This past month, the real estate market in Northern Virginia continues to be steady with some key positives. The Department of Labor Statistics announced inflation rose only 0.1% from November to December and the new inflation rate from November 2022 to November 2023 was 3.1%. Additionally, the Federal Reserve announced they would not raise the federal funds rate for a third straight time. This are excellent indicators for an improved real estate market. In Northern Virginia, inventory levels remain low, partly due to this seasonably slower time. Still, home prices remain steady. Mortgage interest rates also fell under 7% and have been holding. Here what this all means for the Northern Virginia real estate market update for December 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 $628,645, which is up 1.4% from the previous month and up 7.5% from this time last year.
At the end of October 2023, there were 1,816 homes sold in Northern Virginia. This is down 12.6% from the previous month and down 7% from last year. This speaks to the extremely low number of homes for sale in the area. Part of this is also due to the holiday season, which tends to be a slower time in the real estate market. Many homeowners are willing to wait to the Spring before listing their home for sale.
The number of Days on Market for Northern Virginia is now 20 days, which is 3 more days than last month and 7 days less than this time last year.
This month, there are 2,468 homes for sale. This is 382 less homes than last month (down 15%) and 673 less homes than this time last year (down 27%).
Inventory Levels
Inventory levels remain low in Northern Virginia. 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. Currently, Northern Virginia has a month’s supply of homes for sale of 1.4; this is the same as it was last month.
The hesitancy of many home owners to sell their homes may continue next year. Many are unwilling to give up their 3-5% mortgage interest rates to buy another home at 7%. Only time will tell if they decide differently.
Bright MLS Buyer Demand Index
According to Bright MLS Home Demand Index, buyer demand in the Washington Metro Area (which includes Northern Virginia) remains “Limited”. The Bright MLS | T3 Home Demand Index measures and tracks consumer and real estate professional behavior related to shopping for real estate. They look 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 top five highest ranking areas in Northern Virginia are: STEADY in Arlington (98); SLOW in Alexandria City (75) and Fairfax (73); and LIMITED in Prince William County (69), Manassas City (61). Loudoun County’s buyer demand is LIMITED at 59.
What the Experts are Predicting
As 2024 is fast approaching, the predictions are also rolling in. According to the National Association of Realtors (NAR), inventory will remain an issue and home prices will go up slightly at 0.7%. Bright MLS also predicted an increase in home prices but by 1.5%. Zillow predicted prices to fall 0.2% and Realtor.com predicted prices to fall 1.7%. The general consensus is that home prices are not expected to change much in the coming year as low inventory continues to plague the real estate industry. Homeowners will still have a slight advantage. They should have expectations of longer days on the market, more negotiations, and price adjustments. Multiple offer situations will still occur when price, condition, and marketing all line up.
The good news of the market update for November 2023 is that home prices seem to holding steady and strong. When correctly priced, homes continue to sell for what sellers are asking. Multiple offers are no longer the norm. There are exceptions, however. When proper pricing and excellent condition meet, multiple offers are an advantage to homeowners. In the articles, Home Pricing for Multiple Offers and Get Top Dollar for Without the Stress you’ll learn more about the right conditions for successful home-run sales.
Mortgage Interest Rates
The annual percentage rate on 30-year conventional mortgages hovers a smidge below 7%. This is the new normal. The latest Consumer Price Index figures (used to measure inflation) were announced to be at 3.1%. 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%. The next Consumer Price Index report announcement was today (December 12, 2023) and the next Federal Reserve announcement is set for 2 pm tomorrow, December 13, 2023.
Advice to Sellers
For homeowners in Northern Virginia, accurate pricing and good condition remain crucial ingredients to ensure a smooth and successful sale. If done properly, expect to get close to your original list price and go under contract in about 3 weeks.
Advice to Buyers
Lower interest rates are on the horizon so stay vigilant in looking out for homes listed for sale each day. Expect mortgage interest rates to stay between 6.5% and 7%. The National Association of Realtors predict the 6% range in Spring 2024. Mortgage Bankers Association (MBA) forecasts mortgage rates to end 2024 at 6.1% and reach 5.5% at the end of 2025.
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Bottom Line
The market update for December 2023 continues STRONG and STEADY. If you’re looking for expert real estate agents to work with, reach out to us to see if we’re a good fit.
Questions/Concerns? Please contact us.
Also feel free to compare this update with last month’s Market Update – November 2023
