The current real estate market in Northern Virginia appears to be the new normal. Inventory levels match the 5-year averages. Home prices are leveling off. Additionally, the average sold price to list price is just at 100%. The latest Federal Reserve announcement also suggests that we should get used to higher interest rates for the next few years. They are waiting for inflation levels to go down to the desired 2% level. Here is the full breakdown of the market update for October 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 $620,000, which is down about 5% from last month ($651,000) and up 6% from this time last year when the median sold price was $585,000.
At the end of September 2023, there were 2,024 homes sold. This is down a whopping 22% from the previous month and down 23% from last year. The number of Days on Market for Northern Virginia is now 17 days, up 1 day from the previous month and down from 5 days this time last year.
Inventory Levels
Inventory levels seem to be the new normal. There are 2,840 homes for sale, which is a 8% increase from the previous month but down 40% from this time last year. Month’s Supply is another factor to consider. This 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 1.2; this is the same as the 5-year average. These numbers appear to be the new normal.
Many home owners are hesitant to sell their homes. They are unwilling to give up their 2-3% mortgage interest rates to buy another home at 7%, no matter the profit margin. So for now it seems that only those who must sell at this time are doing so.
Bright MLS Buyer Demand Index
According to Bright MLS Home Demand Index, buyer demand in the Washington Metro Area (which includes Northern Virginia) remains “Slow”, the same as the previous month. 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 highest ranking areas in Northern Virginia are: MODERATE DEMAND in Arlington (126) and Alexandria (119); STEADY in Manassas City (100) and Prince William County (91); and SLOW in Fairfax (73). Loudoun County buyer demand was recorded as LIMITED (59).
What the Experts are Seeing
The good news of the market update for October 2023 is that home prices seem to be leveling off. The days of rapid 20% price increases appear to be a thing of the past. 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 do happen.
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Mortgage Interest Rates
This is the new normal for now. The annual percentage rate on 30-year conventional mortgages hovers around 7.7%. This is 6 basis points lower from the previous week and also up 78 basis points from last year. The latest Consumer Price Index figures (used to measure inflation) were announced in June to be at 3%. 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 is October 12, 2023 and the next Federal Reserve announcement is set for November 1, 2023.
Advice to Sellers
Home pricing and good condition remain crucial ingredients to ensure a smooth sale. For those not needing to buy another home right away or who are downsizing, this is a great time to sell their home.
Advice to Buyers
For the home shopper, the mortgage interest rate around 7.8%. This is the new norm. Most agree that Northern Virginia has a very strong real estate market grounded in its proximity to Washington DC, solid job market, great schools, and endless amenities. This means that home owners will see financial gains the longer they own a home in the area. This means securing you home now and then waiting to refinance once rate fall again. As a reminder, those who own their home have a median net worth 40 times that of renters.
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Bottom Line
The market update for October 2023 is all about stabilizing this Fall. This is our new normal. No matter how many reports we read, no matter how may experts we listen to, there is NO crystal ball as to EXTACTLY what happens next in the housing market. What we DO know is that everyone’s situation is different. Some may be living in a home that is too large and requires too much maintenance. Others may want want to buy their first home and begin to build wealth. Regardless of your needs, it’s important to know that we are here to give you up-to-date and accurate information ALWAYS. We’re here to help you decide on what is best for you.
Questions/Concerns? Please contact us.
Also feel free to compare this update with last month’s Market Update – September 2023.
