State of Northern Virginia and DC Housing Market
Super Low Inventory and Higher Rates!!
Snapshot of the Northern Virginia and DC Real Estate Market: Spring 2023 Edition
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Despite ongoing pandemic-related challenges, the spring real estate market has remained relatively strong. According to Bright MLS's May survey, sellers continue to hold sway in the Mid-Atlantic markets, including Northern Virginia and DC. Sellers who closed on their homes in April received an average of 3.5 offers, with more than half closing at prices above their original asking price. This competitive climate is primarily driven by a limited inventory and strong demand, particularly for three and four-bedroom homes in the $300,000 to $499,999 price range.
Homes sold above the list price were under contract significantly quicker than those that came in below the original asking price, suggesting meticulous pricing is pivotal for attracting multiple offers. Specifically, homes selling over the list had a median market duration of just five days, compared to 15 days for those selling at or below the asking price.
Despite the heated market, first-time homebuyers have not been deterred. These buyers constituted 46.1% of Mid-Atlantic buyers in April, mirroring the previous month's share and significantly outpacing the national figure from the National Association of REALTORS. However, first-time buyers are facing more competition, with 53.3% paying over the asking price in April, compared to 49.3% of repeat buyers.
Inventory remains quite constrained, and new listing activity is a decade low. Interestingly, family changes, including marriage, divorce, childbirth, or the desire to be closer to relatives, are prompting many to list their homes. In April, nearly 20% of sellers listed their homes due to family reasons.
We can see why the supply is so limited by looking at the seller's reasons for selling. The most common reason why sellers are listing their properties is because they are going through a significant life change. In other words, they must move. Sellers are not listing due to a desire to upgrade to a nicer home. Those sellers are still locked into a low rate on their existing mortgage and are unwilling to buy a new home at a higher rate.
Also, there was a temporary blip in the market as many potential buyers and sellers put their plans on temporary hold as the government worked through the debt ceiling crisis. So many in this area depend on the federal government or its contractors for a paycheck.
Real estate agents are less optimistic about the summer housing market than a month ago. While 47.2% of Bright MLS survey respondents anticipate high to very high buyer activity in the next three months, only 6.9% expect seller activity to match that level. This expectation points to a continuation of the existing supply-demand imbalance.
Price Recovery on the Horizon?
In addition to these local trends, it's essential to note that national home prices in March were 0.7% higher than in March 2022, according to S&P CoreLogic Case-Shiller Indices. This increase suggests a possible end to the decline in home prices that began in June 2022.
As we move further into 2023, the real estate market will undoubtedly continue to evolve. Whether you're a buyer, seller, or real estate professional, staying informed about market trends is crucial. Despite the ongoing challenges, the resilience of the real estate market in Northern Virginia and DC remains evident. As always, I'll keep providing timely updates and in-depth analysis to help you navigate this dynamic market.
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Chris Colgan
EXP Realty LLC
Licensed In Virginia VA DPOR # 0225 075803 703-485-1435