NoVA Housing Market Softens But Remains A Seller’s Market

NORTHERN VIRGINIA — Even though fewer homes were on the market in Northern Virginia in August, the homes took 19 days on average to sell in August, a 5.6 percent increase in the number of days on the market compared to August 2021, according to a recent report by the Northern Virginia Association of Realtors.

In Northern Virginia, 2,154 home were available to buy in August, a 19.6-percent drop from August 2021 and a decline from the pre-pandemic month of August 2019, when the number of active listings in the region was 2,595.

But buyers were still paying more for homes in Northern Virginia as prices continued to climb in August. The median sold price for a home in August was $627,500, up 3.2 percent compared to August 2021. This is also a big increase compared to the August 2019 median sold price of $540,000 but a decline from July when the median sold price reached $650,000.

“It’s an interesting time as the housing market is slowing compared to earlier this year, but it’s still a challenge to find a house and prices remain high. That means sellers are still in charge, but their power is waning and that opens the door wider for buyers,” NVAR CEO Ryan McLaughlin said in a statement.

NVAR represents Realtors in Fairfax County, Arlington County, City of Fairfax, City of Falls Church and City of Alexandria.

Rob Traister, a Realtor and Associate Broker with RE/MAX 100, told Patch that compared to July, the August numbers show a lower median price.

"In a normal market, summer tends to be a little bit slower — especially in August," Traister said. "People are taking final summer vacations, kids are going back to school, and searching for houses goes on the back burner. Once everyone gets back into a routine, that's when buyers come out of the woodwork in hopes of being into a new home before the holidays."

READ ALSO: Low Housing Inventory Keeps NoVA Home Prices On The Rise: Realtors

One trend that Northern Virginia real-estate agents saw over the summer was sellers reducing the prices of listed homes. But those price reductions had more to do with sellers being overly optimistic than with market conditions, according to Traister.

"It took a while for sellers to accept that the runaway sellers market we've seen over the last two years was coming to an end," he said. "Now that sellers have had some time to adjust to the new norms of the market, we're seeing homes priced more reasonably, and I expect home prices to continue to rise, albeit at a slower rate than we have seen over the past couple of years."

While the market is slowing, sellers are still well-positioned for a smooth transaction if they invest their time and energy into preparing the property for sale, according to Colleen Wright, NVAR board member and a Realtor with McEnearney Associates.

With the market change, buyers now have a little more time to decide and a little more leeway for contingency protections in the sale, Wright said in a statement.

And yet, Terry Clower, a professor of public policy at George Mason University and director of the university’s Center for Regional Analysis, told The Wall Street Journal that the market is slightly softer "but there are still few options for potential buyers."

“At best, maybe things are a little bit less crazy than they were a few months ago," he said.

Rising interest rates also appear to be contributing to a slower housing market in Virginia. Last week, the Federal Reserve approved a third consecutive hike of three-quarters of a percentage point in response to inflation and lower consumer demand.

The rise in interest rates is also increasing monthly mortgage payments for potential home buyers. "Interest rates are definitely a factor, and they are making buyers more discerning about what they want," Traister said.

In 2020, if someone purchased a $500,000 townhome and put down 20 percent, they could expect their monthly payment to be somewhere around $1,700. With interest rates now hovering around 5.5 percent, their monthly payment would be closer to $2,300. Some buyers are looking for smaller homes than they were a year ago, or they are making a lower down payment, according to Traister.

"As a result, they are less interested in taking on a home that's a project and are looking for something that's turn key. For sellers, this means they can no longer just list their house for sale and expect to get multiple offers above the asking price," he said.

With the market returning to normal, Traister recommended that sellers consider updating their home before selling it. Buyers are interested in energy-efficient windows, newer appliances, newer HVAC, updated flooring, and a roof that is less than 10 years old. For sellers who cannot afford to make updates to their homes before selling, Traister said he offers a solution that lets his clients make updates before their home goes on the market, and then they pay for those updates at settlement.

Even with the Northern Virginia housing market returning to normal, it remains a very strong seller's market, Traister emphasized.

"There are all kinds of clickbait headlines saying the market is shifting to a buyer's market, and right now that's just not the case. We have less inventory now than we did in 2019, and that was still considered a strong seller's market," he said.

Traister explained he always advises his clients to price their homes competitively. An overpriced home is bad in any market. Even over the past couple of years, when homes were selling for hundreds of thousands of dollars above the asking price, if the asking price was too high, it took longer to sell, and it usually got a lower price.

"By pricing competitively, sellers will get the largest number of potential buyers looking at their home, and that means multiple offers," Traister said. "Just a week ago, a home in Burke listed around $1.2 million got more than a dozen offers and is under contract for above the asking price."