The latest statistics show that the housing market remains to be strong in Northern Virginia. Home prices are up from last month, though still down from the pandemic-level increases of the past 2 years. And other indicators point to buyers still looking for new homes in spite of the higher interest rates and inflation issues. Due to low inventory, homes in good condition and that have been priced properly are flying off the shelves. What the future holds for the housing market in this area remains uncertain. This is the market update for June 2023.
Big News !
The Federal Reserve announced it won’t be increasing rates in June.
Statistics and What it Means
Home values continue to go up in Northern Virginia. Using statistics from MarketStats by ShowingTime, we looked at 10 counties – Alexandria, Arlington, Fairfax, Falls Church, Fauquier, Loudoun, Manassas City, Manassas Park City, and Prince William.
The median sale price for a home in Northern Virginia is now $679,000 up from $638,000 last month. This is a 5% increase from last month and a 1.5% increase from this time last year.
Inventory continues to be extremely low. At the end of May 2023, 3,006 homes were sold. This is up almost 25% from the previous month and down 27% from the previous year.
In May, it took an average of 13 days on average for a home to go under contract. This is less than the previous month when it took 17 days and higher last year during a crazy market when it took when it took just 9 days to go under contract.
Additionally, there were 2,971 homes coming fresh on the market. This was up 9% from the previous month and down 41% from the same time last year. There were much more homes up for sale last year. Still, homes that are in good condition and priced well, are enjoying multiple offers and contingencies waived by competing. These homes go under contract quickly and oftentimes over asking price.
What the Experts are Seeing
Most agents agree that pricing and condition have become extremely important in this current market. These homes are able to go under contract quickly, over-asking price, and with few contingencies. This is because inventory is so low at this time. Once a home shows well and within budget, serious buyers are compelled to compete for the home. This means offering above-asking price, waiving the home inspection, and waiving financing and appraisal contingencies if needed.
According to Bright MLS Home Demand Index, buyer demand in Northern Virginia remains “Steady”, the same as last month. The Bright MLS | T3 Home Demand Index measures and tracks consumer and real estate professional behavior related to shopping for real estate by looking at metrics such as views of homes online and in-person showings. Ratings are categorized into 5 score points: Limited (under 70 points), Slow (70-89), Steady (90-109), Moderate (110-129), and High demand (over 130).
The highest ranking areas in Northern Virginia are: HIGH DEMAND in Arlington (142), Alexandria (132), Falls Church (132); MODERATE DEMAND in Prince William (110); and STEADY Manassas City (10).
The month’s supply has fallen to 0.8 from 0.96 the previous month. 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 to remain steady in Northern Virginia in the coming months.
Mortgage Interest Rates
This is the new normal. The annual percentage rate on 30-year conventional mortgages hovers around 6.8%. This is 25 basis points higher from the previous week and also up 130 basis points from last year. Many experts want to believe rates will remain this way for a while and hopefully start going down. Still, most agree that we won’t be seeing rates around 4% anytime soon. According to Joel Kan, vice president and deputy chief economist at Mortgage Bankers Association, “Both conventional and government home purchase applications increased last week. However, activity was still nearly 28% below last year’s pace.”
Advice to Sellers
Homeowners are still enjoying a seller’s market. Many homes are experiencing multiple offers, less time to go under contract, and with less inspections and contingencies. If life circumstances require you to sell soon, this is the time to reach out us to discuss ways to get your home “show ready” and receive an estimate of your net proceeds after closing costs. There is not crystal ball as to what happens in the housing next.
Advice to Buyers
For the home shopper just starting the search, it’s important you understand the current market and are able to have a clear understanding. This is vital in setting realistic expectations. Northern Virginia has a very strong real estate market grounded in its proximity to Washington DC, great schools, and endless amenities. This means that your investment is likely to increase in the long term. Most experts say to plan to live in your home at least 3-5 years to see the greatest financial benefits such as home equity and home valuation increases. Be sure to find out if buying or renting in 2023 makes more sense to you.
Northern Virginia is still a great place to live and own a home. If you are thinking of selling and want to get an estimate of how much you would net after a home sale, please reach out to us. If you are a home buyer and want to be in the best position to have your offer accepted, let us work for you.
Questions/Concerns? Please contact me.
Also feel free to compare this update with last month’s Market Update – May 2023.