for buyers, especially with the diverse inventory and reasonable median sale prices. It's advisable for potential buyers to consult with real estate experts and assess personal financial considerations before making a decision.
In summary, the Virginia housing market currently leans towards sellers, with no signs of a crash and a steady increase in home values. However, the decision to buy or sell should be based on a thorough analysis of personal circumstances and a careful consideration of market dynamics.
Regional Virginia Housing Market Forecast: Examining Key Metros
The provided figures showcase the projected percentage change in home prices for different time intervals, providing valuable insights for both potential buyers and sellers.
Washington, DC – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): The forecast for Washington, DC, indicates a modest increase of 0.2% in home prices by 29-02-2024, followed by a more substantial uptick of 1.3% by 30-04-2024, and a further acceleration to 2.5% by 31-01-2025. This suggests a positive trajectory and potential opportunities for both buyers and sellers in the coming months.
Virginia Beach, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Virginia Beach presents a similar pattern with a projected increase of 0.2% by 29-02-2024, followed by a steady rise of 0.9% by 30-04-2024, and a more significant jump to 3.3% by 31-01-2025. These figures highlight a positive outlook for the housing market in Virginia Beach, potentially favoring sellers in the near future.
Richmond, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Richmond exhibits a more robust forecast, starting with a projected increase of 0.3% by 29-02-2024, escalating to 1.2% by 30-04-2024, and reaching a notable 4.3% by 31-01-2025. This indicates a potentially thriving market with significant opportunities for both buyers and sellers.
Roanoke, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Roanoke's forecast suggests a gradual increase, starting at 0.1% by 29-02-2024, followed by a steady climb to 0.9% by 30-04-2024, and a more substantial 4.6% by 31-01-2025. This city, too, presents positive prospects for real estate stakeholders.
Lynchburg, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Lynchburg rounds off the analysis with a forecasted increase of 0% by 29-02-2024, a gradual rise to 0.7% by 30-04-2024, and a more significant 4.3% by 31-01-2025. Despite starting with a stable figure, the city anticipates substantial growth in the later forecast periods, offering potential opportunities for real estate transactions.
Charlottesville, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Charlottesville starts with a promising forecast, indicating a moderate increase of 0.3% by 29-02-2024. The market gains momentum with a more significant uptick of 1.4% by 30-04-2024, followed by a sustained growth of 3.6% by 31-01-2025. This suggests a thriving real estate market with opportunities for both buyers and sellers.
Blacksburg, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Blacksburg presents a stable forecast, starting at 0% by 29-02-2024, followed by a gradual rise to 0.7% by 30-04-2024, and a notable 3.5% by 31-01-2025. Despite a modest beginning, the city anticipates substantial growth, providing potential opportunities for real estate stakeholders.
Winchester, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Winchester's forecast suggests a positive trajectory, starting with a projected increase of 0.1% by 29-02-2024, followed by a steady rise to 0.9% by 30-04-2024, and a more significant 3.8% by 31-01-2025. These figures indicate a favorable market for real estate transactions in the city.
Harrisonburg, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Harrisonburg's forecast reveals a positive outlook, beginning with a projected increase of 0.2% by 29-02-2024, followed by a steady climb to 1% by 30-04-2024, and a sustained growth of 3.6% by 31-01-2025. The city showcases consistent growth potential in its housing market.
Staunton, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Staunton's forecast exhibits a positive trend, starting with a forecasted increase of 0.2% by 29-02-2024, followed by a notable 1.1% by 30-04-2024, and a sustained growth of 3.6% by 31-01-2025. This indicates a dynamic and potentially lucrative housing market in Staunton.
Bluefield, WV – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Bluefield starts with a promising forecast, indicating a moderate increase of 0.3% by 29-02-2024. The market gains momentum with a more significant uptick of 1.6% by 30-04-2024, followed by a substantial 5.4% by 31-01-2025. This suggests a thriving real estate market with considerable growth potential for both buyers and sellers.
Danville, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Danville presents a positive trajectory, starting with a forecasted increase of 0.1% by 29-02-2024. The market experiences a steady rise, reaching 1.2% by 30-04-2024, and a more substantial 5.8% by 31-01-2025. These figures indicate a favorable market for real estate transactions in Danville.
Martinsville, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Martinsville's forecast presents a mixed picture, starting with a slight decrease of -0.2% by 29-02-2024. However, the market rebounds with a steady climb, reaching 1% by 30-04-2024, and a sustained growth of 4.8% by 31-01-2025. Despite the initial dip, the city showcases positive growth potential in its housing market.
Big Stone Gap, VA – Metropolitan Statistical Area (MSA)
- Base Date (31-01-2024): Big Stone Gap's forecast indicates a challenging start with a decrease of -0.4% by 29-02-2024. However, the market shows signs of recovery with a modest rise to 0.4% by 30-04-2024, and a final growth of 2.3% by 31-01-2025. This suggests a more nuanced market, requiring careful consideration for potential real estate transactions.
Sources:
- https://fred.stlouisfed.org/series/VASTHPI#
- https://www.zillow.com/va/home-values/
- https://www.neighborhoodscout.com/va/real-estate
- https://fred.stlouisfed.org/series/ACTLISCOUVA#
- https://www.redfin.com/state/Virginia/housing-market
- https://virginiarealtors.org/research/reports/home-sales-reports/