Uncertainty is the word right now in respect to the Northern Virginia housing market. Mortgage rates are more-than double as high as they were a year ago, and inventory (the number of homes on the market) remains low.
In Northern Virginia, homes prices are expected to rise less than 1%; while nationally, home prices are expected to increase by only 0.3%, following a 9.6% gain in 2022, according to the Northern Virginia Association of Realtors® (NVAR) in its annual forecast produced in conjunction with George Mason University’s Center for Regional Analysis.
While interest rates may drop, they will end up above 6%.
According to GMU’s Center for Regional Analysis, Northern Virginia’s housing inventory will remain very low and could drop significantly, primarily because homeowners with low mortgage interest rates do not want to move to a new house, which would be financed at a higher interest rate.
Additional reasons for the housing market slow down include an uncertain economic outlook.
“The rapid pace of home sales and rising prices in both the Northern Virginia and national housing market wasn’t sustainable,” said Ryan McLaughlin, CEO of NVAR. “A stable, more reasonably paced housing market is good for both Realtors® and their clients—here and nationally. What we are experiencing now is a market adjustment returning to sustainable levels. It’s healthy for the housing market to return to normal.”
With Amazon HQ2 and Boeing bolstering the area’s employment prospects, and the federal government as region’s top employer, the Northern Virginia has traditionally had a more stable housing market than other areas across the U.S.
NVAR provided the following market data:
Fairfax County
- Single family homes: After two years of rising prices, housing costs will be flat in 2023 with a 0.4% price gain. Total sales will drop 9.7% with inventories remaining tight.
- Townhomes: Predicted increase of 0.4% with inventory losses of almost 10% due to owners staying put with sales dropping 15%.
- Condominiums: Inventories are expected to rise continuing recent trends. Prices are predicted to remain flat with sales decreasing by 11%.
Alexandria City
- Single family homes: Price volatility will decline to more normal variations and are expected to be flat. Inventories will continue their long trend of decline and sales will decline modestly.
- Townhomes: Although inventory will be flat, sales may drop as much as 18%.
- Condominiums: Inventories likely to decline by almost 20%, lowering sales by 14%. Affordability concerns will keep prices flat in 2023.
