REAL ESTATE IN NORTHERN VIRGINIA
This month’s market update for Northern Virginia shows how the real estate market is continuing to slow. The holidays are also a time when things are slow traditionally.
What Agents are Seeing
The month of December was even slower than the previous month, likely a combination of the shifting market due to higher mortgage interest rates and a traditionally slower Winter season. According to Bright MLS Home Demand Index, which is a 17% drop from the previous month and 23% lower from this time last year.
Using data from MarketStats by Showing Time, the median sale price for a home in Northern Virginia is now $585,000 down from 599,900 the previous month. This is a 2.5 decrease from the previous month and 4% increase from this time last year.
By the end of November 2022, there were 1,953 homes sold. This is 14% decrease from last month and a whopping 46% decrease from last year. This could be due to the traditionally slow buying season and lack of inventory of homes for sale. It is important to note that 2021 was not a traditional real estate year as the pandemic along with very low mortgage interest rates created a buying frenzy with homes selling well over asking price in record time.
The average number of days it took to sell a home is now at 27, up 2 days from last month and up 6 days from last year.
The median price per square foot per home is now $281, about what it was last month and still 3.7% up from last year.
The total value of homes sold amounted to $1,332,464,963. This is down 17% from last month and down 43% from this time last year.
The month’s supply is steady at 1.6 which is up significantly from 0.97 from last year this time. This number shows how many months it will take to sell all the current homes now on the market. Most consider a balanced market, where buyers and sellers of homes are on the same playing field, to be about 3-6 months supply. It illustrates how low inventory really is at this time.
Mortgage Interest Rates
According to Nerd Wallet, the annual percentage rate on 30-year conventional mortgages is at 6.518. This is up 13 basis points from the previous week and also up 339 basis points (about 3 percent higher) than last year. As you can see from the graph below, interest rates have been unpredictable day to day though they are still coming down from their highest point when rates hit 7.28 around October 23. Most experts are predicting rates may continue going up and then leveling off by the end of 2023.
Advice to Sellers
We recommend that those thinking of selling their homes work with a trusted real estate agent who will assist them in understanding the current market (which shifts each week); addressing the condition of their home; using the latest technology and resources to market their home; and determining the best asking price. It is also wise to keep in mind that homes are taking longer to sell and with fewer offers. Negotiations and patience are of the utmost importance.
Advice to Buyers
For buyers who may be discouraged by higher interest rates, do not lose hope. Some buyers have been asking if they should wait until 2023. Lenders are actively working to create and revitalize programs to help qualified buyers bring down interest rates down. This may include buying down points and/or utilizing a “buydown” option. The advantage of buying now is that there is less competition and more room for negotiation.
The market update for December shows that there are less and less homes available for sale and home prices are unpredictable. The future is still uncertain as inflation and interest rates remain high. Still, life goes on and personal situations will call for either a home sale or home purchase. Thankfully, Northern Virginia remains a great place to live and own a home.