Upwardly spiraling prices, a limited inventory, rising interest rates, the possibility of a recession and ramped-up world strife adding to the uncertainty.
It’s no picnic in the park for prospective home-buyers these days, but Virginians seem to be moving forward to find a home that fits their budget.
“There are still a lot of buyers in the market,” said Lisa Sturtevant, chief economist for the Virginia Realtors trade group, in parsing the newly released sales data for February market activity.
Sales across the commonwealth totaled 8,160 last month, down 8.4 percent from a somewhat overheated February 2021, according to figures reported by the trade association, while the average sales price rose 8.9 percent to $350,000 as inventory constraints led purchasers to pump up their offers.
There were “signs of cooling” in the statewide economy for the month, but it remains “too early to tell if it is the start of a wider trend,” Sturtevant said. “It is an uncertain time for many reasons.”
While home sales in every geographical region bar one were down from February 2021, that’s a bit of a misnomer both because of the very strong market at the end of 2020 and start of 2021, and also because inventory issues plague many regions of the commonwealth – there just aren’t enough homes to go around.
Of the 8,160 sales for the month, fully one-third came in Northern Virginia, according to the data. This region’s 2,741 transactions marked a decline of 12 percent from a year before, although the year-over-year dropoff was less than that experienced in January.
Among other regions of the commonwealth, Hampton Roads and the Shenandoah Valley showed modest year-over-year dips, while Southwest Virginia saw an increase. Central Virginia (the Richmond environs) posted a sales drop of just over 10 percent for the month.
Prices, however, kept moving forward, with all eight geographic areas of the commonwealth showing increases in median prices that ranged from 8.6 percent (Hampton Roads) to 16.7 percent (Southwest Virginia).
Northern Virginia had the highest median sales price ($542,500, up 10.5%) while the lowest median price in Southside ($160,000) still represented an increase of 15.1 percent.
Higher prices offset fewer sales in the grand scheme of things. For the month, Virginia’s total sales volume was $3.6 billion, up slightly from a year before.
Buyers are receiving conflicting signals – act now? wait? – and their behavior is also sometimes conflicting, said Virginia Realtors president Denise Ramey.
“I’ve seen some buyers moving a little more cautiously as home prices have continued to climb,” she said. “However, others are jumping into the market now, before mortgage rates rise any further.”
Average 30-year, fixed-rate mortgage-interest rates have bumped above 4 percent for the first time since May 2019, and while they remain far below historic norms, that represent a shock to those who have seen them at 3 percent (or lower) in recent years.
Homes continue to find buyers at a more brisk pace than a year before, with the average length of time between listing and ratified sales contract standing at 30 days (down from 35 in March).
But that statewide figure can be misleading; in areas of the commonwealth where bidding wars are still happening, no buyer has that amount of time to sit around and ponder a purchase. (Before the pandemic, the average amount of time on the market statewide in February stood at more than 60 days in both 2018 and 2019.)
At the end of the month, there were 12,142 active listings statewide, down 22 percent from a year before and a drop of nearly 65 percent from the 34,600 or so homes on the market in February 2018.
There were inventory upticks in parts of the Hampton Roads area, Southwest Virginia, the Shenandoah Valley and some areas west of Richmond, but in most places, inventory – including most of the Northern Virginia core area – it is well down from a year before.
The inventory picture “continues to get worse,” Sturtevant said. “The number of new listings statewide has declined for six consecutive months . . . [and] the number of active listings in the market is not keeping up with the pace of buyer demand.”