Homesellers In NoVA Getting Multiple Offers Again With Mortgage Rate Retreat

NORTHERN VIRGINIA — Homebuyers are returning to the market in Northern Virginia in early 2023, with mortgage rates steadily declining over the past two months, according to real estate experts.

The first few weeks of 2023 saw homes for sale in the region that had been sitting for a while suddenly getting multiple offers, according to Rob Traister, a Realtor and Associate Broker with RE/MAX 100.

Prior to mortgage rates peaking late last fall, rising mortgage rates in 2022 caused the market to remain relatively flat from late spring through the end of the year. Buyers paused their searches as rates climbed and sellers delayed putting their homes on the market, exacerbating the shortage of housing inventory Northern Virginia has experienced for the past few years.

But new listings in Northern Virginia are once again being sold in a matter of days if they are priced competitively.

Traister said he listed a condominium with three bedrooms and two bathrooms in Oakton last Friday. The condo is in “coming soon” status and will not be active until Wednesday. But Traister said he has already received a dozen calls about the condo and has showings scheduled for Wednesday through Sunday.

READ ALSO: NoVA Housing Market Softens But Remains A Seller's Market

“The best deals to be found were at the end of last year and the very beginning of this year,” he said. "Activity over the past few weeks points to a strong market for 2023 and prices are already starting to reflect that. There are still deals to be had, but buyers were in the strongest negotiating position in the last quarter of 2022 when there was less competition from other buyers."

Communities across Northern Virginia saw a steep decline in the number of home sales in last fall, continuing a trend in home sales that industry experts attributed in large part to rising interest rates and a limited inventory of homes on the market.

The number of home sales in Northern Virginia last September, for example, totaled 1,442 units, down 30 percent from September 2021 and down 17.7 percent from August 2022, according to the Northern Virginia Association of Realtors.

That trend continued into December, even though the climb in mortgage rates appeared to have stopped. Homes sales slipped regionally in December, but paying with cash grew in popularity, helping consumers avoid the additional costs associated with higher mortgage rates, NVAR said.

Nationally, all-cash sales accounted for 28 percent of transactions in December, up from 23 percent in December 2021. In Northern Virginia, 21 percent of buyers paid cash, up from 19 percent the year earlier, said NVAR, which reports on home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church and the towns of Vienna, Herndon, and Clifton.

“Many buyers are using cash to purchase homes — here and nationally — as buyers continue to compete due to low inventory and forego paying higher mortgage rates,” NVAR CEO Ryan McLaughlin said in a statement Jan. 30.

Regionally, the median price was $599,900 in December, the same as December 2021. Homes took a little longer to sell in Northern Virginia, averaging 32 days on the market in December, up 14.3 percent compared to December 2021, according to NVAR.

A Return To Multiple Offers

RE/MAX 100's Traister said he expects home prices to rise in 2023, but not at the rates they did over the previous few years. The average appreciation of homes in Northern Virginia averages 5 percent in a normal market. Traister said he expects prices for detached homes and townhouses in the region to rise 3 to 5 percent in 2023.

Right now, inventory is "painfully low and buyers are once again submitting multiple offers, above asking price and waiving many buyer contingencies," Traister said.

But the return to sellers receiving multiple offers could end if mortgage rates tick back up again.

"I've been telling sellers for months that they are missing an opportunity by waiting to list. Inventory in the last quarter of 2022 was the lowest it's been in a decade, and there were buyers actively looking for homes who couldn't find what they needed," Traister said.

One reason sellers delayed listing, though, was that they were waiting for rates to come down, so they could purchase their next homes. The result was historically low inventory, and that can also cause sellers to delay listing their home because they are afraid they won't be able to find something else.

"It's a vicious cycle," Traister explained. "I would advise sellers thinking of selling to do so now, before there is more competition, and there's a decent chance they can get a rent-back from the buyer after settlement to give them time to find something else."

Traister expects housing inventory to increase as 2023 progresses. But at this point, the region's supply of homes for sale is far away from being able to meet demand.

For buyers who do not want to pay top dollar for homes in the close-in suburbs, Traister said there are possibilities elsewhere in the region. "I've recently helped clients relocate to areas that were once considered too far out for someone working in the DMV area, including Warrenton and Culpeper," he said.

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