As the weather heats up and we experience longer days, it seems we become more active in all areas of our lives. The housing market is no different. The full month of June saw an increase in the number of homes sold and the number of homes on the market for sale. The latest real estate statistics for Northern Virginia are showing signs of an early Spring market being pushed into our summer months. Here is the market update for July 2023.
Statistics and What it Means
Using statistics from MarketStats by ShowingTime, we looked at 10 counties in Northern Virginia – 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 $663,000, which is down 1% from the previous month and up 4% from last year. This may be the result of measures taken by the Federal Reserve to curb inflation. In their June announcement, they did not increase their key interest rate but warned they “would be prepared to adjust the stance of monetary policy as appropriate if risks emerge”. This ensured that interest rates stayed between 6.5 to over 7%.
At the end of June 2023, there were 3,158 homes sold in that month. This is up 5% from the previous month and down 18% from last year. The number of Days on Market for Northern Virginia remains the same at 13 days.
Inventory continues to be low with many home owners hesitant to sell their homes with no place to go. They are unwilling to give up their 2.5% mortgage interest rate to buy at 6.5%, no matter the profit margin. Still inventory appears to be improving. There are 2,676 homes for sale, which is a 9% increase from the previous month.
Bright MLS Buyer Demand Index
According to Bright MLS Home Demand Index, buyer demand in Northern Virginia remains “Slow”, down from “Steady” buyer demand the month before. 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: MODERATE DEMAND in Arlington (126), Alexandria (119), Prince William County (115), Manassas City (110), and STEADY DEMAND in Stafford County (102).
What the Experts are Seeing
Most agents agree that pricing and condition have become extremely important in this current market. Homes priced well and in excellent condition are going 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 is priced at market value, serious buyers are compelled to compete for the home. This means offering above asking price and waiving contingencies like a home inspection. This may be needed to ensure an offer is accepted.
The Month’s Supply of inventory of homes has gone from 0.8 to 1.2 in June 2023. Month’s Supply refers to how many months it will take to sell all the current homes currently on the market. Most consider a balanced market, where buyers and sellers are on the same playing field, to be about 3-6 months supply. Though improving, it illustrates just how low inventory is for this market update in July 2023.
Mortgage Interest Rates
This is the new normal for now. The annual percentage rate on 30-year conventional mortgages hovers around 6.8%. This is 17 basis points lower from the previous week and also up 130 basis points from last year. The latest Consumer Price Index figures (used to measure inflation) were announced in June to be at 3%. This percentage shows change over time in the prices for a basket of consumer goods. The Federal Reserve has stated that they want to see the inflation figure down to 2%. Being just 1% off of the target is good news for everyone. Many experts are hopeful that the inflation rate of 2% will be achieved soon. When this happens, the Federal Reserve can then halt raising the central bank’s rates. This will result in lower interest rates for everyone.
Advice to Sellers
Homeowners are still enjoying low available inventory/competition, which helps them get above asking prices on the sale of their homes. It’s not sure how long this will last. Home pricing and good condition remain crucial ingredients to ensure a smooth sale. It also appears inventory levels are beginning to increase. Still, the real estate market remains as strong as ever. Northern Virginia is NOT about to CRASH, as some are speculating. The area remains a great place to live and own a home.
Advice to Buyers
For the home shopper, the mortgage interest rate around 6.5% is the new norm. Most agree that Northern Virginia has a very strong real estate market grounded in its proximity to Washington DC, great schools, and endless amenities. This means that home owners will see financial gains the longer they own a home in the area. As a reminder, those who own their home have a median net worth 40 times that of renters.
It appears the Spring market was delayed and now just beginning. We’re optimistic this energy will continue into the fall and make for an active Northern Virginia real estate market.
Questions/Concerns? Please contact me.
Also feel free to compare this update with last month’s Market Update – June 2023.