A combination of a rough economy, ongoing inventory challenges, skittish prospective buyers and the return of seasonal ebb and flow is likely to lead to a chilly winter in Virginia’s real-estate market.
Nearly two in three respondents (66%) to a new Virginia Realtors’ survey of members believe that prices will decline over the coming three months in their regions, with only 9 percent expecting a price rise.
That’s according to the October “confidence survey” of Realtors, conducted between Sept. 27 and Oct. 2 and reported Oct. 5.
A total of 879 Virginia Realtors responded to the survey, including 687 who had participated in a home-sales transaction in the past 30 days. Results were compiled by Dominique Fair, a research associate for the trade organization.
The percentage of respondents expecting sales prices to fall in the ensuing quarter is the largest all year, and an indication of how the market has changed over the past six months. But it’s also an indication that some pre-COVID norms are returning to the market, as it’s not unusual for average sales prices to decline during the winter months, when activity is lower and many prospective buyers (and sellers) opt to hold off until spring.
The trade organization’s Buyer Activity Index, a 0-to-100 scale of how active buyers are in local markets across Virginia, tumbled from 39 in August to 29 in September, also a low for the year and well off March’s peak of 84.
That Buyer Activity Index pretty well tracks the trajectory of the state’s real-estate market as it moved from hot to warm to cool: The figure was 76 in January, 78 in February, 84 in March, 71 in April, 56 in May, 48 in June, 43 in July, 39 in August and 29 in September. And it may go lower before the year closes out.
And there isn’t much expectation among respondents that things will improve before the spring buying season kicks in. Only 6 percent of survey-takers expect strong buyer activity three months hence, only half the rate of a month before. The figure had stood at 70 percent in January, when the market was coasting along despite, or perhaps in part due to, concerns about increases in mortgage-interest rates that since have come to pass.
Sellers had the wind at their backs for the first five or so months of 2022. Responding Realtors said that homes listed for sale in March garnered an average of 6.6 offers once they came on the market. For the past three months, that figure has been hovering around 1.7.
About 32 percent of respondents indicated that offers were coming in above the list price, a major drop.
Seller activity also continued its downward trajectory. In September, the Seller Activity Index was 27, down from 29 in August. Just 5 percent of respondents reported that seller activity was “high to very high” in their local markets. About 52 percent of Realtors reported that seller activity was “low to very low.”
Having seller activity and buyer activity slowing at relatively the same rate may in fact be a good thing for the market, as maintaining an equilibrium is likely to ensure that the Virginia homes market avoids the major downturn that occurred after the real-estate bubble 15 years ago.
While not guaranteed to statistically match the experiences of all real-estate professionals in the commonwealth, the number of responses to the confidence survey and the geographic coverage of respondents make it possible to draw conclusions about the opinions and expectations of Virginia Realtors, the trade group said.
Responses to our surveys are confidential. “We do not look at individual responses but rather report data in the aggregate,” Fair said.