Northern VA and Washington DC 2024 Housing Market Predictions will be WILD!!
Hey there, it's Chris Colgan, your favorite Virginia DMV area realtor, here to discuss my predictions and the MLS's predictions for the housing market in 2024. Let's dive right in!
Current Market Trends
According to Bright MLS, which controls our MLS and covers a large area including parts of New Jersey, Pennsylvania, Maryland, Virginia, and West Virginia, the housing market experienced a 22% decrease in activity in 2023 compared to the previous year. This decline can be attributed to the increase in interest rates, which rose as high as 8% before settling around 7%. Many homeowners who had locked in low interest rates around 3.5% to 4% chose to stay put, resulting in fewer listings.
Despite the decrease in activity, there is still a strong demand for home ownership in Northern Virginia. Approximately 40% to 50 % of home buyers in the DMV region are first-time buyers. Interestingly, there are currently 45% fewer listings compared to before the pandemic hit. In contrast, cities like Orlando, Florida, Austin, Texas, Seattle, and San Francisco have seen a 10% to 20% increase in listings. This significant difference in listing activity is surprising and raises the question of why more people are not putting their houses up for sale.
2024 Housing Market Prediction
Bright MLS predicts a strong rebound in the housing market for 2024. They estimate a total of 239 home sales in our MLS, which is a 13% increase compared to 2023. This contradicts the predictions of experts outside our MLS area who anticipate fewer sales.
The MLS also expects an increase in listings in 2024. Various factors, such as job transfers, divorces, life changes, and financial circumstances, will likely prompt more people to put their houses on the market. They project that there will be 35,000 more listings next year compared to this year. However, it's important to note that even with this increase, the number of active listings will still be significantly lower than pre-pandemic levels.
The Lock-In Effect
The MLS discusses the "lock-in effect," where homeowners with low interest rates are hesitant to sell their homes. They suggest that once interest rates reach around 6% to 6.5%, more homeowners who were previously on the fence about selling will decide to move. This could be due to various reasons, such as job relocations or changes in personal circumstances.
By the end of 2024, the MLS forecasts that active listings will reach 38,000, representing a 9.3% increase compared to 2023. However, this will only be 77% of the number of listings in 2019, which was considered a normal market. Therefore, the housing market in 2024 is expected to be more active than in 2023 but still not reach the same level as before the pandemic.
Home Price Expectations
The MLS predicts that home prices in the DMV region will rise, but only by around 1% to 3%. A 3% increase per year is considered normal for a stable market. The MLS does not anticipate the extreme price surges seen in recent years, and they believe that the Federal Reserve will not lower interest rates to previous levels. They expect interest rates to remain around 5.5% to 6%, which would create a more sustainable and balanced market.
Insights from a Realtor
As a realtor on the ground, I have observed some interesting trends. Many real estate professionals are leaving the business due to the decrease in transactions. With 50% fewer deals happening, it has become challenging for agents who are not experienced or well-established. Similarly, lenders are also expected to exit the market.
However, I believe that suburban areas will thrive in 2024. Locations like Ashburn, Manassas, and Culpeper, which offer more affordable housing options, will attract buyers. With an income of around $100,000 to $120,000, buyers can afford homes in the $400,000 to $450,000 range. In contrast, average sales prices in some areas are reaching $600,000 to $700,000. Therefore, the more affordable areas will likely see increased demand.
Additionally, I predict a shift towards Arlington and Alexandria, where there are more job opportunities and local transportation options. Areas like Prince William County, which lack a metro system, may see a decrease in demand.
Conclusion:
The 2024 housing market in Northern Virginia and the DMV region is predicted to return to normalcy with no crash or foreclosure crisis expected. Despite high interest rates and low inventory, a rebound in sales and increased listings is anticipated, though still significantly lower than pre-pandemic levels. Home prices are expected to rise moderately (1-3% per year). Suburban areas like Ashburn, Manassas, and Culpeper are seen as thriving, offering affordable housing for buyers with incomes in the $100,000 to $120,000 range. The overall market is expected to be more active than in 2023 but won't reach pre-pandemic levels, presenting a balanced and sustainable outlook. The author, a realtor, welcomes thoughts on these predictions and asks if readers agree with the MLS's forecast.
Chris Colgan - EXP Realty Powered by Place
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