A majority of Virginia Realtors taking part in a monthly confidence survey now believe home prices across the commonwealth will drop in coming months, reversing a long-held belief by many that the market, while cooling, wasn’t going to enter a declining-price environment.
The share of survey respondents who expect prices to rise in their local markets in the next three months fell again to the lowest level since the Virginia Realtors trade organization began tracking member confidence in July 2021. Just over half of responding Realtors (51%) said they believed prices will begin to fall within the next few months. Thirty percent said they expected prices to remain the same in the coming quarter, with less than 20 percent expecting gains.
(Before the hyperventilating begins, it’s probably worth noting that this may simply represent a return to the cyclical nature of annual home sales and sale prices in the commonwealth, which before being sent higgledy-piggledy by COVID tended to be higher in spring and summer, lower in autumn and winter.)
Figures represent the most recent survey, conducted in late August and reported in early September. A total of 700 Virginia Realtors members responded to the survey, including 557 who had participated in a home-sales transaction in the prior 30 days.
The survey’s Buyer Activity Index for the month was 39, which is down from 43 in July, the lowest level since data began being tracked in mid-2021. Only 13 percent of respondents rated the level of buyer activity in their local markets as “high” or “very high” while about 36 percent said it was “low” or “very low.”
Confidence in future homebuyer activity grew for the third consecutive month but is still relatively low. This index gauges how Realtors think the market will be performing in three months’ time.
The index increased to 42,up from 41 in July, but it’s still just half the level from January’s high of 83. Only 12 percent of respondents indicated that they thought buyer activity would be strong three months from now in their local markets.
The average number of buyer offers per home declined, according to respondents. Recent transactions received an average of 1.7 offers in August, slightly down from 1.8 offers on average in July. During August, about 42 percent of respondents stated that offers came in above listing price, which is a decline from the previous month but still a sign that the market, while cooling, is hardly collapsing.
Around 28 percent of buyers in August were first-timers, according to survey respondents, a tick lower than the preceding month.
Sellers, too, are seemingly backing away from the market. In August, the Seller Activity Index was 29, a fall from 33 in July. About 7 percent of respondents reported that seller activity was “high to very high” in their local market while 49 percent reported that seller activity was “low to very low,” up from 42 percent a month before.
Only 9 percent of Virginia Realtors reported that they think seller activity will be strong in three months, remaining unchanged from last month.