Virginia Real Estate Market: What to Expect in 2024 and 2025?

The current median home sale price of $472,800 is rising at 6.5% Y-O-Y. Moreover, homes have been sitting on the market for only 21 days. This indicates that the real estate market in the Old Dominion is now competitive.

However, only 10,550 homes were sold in June 2024, down from 11,768 in the previous year. This decline suggests sellers are receiving fewer offers now, mainly due to the recent NAR settlement. Concerns about selling prices and agent compensation have contributed to this market’s sudden sluggishness.

The NAR settlement has removed the buyers’ agent compensation from the MLS. This may drive down home prices further. As a result, buyers will have improved affordability along with low mortgage rates.

Here are some tips for you to sustain in Virginia’s housing market:

• If You Are a Home Buyer: A low inventory of 29K properties makes now a good time to buy your new home. The low interest rates at 6.63% are also in your favor. Consider negotiating for seller concessions to further benefit from the purchase.
• If You Are a Home Seller: The correction in the home prices is long overdue. In the wake of the NAR settlement, home prices may drop a little more. If you’re a seller, you can still make profits on home sale before prices potentially drop.

So, How is the Real Estate Market in Virginia?

Balanced!

The number of homes for sale increased by 7.6% in July 2024 Y-O-Y. Maybe due to the falling mortgage rate which is at a low of 6.69% as of 20th August 2024. Other important factors are:

• Median Days on Market: The median days on market for homes for sale are 24 days, up by 3 days YoY. This trend suggests a high demand in the Virginia real estate market.
• Housing Inventory and Supply: As a buyer, you have more options now as the housing inventory is up by 11.7%. There are 29,074 homes for sale in Virginia, with an average supply of 2 months.
• Average Home Prices: The median home price in Virginia is $463,000. But, it is expected to decrease due to a rise in inventory in the latter half of 2024. The sale-to-list price ratio is 100.2%, down by 0.72 pt YoY.
• Home Sales: As per July 2024 data, home sales decreased by 9.9% YoY! Only 10,571 homes were sold, compared to 11,733 last year.
• Average Rent Prices: Rental costs vary statewide. The median rent is $2,100 with month-over-month change is +$5.

Why Is Virginia a Seller’s Market Now?

Virginia real estate market has low inventory of homes for sale. Besides this, a steady increase in median home prices, favors home sellers. Homes spend only 24 days on the market which depicts the competitive market.

Let’s look at some more facts:

• Fewer Days on the Market: Homes are spending only 24 days on the market before going under contract. This is visible in metro cities like South Riding where the average days on market is between 7 to 10 days.
• Multiple Offers on Homes: Low inventory and strong demand from buyers have led to bidding wars. This indicates that the housing market is very competitive. Many homes receive multiple offers, some even sold without contingencies.
• High Sale-To-List Price: The average homes sell for about 1% above list price whereas hot homes sell for about 3% above list price. The average sale-to-list price ratio in Virginia is 100.2%.
• Homes Sell Above List Price: In July 2024, 40.4% homes sold above list price in Virginia. Increased number of homes selling above list price is a clear sign of a strong seller’s market.

Virginia Housing Market Predictions 2024

Here are the predictions for Virginia’s housing market in the remaining months of 2024 and 2025:

1. Number of Home Buyers Will Increase: As inventory grows and homes stay on the market, more home shoppers are expected to re-enter the market. The historically high interest rates averted buyers in 2023. But the easing inflation and stabilizing rates will bring back house hunters.
2. Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across VA YoY, reaching $463K in July 2024. Cities like Winchester and South Riding have surged in home prices by by approximately 26%.
3. New Home Construction Sales Will Increase:  Homes purchased in July 2024 were new homes, a 4.4% increase from June and 31.5% up from previous year. Home builders offered $20,000 worth of concessions to attract buyers in 2023. We think builders and sellers will compete for buyers in 2024.
4. iBuyers Will Continue to Make Lowball Offers: iBuyers offered 104.1% of market value in 2021. They offered 86% in 2022 and around 70% in 2023. Opendoor and Offerpad have lost billions of dollars in 2023. As they struggle to survive, they will make lowball offers.

Bonus Predictions: Buyer Broker Commissions Will Be Zero!

In a shocking turn of events, the NAR settlement has completely eliminated buyer agent fees from the MLS. Let’s understand its impact:

1. Buyer Agents Will Be Affected: With buyers now responsible for directly paying their agents, many may choose to find their homes on their own. This may very soon render buyer agents obsolete.
2. Seller Concession Will Increase: Without the obligation to pay buyer agent commissions, sellers might see increased requests for seller concessions and offline transactions. Additionally, builders are offering significant concessions to attract buyers, further influencing the market dynamics.
3. Builders Will Compete More: Home builders are persuading buyers to buy new construction homes with mortgage buydowns worth $30K!
4. Sellers May Offer Fees for Services: Sellers may offer at least 1%-2% fees to the buyer agents in order to sell their homes quickly. Increasing competition from builders may also cause sellers to pay extra fees to buyer agents.

Is the Housing Market in Virginia Going to Crash?

A housing market crash in Old Dominion is unlikely.

Virginia is one of the fastest-growing states in the country. VA has 17th highest household income in U.S. which is $89,393. Moreover, living on the mountainous landscape of Virginia is super affordable. So it is unlikely that Virginia’s housing market would crash anytime soon.

Danville shows a projection of 4.5% rise by March 2025. Winchester has the largest population growth rate of 14% and is home to large companies such as Amazon, Accenture, Capital One, and Sentara Healthcare.

Virginia’s job market is also strong. The unemployment rate is at 2.7%. In fact, Virginia’s private sector employment grew by 3.3% in 2023, faster than the national average of 2.0%. And, Virginia’s friendly tax policies are a cherry on the top.

2024: Is it a Buyer’s or Seller’s Market?

Virginia real estate market favors sellers in 2024. (And buyers, too!). The Virginia real estate market is expected to lean more in favor of the buyers in the latter half of 2024.

Home prices are rising slowly, and the number of homes for sale has increased by 11.7% YoY. Buyers now have more choices. With mortgage rates around 6.37%, buyers also have more purchasing power.

Consequently, more homeowners are likely to list their homes on Virginia MLS. The 5.2% increase in new active home listings in Virginia has brought back home shoppers. So, whether you are looking for a condo in Olympia or a single-family primary home, you will find your dream home in the coming months.

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Disclaimer: This article is for informational purposes only. It does not constitute an offer, solicitation of an offer, or any advice or recommendation. Houzeo doesn’t provide any legal or financial advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Houzeo Corp., its affiliates, or its employees. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision.

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