As we analyze the current situation in the Virginia housing market, it's evident that there are challenges ahead. The sharp drop in sales and tightening inventory pose concerns for both buyers and sellers. Affordability challenges are mounting, and many potential buyers are hesitant or priced out of the market.
However, there is a glimmer of hope. Virginia REALTORS® Chief Economist Ryan Price points out that while prices are still climbing, the rate of growth is slowing. This trend may continue as buyers navigate higher mortgage rates, potentially softening price growth in certain markets.
Is the Virginia Housing Market Slowing Down?
According to the September 2023 Virginia Home Sales Report released by Virginia REALTORS®, the housing market in Virginia is facing challenges. Let's break down some key points:
- Significant Drop in Sales: In September 2023, there were 8,023 homes sold in Virginia, marking a drop of just over 21% compared to the previous year. This decline in sales is the most significant September market slowdown in over a decade.
- Tightening Inventory: The housing inventory in Virginia has been shrinking, with 18,188 active listings at the end of September. This is 1,605 fewer listings than the previous year, representing an 8.1% decrease. Notably, Northern Virginia and certain areas of the Richmond metro region have experienced the sharpest reductions in listings.
- Regional Variances: While many regions in Virginia are witnessing a decrease in inventory, some areas, such as the Shenandoah Valley and New River Valley in western Virginia, have seen growth in the number of listings. However, due to the size of these markets, their impact on the overall state inventory remains limited.
- Competitive Market: Despite the slowdown in transactions, the Virginia housing market remains competitive. Home prices continue to climb, and sellers often receive offers above the asking price. The statewide median sales price in September reached $380,000, showing a $15,000 increase from the previous year, representing a 4% growth.
Overall, the Virginia housing market is at a critical juncture, with some areas experiencing growth while others face a significant slowdown. Whether this slowdown leads to a crash remains to be seen, but it is crucial for both buyers and sellers to closely monitor the market's evolving dynamics.
Virginia Housing Market Forecast 2023-2024
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.
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.
Zillow's Forecast for the Virginia Housing Market
Overview of Virginia Home Values
As of September 30, 2023, Zillow provides key insights into the Virginia housing market. The average home value in Virginia stands at $373,854, reflecting a 4.0% increase over the past year. This data is a crucial indicator of the state's housing market health and trends. Additionally, homes in Virginia are going to pending status in approximately 10 days, underlining the speed at which properties are being sold.
Market Metrics and Indicators
Zillow offers several important metrics that help provide a comprehensive view of the Virginia housing market. These metrics are as of August 31, 2023:
- Median Sale to List Ratio: The median sale to list ratio as of August 31, 2023, is 1.002. This ratio indicates that, on average, homes in Virginia are selling for very close to their listed price, showing a balanced market.
- Percent of Sales Over List Price: In August 2023, approximately 52.3% of sales in Virginia were over the list price. This suggests a competitive environment where many buyers are willing to pay more than the asking price for their desired homes.
- Percent of Sales Under List Price: About 26.4% of sales in August 2023 were under the list price. This metric indicates that there is still room for negotiation and opportunities for buyers to secure homes at a price below the initial listing.
- Median Days to Pending: The median days to pending as of September 30, 2023, is 10 days. This quick turnaround time underscores the high demand for homes in Virginia and the competitive nature of the market.
Top 10 MSAs in Virginia For Home Price Projections for 2024
Let's explore the forecasted changes in home prices in various metropolitan areas within Virginia. The following data provides insights into the projected trends for the period from September 30, 2023, to September 30, 2024:
In Danville, the metropolitan statistical area (msa) of Virginia, the forecast shows a promising outlook. Home prices are expected to rise steadily from a baseline of 0.7 in September 2023 to 3.9 by September 2024. This significant increase suggests a robust and potentially appreciating housing market in the Danville area.
Roanoke is also anticipated to see positive growth in its housing market. Starting at 0.4 in September 2023, home prices are projected to climb to 2.3 by September 2024. This indicates that Roanoke's real estate market is likely to experience a healthy appreciation in property values over the forecasted period.
Lynchburg's msa in Virginia is poised for growth as well. With a baseline of 0.4 in September 2023, home prices are expected to reach 2.2 by September 2024. This suggests that Lynchburg's housing market is on an upward trajectory, making it an attractive option for potential homebuyers.
Bluefield, located in West Virginia but within proximity to Virginia, shows a positive trend in home prices. The forecast projects an increase from 0 in September 2023 to 2.1 by September 2024. This indicates that the housing market in the Bluefield area is likely to experience growth over the forecasted period.
In the Richmond metropolitan area, the forecast suggests a steady rise in home prices. Starting at 0.2 in September 2023, prices are expected to reach 1.7 by September 2024. Richmond's housing market appears to be on a positive trajectory, making it an attractive option for both buyers and sellers.
Martinsville's housing market is also expected to see growth. Starting at -0.1 in September 2023, home prices are forecasted to reach 1.7 by September 2024. This indicates a potentially appreciating market in the Martinsville area.
Winchester's housing market is projected to show growth, with prices starting at 0.4 in September 2023 and expected to reach 1.6 by September 2024. This forecast suggests a positive trend in the Winchester real estate market.
Blacksburg's market outlook is optimistic, with prices projected to increase from 0.2 in September 2023 to 1.4 by September 2024. This indicates a potentially appreciating market in the Blacksburg area.
Virginia Beach, VA
Virginia Beach is anticipated to experience growth in its housing market. With a baseline of 0.4 in September 2023, prices are expected to reach 1.1 by September 2024. This forecast suggests a positive trend for property values in Virginia Beach.
Staunton's housing market is projected to show growth as well. Starting at 0.3 in September 2023, home prices are forecasted to reach 1.1 by September 2024. This indicates a potentially appreciating market in the Staunton area.
These regional market projections offer valuable insights into the expected changes in home prices in various metropolitan areas across Virginia, helping potential buyers and sellers gain a better understanding of localized market dynamics and trends.