HAMPTON ROADS, Va. (WAVY) — While there was a sharp decline in sales activity in Virginia’s housing market in 2023, new data from the Virginia Realtors offers an improved forecast of the state’s housing market in 2024.
In 2023, heightened home prices, low inventory, and a rise in interest rates hurt the market.
“Due to rising and volatile mortgage rates, upward pressure on home prices, and tight inventory conditions, Virginia’s housing market experienced a sharp decline in sales activity in 2023—the lowest it has seen in almost a decade,” said President Katrina M. Smith.
According to the data, predictions show the housing market will improve, but factors impacting the market in 2023 will carry into 2024.
Chief Economist Ryan Price said this year will feel like neutral.
“A good way to describe it is the market is sort of in neutral,” Price said. “There are people in the market interested in buying, sellers interested, and it is a sort of kind of wait and see approach. With inventory, there are not a lot of options.”
Price said people are interested in purchasing, and he sees a demand pipeline across the Commonwealth. However, there are not enough homes available.
Interest rates remain a top problem for first-time home buyers and would-be sellers. For would-be sellers, they are enjoying their current rates where they are locked-in.
The current interest rate is not helping.
“Those have been hovering above 7% average for fixed for six weeks. That’s the longest it’s lingered above 7% since, 2001,” Price said.
A drop-in rate would bring more people into the neutral market, ready to make decisions if the right option becomes available.
In the current market, he encourages those on pause to evaluate budget and their needs and priorities. With the interest rate, buyers might have to shift price points or take a look at different communities.
Even in the current climate, according to Price, prices are still rising, and can lead to a great investment.
“We see prices still rising, around in most places in Virginia,” Price said. “So, I wouldn’t try to overthink it or time it with conditions that are out of your control.”