After a steep decline, the housing market in Virginia rebounded strongly in the spring of 2020. The hot housing market continued to be fueled in 2021 by strong demand, low mortgage rates, and the trend toward working from home. It is anticipated that sales activity will decline in 2022, primarily as a result of increased affordability concerns, prolonged low inventory, and a significant increase in mortgage rates.
In April, the statewide median sales price was $390.000. This is a $100,000 increase from April 2018. Compared to this time last year, the median sales price in Virginia has increased by just over 9 percent, or $32,500. The slowdown in sales activity and the recent increase in mortgage rates have had no impact on the consistently upward trend of home prices. However, the rate of price growth in Virginia could change in the coming months.
Monitoring economic and housing market trends can help us reconstruct our past. However, it is equally important, if not more so, to look ahead and predict the direction of the economy and housing market over the next few months and into the next year. Virginia's economy continues to improve in 2022 despite rising inflation and intensifying international conflict.
The unemployment rate continues to decline steadily, indicating a robust economy. In February 2022, total employment in Virginia surpassed four million jobs, the first time that milestone has been reached since March 2020. About 111,900 jobs have been added over the past 12 months.
The total number of jobs in the state is now just 2% below where it was prior to the pandemic. The unemployment rate is a key indicator of a strengthening economy. In February, the unemployment rate in Virginia was 2.9% (not seasonally adjusted), which is down from 3.4% in January and is at the lowest level since March 2020.
Let's take a look at the current state of the Virginia and Virginia Beach housing markets.
Virginia Housing Market Report & Trends (Statewide)
The Current Market Trends: According to the April 2022 Virginia Home Sales Report released by Virginia REALTORS®, the statewide median home sales price was $390,000 in April. This is $100,000 higher than April of 2018, just four years ago. Compared to last year at this time, Virginia’s median sales price is up just over 9%, a gain of $32,500. Homes sold for 3.4% higher than the list price, on average. In all price segments, the average sold-to-list price ratio was at least 100%.
In April 2022, there were 11,991 home sales in Virginia, a decrease of 11.6% from the previous year. For five consecutive months, sales have decreased year-over-year. This slowdown is a result of buyers' reluctance due to rising home prices, inflation, and mortgage rates. In the coming year, as a result of rising interest rates, housing demand in Virginia will decrease, thereby slowing price growth. However, higher mortgage rates and home prices will continue to be an obstacle for purchasers.”
In 2022, Virginia REALTORS® is forecasting that sales activity will be down by just about a tenth of a percent as compared to last year, due primarily to rising affordability challenges, continued low inventory, and a huge uptick in mortgage rates. Virginia home prices will continue to rise in 2022, though the rate of price growth will slow as demand softens and inventory expands a bit.
The group is forecasting that prices will be up by about 4.1% in 2022, making it a more typical year for price appreciation. New construction is expected to stabilize in 2022 with just a modest increase in the number of new homes built. According to Virginia REALTORS, real estate in Arlington and other parts of Northern Virginia has been in high demand for years, fueled by strong job growth and high household incomes in the metropolitan Washington, D.C. area.
Amazon added fuel to this fire a few years ago, but it is no longer the only factor. Amazon has brought new workers to the region. The company announced that it would ultimately bring 25,000 to the Amazon HQ2 headquarters. Amazon has hired more than 3,000 HQ2 employees and was actively hiring another 2,500 workers. These new Amazon jobs tend to be higher-paying jobs—the average annual salary is $150,000. In April 2022, the median sales price in Arlington County was $645,000. The average single-family detached home sold for over $1.2 million.
In April, the median sales price in 22202, which includes National Landing, was $662,500. The majority of the surrounding region has experienced double-digit price increases. Over the past year, the median price of a home in Arlington and Alexandria has decreased due to a greater proportion of condominium sales than single-family homes. Home prices have actually risen much faster in neighboring Fairfax and Loudoun counties, where the median prices were up 10.1% and 18.0% year-over-year, respectively, in April.
“Northern Virginia” Housing Market Trends
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. Below are April 2022 regional home sales compared to April 2021 for Northern Virginia with data derived from Bright MLS.
- Northern Virginia is a hot seller's market in 2022.
- Sold volume in April was $1,594,454,859, down 8.38% compared to April 2021, but still well above April 2019 (pre-pandemic) when it was $1,338,403,421.
- While still very tight, inventory has steadily increased since January 2022 when there was .39 month’s supply to April’s .76 month’s supply, indicating a slight shift in advantage to buyers.
- The average price in April was $776,162, up 7.72% compared to April 2021, and substantially above the April 2019 average price of $621,069.
- Notably, the average price of detached homes is now nearly $1.1M.
- The median price in April is $685,000, up 7.03% compared to April 2021, and substantially above the April 2019 median price of $560,000
- Average days on market in April were 11 days, down from 14 days in April 2021, revealing that homes are selling at a more rapid pace.
- The number of active listings in April was 1,638, down 22.15% compared to April 2021, and down considerably from April 2019 when the number of active listings was 2,508.
- Pending sales in April were 2,503, down 18.71% compared to April 2021.
- Cash sales continue to be popular, further propelled by this spring’s rising mortgage rates. Year to date, the region had 974 cash sales, up from 847 for the same period in 2021.
“Virginia Beach” Housing Market Trends 2022
Virginia Beach is a city in southeastern Virginia. It sits where the Atlantic Ocean and the Chesapeake Bay meet. The city is best known for the three-mile boardwalk on the Atlantic side. About 20 million visitors come to Virginia Beach each year. The city has just under half a million permanent residents.
According to a report published by the Hampton Roads REALTORS® Association, the Virginia Beach housing market continued to cool in the first quarter of 2022. Virginia Beach home sales were down for the third consecutive quarter. There were 1,750 sales in the city in the first quarter, down 14% from a year ago, which is 278 fewer sales. However, sales are 8% higher in the city than they were two years ago (source: Virginia REALTORS®).
The median sales price in the City of Virginia Beach during the first quarter was $326,050, which is an increase of nearly $30,000 from a year ago, or a 10% gain. The city’s median home sales price is now more than $53,000 higher than it was a year ago. Despite higher prices, a sharp decline in sales resulted in a lower sold volume in Virginia Beach compared to the previous year.
The first quarter sales volume in the city was approximately $692.8 million, which is about $27.7 million less than the first quarter of 2021, a decrease of 4 percent. In Virginia Beach, homes sold in an average of 23 days during the first quarter. On average, homes sold a week faster than they did at this time last year and more than three weeks faster than they did in the first quarter of 2020.
The housing market supply in Virginia Beach continued to decline. At the end of the first quarter, there were 723 active listings in the city, a 13 percent decrease from the same time last year, or 112 fewer active listings.
Virginia Beach Housing Market Forecast
If you are a home buyer or real estate investor, you may find mixed opinions about investing in Virginia Beach real estate. It may not have a good track record or hype for real estate investment but Virginia Beach has a good variety of housing available for investors, including single-family homes, condominiums, and rental apartments. Tourism results in some key beachfront locations being used as vacation rentals for which the returns are very good.
Virginia Beach's real estate appreciation rate notably has been below the national average for the last ten years. The average annual home appreciation rate in Virginia Beach during the period has been just 3.87%, which is lower than 70% of US communities, according to NeighborhoodScout's data.
Over the last year, Virginia Beach appreciation rates have lagged behind the national average. In the past year, the rate of appreciation in Virginia Beach was 16.80 percent, which is lower than the rate of appreciation in the majority of American communities. The most recent quarter's house appreciation rates in Virginia Beach were 6.50 percent, which equates to an annual appreciation rate of 28.65 percent. If this forecast is correct, home prices will be higher in the 1st Quarter of 2023 than they were in the 1st Quarter of 2022.
The typical home value in Virginia Beach is $367,667 (Zillow Home Value Index). Virginia Beach home values have gone up 14.1% over the past year and 49.45% over the last ten years. Similarly, the typical value of homes in Virginia Beach-Norfolk-Newport News Metro is $317,835. This value is also seasonally adjusted and only includes the middle price tier of homes. Virginia Beach-Norfolk-Newport News Metro home values have gone up 14.4% over the past year and 48.5% over the last ten years.
These are some of the best neighborhoods in Virginia Beach to invest in real estate because they have the highest real estate appreciation rates since 2000 (List by Neigborhoodscout.com).
- North Virginia Beach
- Fort Story
- Shadow Lawn / Salt Marsh Point
- Kempsville
- Point O Woods
- Ashville Park
- Magic Hollow / Gatewood Park
- Linkhorn Park / Bay Colony
- Ocean Lakes
- Arrowhead
Virginia Beach Real Estate Investment Overview
Investing in real estate is touted as a great way to become wealthy. Is Virginia Beach rental property good for investment? If you are looking to buy Virginia Beach investment properties, then you must read this. These things make Virginia Beach real estate market stand out when it comes to choosing a place to invest. We have already discussed the Virginia Beach housing market forecast for answers on why to put resources into this sizzling market in 2022. The home prices in the Virginia Beach housing market will be on an upswing all through 2022.
Located in the southeastern corner of Virginia, where the state meets the sea, the Virginia Beach Metropolitan Statistical Area (MSA), also known as Hampton Roads and Coastal Virginia, is the 36th largest in the United States. The MSA encompasses 15 cities and counties with a population of more than 1.7 million and a workforce of more than 850,000. Virginia Beach is the most populous city in Virginia and the 39th largest city in the United States, with approximately 450,000 residents.
The City encompasses 307 miles: Land 248 miles, 59 square miles of water, and 38 miles of beaches. Virginia Beach has a unique environment. Within minutes, residents and visitors have access to the popular oceanfront resort area, bountiful wildlife preserves and parks, a vibrant financial district, urban amenities, pastoral rural areas, distinctive cultural centers and museums, a variety of military facilities, and neighborhoods as diverse as the people who call the city home.
Economic and Tourism Initiatives
According to the City of Virginia Beach's governing body, a robust financing plan through the TIP Fund will enhance Virginia Beach's position as a tourist destination that includes capital maintenance repairs along Atlantic Avenue, Sports Center improvements, increased parking capacity, site acquisition in the Resort Area, and investment in sports infrastructure within the City.
The extension of the Tourism Investment Program (TIP) Fund dedications will ensure it has adequate capacity to support the tourism and economic development initiatives within the Resort Area.
$300,000 for enhanced entertainment, peak season ambassadors, and block-by-block security for the Town Center grounds and plaza. To support and encourage the expansion of special events within the city, the Special Event Fees will be eliminated. The City will continue to provide required safety standards and support services at no charge.
The Large Military & Student Market
Every military base dumps a large number of renters into the local real estate market. The Virginia Beach housing market demand for rentals is high because there are three military bases in the area: Langley Air Force Base in Hampton, Oceana Naval Base in Virginia Beach, and the Joint Expeditionary Base Little Creek-Fort Story, commonly known as Little Creek. Little Creek alone employs around 15,000 people.
Students often come from all over the country to attend school. Virginia Beach contains a truly eclectic mix of higher learning institutions. Regent University is a private Christian college. Atlantic University is a New Age training center. Virginia Tech and the University of Virginia operate satellite campuses in Virginia Beach. Norfolk State University and Old Dominion University are located in nearby Norfolk.
Students in the area often attend the Tidewater Community College. Virginia Wesleyan College is located mostly within Virginia Beach, though its address is in Norfolk. The same is true for the East Coast Polytechnic Institute. All of these schools dump tens of thousands of students into the Virginia Beach real estate market and drive demand for Virginia Beach rental homes.
The Strong, Diverse Job Market
Virginia Beach is part of the Hampton Roads metropolitan area. That area includes cities like Chesapeake, Hampton, Norfolk, Portsmouth, Newport News, and Suffolk. The hybrid beach community and suburban nature of Virginia Beach make it a popular place to live while working in other towns. (Around 100,000 people commute from Virginia Beach to Norfolk and Chesapeake.)
There are also many who work in Virginia Beach at corporations like Christian Broadcast Networking, Regent University Amerigroup, STIHL, Busch, IMS Gear, and the three military bases in the area. This explains why Virginia Beach squeaked by in the top 50 of Forbes’ list of best places for careers and business. The desire to live both close to work and natural attractions like the beaches and wilderness areas drives demand for Virginia Beach real estate market. Being able to drop by a farmer’s market to select from produce grown only a few miles away is a plus.
The Relatively Affordable Beachfront Property
The town is notable for its hundreds of hotels and motels. Virginia Beach rental homes a short distance to the beach command a premium. For example, the median home price for Virginia Beach is less than $350,000 (Virginia REALTORS®). You can find homes on the water for less than half a million if they’re cozy properties instead of mansions.
The Virginia Beach housing market is nearly certain to see long-term appreciation because there are limits to expansion. You can’t build on water. The city has run out of clear land north of the Green Line, their division between rural and urban areas. The city cannot expand onto open land around Naval Air Station Oceana. In fact, the naval base asked for 3500 homes in its crash zone to be bulldozed to ensure that no one was killed in a plane taking off as part of their pilot training program crashed there. The only options are denser construction and infill development.
The Landlord Friendly State of Virginia
Virginia is incredibly landlord friendly. Virginia is one of 14 states that allow you to serve an unconditional quit notice to renters who violate the lease terms. That notice is generally used for serious breaches like criminal activity on the premises. There are no limits on late fees as long as they are written into the rental agreement. You don’t have to pay interest on deposits. There are no laws on re-keying.
The state doesn’t require you to have a permit to be a landlord, though cities may mandate this. The state allows landlords to forbid specific guests and visitors if their behavior violates the lease, too. If tenants in Virginia Beach rental homes make too much noise, tolerate drugs or give alcohol to minors, you can evict the tenant for the behavior of guests that they didn’t keep in compliance with the law.
A side benefit of the Virginia Beach real estate market is how it has come to accommodate the short-term rental market. You have to get a conditional-use permit if regularly renting the property out on a site like Airbnb, and hotel taxes are owed. You can only rent out single-family houses and condos via short-term rental houses, not garage or carriage house apartments.
Rentals can only be rented out to two different people in the same week, something intended to minimize the disruption of guests coming and going. You must provide at least one parking spot for every bedroom occupied by tenants, and no more than three people per bedroom are allowed.
The Better Tax Situation
Another reason to invest in the Virginia Beach real estate market is the better tax climate in the area. Homeowners in the state of Virginia pay property tax rates that are well below the national average of 1.07%. In fact, the state's average effective property tax rate is just 0.80%, which falls in the bottom half of the nation. Based on an Assessed Home Value of $250,000, the annual property tax in Virginia Beach City County would be $2,225.
Of the seven cities – Chesapeake, Norfolk, Portsmouth, Suffolk, Hampton, and Newport News the other six – Virginia Beach has the lowest real estate and personal property tax rates – the two largest revenue generators for local governments.
The City of Virginia Beach has been able to maintain a strong budget position despite the challenges of the pandemic. City leadership has been thoroughly engaged through Council workshops, departmental briefings, and public hearings over the last several weeks to help inform the FY 2022-23 budget. The adopted budget implements major investments in the City workforce, public safety, and capital improvement projects, among other focus areas.
There will be no change in the real estate tax rate. The City will absorb the full cost of the $567.5 million Flood Protection Program bond referendum approved by over 72% of voters in November 2021, with no change in the $0.99 tax rate. Of the total $0.99 tax rate, 4.1¢ will remain dedicated to the Flood Protection Program within a stand-alone fund acting as a “lock box,” with the remaining 94.9¢ supporting other base operations and services. The real estate surcharge for the Sandbridge Special Service District has been reduced from 4¢ to 2¢ per $100 of assessed value.
Conclusion
The Virginia Beach real estate market presents an ideal mix of high demand, constrained supply, and a large number of renters who won’t go buy a house if interest rates drop. The diverse local economy allows you to cater to tourists knowing you can rent the property out to locals, as well. Buying an investment property is different from buying an owner-occupied home. Investment properties are designed to make money as rentals, which means you must look at them solely as an income-producing entity just like any other business.
Whether you are a beginner or a seasoned investor, you probably realize the most important factor that will determine your success as a real estate investor is your ability to find great real estate investments. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities.
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Apart from the Virginia Beach real estate market, you can also invest in another hot market in Atlanta, GA. Located in the state of Georgia, the city of Atlanta is a hotspot for any type of real estate investing. Atlanta has shown promising population growth and employment, which are two signs of a healthy real estate market. You can purchase investment properties in Atlanta for as low as $127,000. Comparing that to the national average, which is $152,000, that’s a pretty significant deal!
Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References
Market Data and Trends
https://virginiarealtors.org/
https://hrra.com/media/
https://www.zillow.com/VirginiaBeach-va/home-values
https://www.neighborhoodscout.com/va/virginia-beach/real-estate
https://www.realtor.com/realestateandhomes-search/Virginia-Beach_VA/overview
https://www.nvar.com/realtors/news/market-statistics
About Virginia Beach
https://www.vbgov.com/news/Pages/default.aspx
https://en.wikipedia.org/wiki/Virginia_Beach,_Virginia
Military & Student market
https://militarybases.com/virginia/oceana/
https://en.wikipedia.org/wiki/Joint_Expeditionary_Base%E2%80%93Little_Creek
https://en.wikipedia.org/wiki/Naval_Air_Station_Oceana
Real Estate Taxes & Economic and Tourism Initiatives
https://www.bankrate.com/finance/taxes/state-taxes-virginia.aspx
https://www.vbgov.com/news/pages/selected.aspx?release=5803&title=city+council+adopts+revised+fy2022-23+budget
