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The first market update for Northern Virginia for the new year shows how home prices continue to go down month over month and the increase from last year is narrowing. It is taking longer for homes to go under contract and the number of homes for sale is still very limited. Still, there has been an uptick in buyers looking for homes since the beginning of 20233. Here it the latest market update January 2023.
What Agents are Seeing
It seems that as soon as the new year began, home buyers began looking again. {Partly due to the mortgage interest rates leveling near 6% and speculation that it’s expected to go higher before going down again may have had some effect. Additionally, the shock of intest rates increasing dramatically from 3% seems to be wearing off. As expected, December’s activity was very slow. According to Bright MLS Home Demand Index, there was another 16% drop in buyer demand for homes. This is expected as December is a traditionally slow month for real estate.
Statistics
Using data from MarketStats by Showing Time, the median sale price for a home in Northern Virginia is now $565,000 down from 585,000 the previous month. This is a 3.4 decrease from the previous month and only a 2% increase from this time last year. It seems that efforts to curb inflation are working as home prices continue to fall.
By the end of the year, there were 1,828 homes sold. This is 6% decrease from last month and a whopping 45% decrease from last year. Again, this is not surprising consider that the winter season is traditionally slow and there is a 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 31, up 4 days from last month and up 14 days from last year.
The median price per square foot per home is now $279, about what it was last month and still 2% up from last year.
The total value of homes sold amounted to $1,208,383,125. This is down 9% from last month and down 44% from this time last year. This rounds up the numbers for the latest market update for January 2023 for Northern Virginia.
WATCH THE LATEST VIDEO – MARKET UPDATE FOR JANUARY 2023
Month’s Supply
The month’s supply is steady at 1.2 which is down from 1.6 last month and up significantly from 0.5 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 is at this time. Many experts speculate that this will keep home value from falling more drastically in the coming months.
Mortgage Interest Rates
According to Nerd Wallet, the annual percentage rate on 30-year conventional mortgages is at 6.125. This is down 17 basis points from the previous week and also up 248 basis points from last year. As you can see from the graph below, interest rates remain unpredictable day to day though but they are still coming down from their highest point when rates hit 7.28 around October 23. Many experts are predicting rates may continue going up (as high as 9%) and then leveling off closer to 4 or 5% by the end of 2023. The main takeaway is that most experts agree rates will not return to 2-3% anytime soon.
Advice to Sellers
If you’re in a situation where you need to sell your home, pricing will be important to understand. As home prices decline, working with a real estate agent who is looking at these conditions will be able to advise you. It’s tempting to look at homes that sold in your neighborhood recently and compare. Each month, home value change and each home is individual and should be priced accordingly. Because buyers are not competing with many others for your home, condition of your home is also important.
Advice to Buyers
Buyers who are discouraged by higher interest rates should keep in mind that rates are expected to get higher and it doesn’t mean you shouldn’t buy a home. If you can afford to buy a home, this may be a good time. Lenders can assist you with finding the best course of action for you – whether using a first time homebuyers program, buying down interest rate points, or using a “buydown” option.
Bottom Line
This first market update for January shows a market ready to get going again. There is still a low inventory of homes for sale but mortgage interest rates staying in the low 6% range is sure to encourage home buyers to start looking seriously at buying a home this year. Thankfully, Northern Virginia remains a great place to live and own a home.
Questions/Concerns? Please contact me.
Also feel free to compare this update with 2022 Year in Review and 2023 Forecast
