Market Update – January 2022
Mortgage interest rates have been rising consistently for the past 4 weeks. Some buyers are surprised how their estimated monthly payment rose so dramatically in just a week. While this increase will cause panic and a sense of urgency in some buyers, it will make others no longer able to afford to buy. Pair this with low inventory and sellers still have a major advantage. Using statistics from SmartCharts by Market Quest, I looked at figures for the end of December 2021. Here is your market update for January 2022, which was marked by these mortgage interest rates going up so fast. See how interest rates are affecting the housing market.
Homes Sold in December
The average sale price for a home in Northern Virginia is 651. This is up 7% from last year and down 1% from last month
By the end of December 2021, 3,332 homes were sold in Northern Virginia. This is down 6% from last year and down 8.5% from last month.
The total value of homes sold amounted to $2,161,928,434, which is up 0.8% from last year and down 7% from last month’s volume.
The average days on market went to 24 days which is up from 20 days in December 2020 and up from 21 days last month.
The average price per square foot was $303/sq ft. This went up 8% from last year and 1% from last month.
By all accounts December was another very quiet month in the housing market. Almost all the indicators went down, with month’s supply remaining about the same. Month’s supply went from 0.97 in October to 0.6 in November and then 0.59 in December. This follows the usual slow cycle of real estate with the busiest months being March – June and the slowest from November to January.
Mortgage Interest Rates
According to Forbes Advisor, “Today, the average rate on a 30-year fixed mortgage is 3.59%, according to Bankrate.com, while the average rate on a 15-year mortgage is 2.93%. On a 30-year jumbo mortgage, the average rate is 3.59%, and the average rate on a 5/1 ARM is 2.76%.” Mortgage interest rates are affecting the housing market.
There has been increases in the last 4 weeks, with rates going up a full half percent. And buyers are taking notice. Reuters reported “Overall loan application volumes rose 2.3% last week on the back of a 7.9% increase in loans to buy a home, while refinancing applications dropped 3.1% to their lowest level in more than two years”. This will increase buyer activity in the short term as time is running out to take advantage of the still historically low mortgage interest rates.
What Agents are Seeing
January seems to have started off with a “bang”. There were more homes coming on the market and buyers were out looking and putting in multiple offers at over the asking price. Once statistics for January come out, we’ll be able to confirm this. I felt the activity level felt more like a Spring market than a typical January. If you want to know what I saw, be sure to see the video in my blog “2022 Housing Forecast“.
What Does This All Mean?
The data shows a slow holiday season, more typical of pre-pandemic seasons. Still the value of homes continue to go up. Northern Virginia property values just keep going up. Though the rate of appreciation is slowing, it remains an excellent area to own a home.
While inventory is low, the market still favors the Sellers. The forecast for the market going into Spring 2022 is that inventory will remain low while buyers demand will slowly decrease due to rising mortgage interest rates.