The real estate market this year started off with high mortgage rates, high prices, and low inventory. The Northern Virginia Association of Realtors began the year with a few predictions regarding how the market would pan out over the course of the year. Now, over halfway through 2023, NVAR has released both monthly real estate reports and a midyear update to its original forecast that indicates the real estate market is slowly beginning to normalize.
Home sales in Northern Virginia were down 16 percent compared to June 2022 but were up 3.6 percent from May 2023, the June monthly report said. Median prices are up from June 2022, but have remained nearly the same compared to May 2023.
“Homes continue to sell quickly making sellers happy, and supply was up slightly compared to last month which gave buyers a few more choices,” said NVAR board member Casey Sutherland with Rosemont Real Estate LLC, in the June monthly report. “The housing market is more rational than from the past few years, but many potential sellers remain sidelined, holding on to their better mortgage rates.”
The mid-year update of the 2023 Real Estate Market Forecast, originally published in December, makes note that economic conditions remain good overall, though it points out that some conditions have posed risks to the economy and real estate market. These risks include “continuing monetary tightening by the Federal Reserve Bank in response to stubbornly persistent inflation, declining profits for companies across a wide range of industries, and the realization of layoffs announced by some of the largest technology firms over recent months.”
One of the primary challenges the 2023 market continues to present is high mortgage rates – the mid-year update indicates that these rates have “pulled back from recent highs,” but that they remain significantly higher than pre-pandemic norms. This results in less inventory, which drives the market in favor of sellers rather than buyers.
The midyear predictions remained relatively consistent with the original predictions from December, with some minor adjustments.
The December forecast predicted that prices for single-family homes in Arlington would “soften,” but the June update says that demand has remained high, especially exacerbated by the county’s decision to allow some single-family units to be converted to multi-family units, which may further drive the need for single-family homes. NVAR predicts that unit sales will decrease by around 4 percent, and the number of homes for sale will decrease by around 7 percent.
NVAR said that predictions for Alexandria’s single-family home prices are hard to nail down but predicts that prices will remain relatively flat through 2023, with an annual increase of around 1.65 percent. It does note that total unit sales will increase by around 5.4 percent (though this represents only 19 homes.)
Fairfax’s rates are still expected to remain relatively flat in 2023, though the midyear update predicts that there will be an average 0.7 percent price gain through 2023, compared to the 0.4 percent prediction in December’s forecast. It predicts that inventories will drop by 13 percent, which is a “less severe” decline than recent years.
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