Home prices in Virginia increase, while inventory drops during May

Posted at 6:50 AM, Jun 27, 2023
and last updated 2023-06-27 06:50:13-04

RICHMOND, Va. — Most home sellers are receiving above average of their listing price while inventory has dropped, according to the May 2023 Virginia Home Sales Report.

Virginia REALTORS reported there were nearly 10,300 homes sold across the state last month. That accounts for a 21% drop or 2,750 fewer sales in May 2022.

Chief Economist Ryan Price said this is still a seller's market.

“Buyers are facing very limited inventory. So, there's not a lot of homes that are on the market compared to the levels that we typically have,” Price explained.

The median home price in Virginia is $410,000, which is up from $310,000 in 2019.

There were nearly 39,000 active home listings in May 2019. Four years later and that number dropped to 15,400 active listings, which accounts for 8.5% decrease.

This is the second consecutive month that active listings have dipped after six months of growth.

“In Virginia’s spring market, we’ve seen activity trending below average on both sides of the table; however, market conditions remain very competitive in many local markets around the state,” Price noted. “Despite the current mortgage rate conditions, which have kept some would-be buyers on the sidelines, the already tight inventory conditions worsened by stagnant seller activity has kept the market competitive for buyers here in Virginia.”

The 30-year fixed interest rate for a mortgage is more than 7.47%.

“We have a lot of sellers or potential sellers that are really kind of locked into their [lower] rate. They're not too keen on losing that that attractive interest rate by selling their home and having to buy a new home at the current rates,” Price stated.

Survey data showed millennials are very interested in home ownership, but the generation is purchasing homes at a slower rate compared to previous generations.

In fact, Price said the younger generation, Gen Z, has surprised Millennial home ownership rate when they turned 25 years old.

He expected a “Silver tsunami” to boom in the next 10 to 15 years as seniors look for less maintenance and a smaller footprint.

“The first-time homebuyers are facing a lot of challenges. Competing with all cash offers, competing with baby boomers who have significant equity, potentially from a previous home that they bought and they're selling,” Price explained. “We have a lot of seniors that are looking for smaller homes and looking for homes that are single level. These happen to be the same homes that a lot of first-time homebuyers are looking at as well.”

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