October 2023 Northern Virginia Real Estate Market Update
In this month's Northern Virginia market update, we will be addressing two important factors: inventory and mortgage rates.
The question on everyone's mind: Does Northern Virginia still facing a shortage of inventory? To answer this, let's examine a critical metric - Months of Supply. In September, this figure stood at 1.4 (for single family homes), a 10% increase from the preceding month. It took approximately 1.82 months to sell the single-family homes in Northern Virginia, compared to 1.34 in September 2022. Although the inventory levels appear higher this September, it's not due to a sudden influx of listings. Instead, it's a consequence of a smaller pool of buyers, particularly within certain price points. This shift can be attributed to prospective buyers postponing purchases in anticipation of potential affordability improvements.
While headlines may suggest a standstill, we are seeing multiple offer situations within days of listing, complemented by excellent loan programs including 2-1 buy-downs, first-time home buyer programs, sellers offering credits, or even doing some repairs from the home inspections. And let's not forget about the VA assumable loans. Looking ahead, we anticipate a possible rise in Months of Supply through October, owing to sustained higher mortgage rates. However, there's likely going to be dip in inventory levels as the holiday season approaches as few homes on the market will lead to a decrease in Months of Supply. A tip for buyers: homes lingering for 14 days or more in November and December may present an exceptional deal.
National vs. Local Inventory Levels
According to data provided by Redfin, the months of Supply as of October 15th was 3.4 months. Compared to the National market, our inventory level is much lower, which means it is still much more competitive in our region for buyers to purchase a home.
The Interest Rate Conundrum
Mortgage rates continue their upward trajectory, nearing 8%. As of October 19th, the average 30-year fixed rate, according to Freddie Mac, stood at 7.63%. This surge has correspondingly led to a decline in mortgage applications.
There is an indirect link between mortgage rates and the federal funds rate. Most experts predict that the FED is unlikely to increase interest rates in November and December, but questions remain on when they would begin to cut rates.
Market dynamics are not uniform; they vary from city to city and even within neighborhoods. If you're curious about how the market is trending in your specific area, reach out to us. We're more than happy to provide you with tailored statistics.
As we navigate the higher interest rate environment and evolving inventory levels, there are still opportunities for buyers. Keep a close watch on those homes lingering on the market this holiday season; they might just harbor the deal you've been dreaming of. Until next time, share your insights in the comments below.
This blog and any information contained herein are intended for general informational purposes only and should not be construed as legal, accounting, financial or other professional advice. We take great efforts to ensure the accuracy of information contained here. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published on this blog. This blog is not intended to solicit properties.
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