Virginia’s home price forecast: Costs will go up, but only slightly

Total residence gross sales throughout Virginia are anticipated to fall subsequent 12 months as a result of increased rates of interest, however costs will proceed to climb, in keeping with a brand new forecast from Virginia Realtors.

Why it issues: Potential consumers hopeful {that a} slowdown in residence gross sales would translate into decrease costs probably will not discover it in 2023.

Sure, however: House sale costs are anticipated to solely rise barely subsequent 12 months, by round 2.9%, the commerce affiliation predicts in its annual take a look at what subsequent 12 months’s market might carry.

• Median costs rose by 9.4% final 12 months and eight.4% in 2020, in keeping with Virginia Realtors.
• Up to now this 12 months, costs are up 7%.

What’s taking place: Rates of interest are anticipated to remain increased than final 12 months’s historic lows, which can dampen the general homebuying market in 2023, earlier than falling to round 5.2% on the finish of subsequent 12 months.

• However the market slowdown will imply stock continues to be low, so costs will probably maintain climbing, the affiliation predicts.

What they’re saying: “Gross sales exercise in Virginia’s housing market cooled considerably in 2022, and we’re on observe to have our sharpest annual drop in closed gross sales in additional than a decade,” wrote Ryan Worth, Virginia Realtors’ chief economist, within the report.

The September housing report may supply an early indication of what residence customers might count on to see play out subsequent 12 months.

• House gross sales throughout the state dropped by greater than 23% 12 months over 12 months in September, per the report.
• Whereas the median residence value hit $365,000 — a $15,000 improve from the 12 months earlier than.

In the meantime, the sold-to-list value ratio — how a lot consumers are paying for a home in comparison with what it was listed for — fell to 99.9% statewide.

• “Whereas this may occasionally not appear vital, it is truly the primary time this ratio has dipped under 100% since January 2021,” Worth wrote.

However within the Richmond space, the sold-to-list ratio was 101% in September, placing the native market in a six-way tie for the third-highest over-asking ratio within the nation final month, per a Remax report.