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FairfaxReal EstateVa. home-sales data has reasons for optimism ... and concern

Va. home-sales data has reasons for optimism … and concern

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There seems to be a tug-of-war going on when it comes to the Virginia real-estate market, with positive data battling it out against figures that show reason for concern.

“The housing market continues to cool in Virginia – [but] despite the slowdown, prices continue to climb and homes continue to sell relatively quickly,” noted the Virginia Realtors trade group, which on Aug. 23 reported July’s sales figures.

A total of 11,346 properties went to closing across the commonwealth that month, down nearly 26 percent from 15,284 a year ago as prospective buyers pulled back over economic concerns. The decline represents “the sharpest drop in Virginia’s housing market in years,” Virginia Realtors officials said.

And yet, there were no signs that the overall housing market was truly taking a plunge akin to 2007-08:

• Sales prices remained strong, with the median sales price of $385,000 up 7 percent from $360,000 a year before – and still running above the year-to-date median sales price of $380,000.

• The average number of days it took for a home to go from listing to ratified sales contract was 20, unchanged from a year before and below the running average of 22 for the first seven months of 2022.

• The number of months of home supply was 1.7, up but only slightly from 1.6 percent a year before and, by most standards, still in a pro-seller to mixed environment. (It would take the housing supply to rise to three months’ worth of sales before it could accurately be described as pro-buyer.)

• The average sales price in July represented 101.2 percent of listing price, down from 102.4 percent in June but hardly suggesting a real-estate recession.

“In most price segments, homes are still selling for more than listing price, on average,” said Virginia Realtors president Denise Ramey, but she was quick to add that “we expect price growth will moderate even more [than it has] as the market activity continues to cool.”

For buyers who remember the olden days (way back in March and April!) when a for-sale sign brought buyers and their money in a feeding frenzy, the new situation may be disconcerting. But for buyers, “the expanding supply is good news,” said Virginia Realtors CEO Ryan Price.

“Buyers’ purchasing power has been impacted by elevated inflation and rising mortgages rates,” Price said, but finally they are getting something of a break.

“The slowdown in sales activity we’ve seen in many areas of the state is resulting in a buildup of available homes,” he said.

(But only to a degree: July’s inventory actually remained below that of a year ago. But with the sharply lower sales totals, it certainly seems like the market is awash in inventory.)

Among the eight geographic regions of Virginia as sliced up by Virginia Realtors, year-over-year sales prices rose by rates ranging from 2 percent in Southwest Virginia to 17.9 percent in Southside Virginia, while median sales prices were down by rates ranging from 9.9 percent in Southside Virginia to 32.1 percent in Northern Virginia.

For those in the real-estate industry – a cyclical business if there ever was one – the home-sales decline is impacting the bottom line.

The total market value of home sales in July across Virginia was approximately $5.3 billion, down from $6.8 billion a year before. Assuming a typical home-sales commission rate of 5.5 percent, that means $82.5 million less in commission revenue coursed through the veins of the Old Dominion’s homes market than in July 2021.

And real-estate professionals may have to get used to that for a while. The number of pending sales in July (9,243) was anemic compared to 14,676 a year before. That drop-off is likely to be reflected in the home-sales figures of August and September.

Add to that the prospect of yet another interest-rate hike from the Federal Reserve, which is likely to trickle down to the home-mortgage market, and it could be a tricky autumn, indeed.

Figures represent most, but not all, homes on the market. All July 2022 figures are preliminary and are subject to revision.

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