The real estate market this summer has been a waiting game. Home sellers are waiting for mortgage interest rates to come down so they can justify moving; buyers are waiting for more homes to come on the market so they can achieve their dreams of home ownership; mortgage lenders are waiting for the Federal Reserve to stop raising the rates; and real estate agents are waiting for a busier fall season. Here is the market update for August 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. Here are the highlights for Northern Virginia in general, Prince William, and Loudoun counties.
The median sale price for a home in Northern Virginia is now $650,000, which is down 2% from the previous month and up 5% from last year. This may be the result of measures taken by the Federal Reserve to curb inflation. In our July market update announcement, we shared their warning as they “would be prepared to adjust the stance of monetary policy as appropriate if risks emerge”.
At the end of July 2023, there were 2,454 homes sold. This is down 22% from the previous month and down 22% 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 7%, no matter the profit margin. Still inventory appears to be improving. There are 2,488 homes for sale, which is a 8% decrease from the previous month.
Bright MLS Buyer Demand Index
According to Bright MLS Home Demand Index, buyer demand in Northern Virginia remains “Slow”, the same as the previous 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).
This month. the highest ranking areas in Northern Virginia are: HIGH DEMAND in Manassas City (141), MODERATE DEMAND in Arrington (126), Alexandria City (119), STEADY in Prince William County (108) and Stafford County (92).
What the Experts are Seeing
Most agents agree that pricing homes correctly is important these days. Homeowners whose homes are in great condition and priced well often receive multiple offers, settle over asking price and in shorter number of days.
Inventory remains extremely 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, if needed. This may be needed to ensure an offer is accepted.
The Month’s Supply of inventory of homes has gone from 1.2 to 1. 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. 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 7.4%. This is 3 basis points higher from the previous week and also up 172 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 seems this will stay the same for now. 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 and home prices keep going up each year.
Advice to Buyers
For the home shopper, the mortgage interest rate around 7.2% is the new norm. Most agree that Northern Virginia has a very strong real estate market grounded in its proximity to Washington DC, a strong market, 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 Summer market is more comparable to pre-pandemic times. We’re remain optimistic in this waiting game to see what happens next in the Northern Virginia real estate market.
Questions/Concerns? Please contact us.
Also feel free to compare this update with last month’s Market Update – July 2023.