Virginia's home price forecast: Costs will go up, but only slightly
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Overall home sales across Virginia are expected to fall next year due to higher interest rates, but prices will continue to climb, according to a new forecast from Virginia Realtors.
Why it matters: Prospective buyers hopeful that a slowdown in home sales would translate into lower prices likely won't find it in 2023.
Yes, but: Home sale prices are expected to only rise slightly next year, by around 2.9%, the trade association predicts in its annual look at what next year's market could bring.
- Median prices rose by 9.4% last year and 8.4% in 2020, according to Virginia Realtors.
- Thus far this year, prices are up 7%.
What's happening: Interest rates are expected to stay higher than last year's historic lows, which will dampen the overall homebuying market in 2023, before falling to around 5.2% at the end of next year.
- But the market slowdown will mean inventory continues to be low, so prices will likely keep climbing, the association predicts.
What they're saying: "Sales activity in Virginia's housing market cooled significantly in 2022, and we're on track to have our sharpest annual drop in closed sales in more than a decade," wrote Ryan Price, Virginia Realtors' chief economist, in the report.
The September housing report might offer an early indication of what home shoppers could expect to see play out next year.
- Home sales across the state dropped by more than 23% year over year in September, per the report.
- While the median home price hit $365,000 — a $15,000 increase from the year before.
Meanwhile, the sold-to-list price ratio — how much buyers are paying for a house compared to what it was listed for — fell to 99.9% statewide.
- "While this may not seem significant, it's actually the first time this ratio has dipped below 100% since January 2021," Price wrote.
But in the Richmond area, the sold-to-list ratio was 101% in September, putting the local market in a six-way tie for the third-highest over-asking ratio in the nation last month, per a Remax report.