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The sharp spike in mortgage rates over the past year is locking Virginia homeowners in place and leaving weary buyers with fewer options.

What's happening: A whopping 66% of homeowners in Virginia with mortgages had a rate below 4% as of late last year, per Redfin data shared with Axios.

Meanwhile, just 15% of homeowners in the state have a rate of more than 5%, as of the latest data from October of last year.

Why it matters: Mortgage holders are experiencing the "golden handcuffs" phenomenon: They might have a great rate now, but likely can't move without spending a lot more cash, according to Redfin chief economist Daryl Fairweather.

Those cuffs are keeping housing inventory on lockdown.

Richmond metro saw a 35% drop on new listings year over year in June, according to data from the Richmond Association of Realtors.

State of play: A higher rate can lead to significant differences in monthly payments.

For a home with a sales price of $310,075 — the median Virginia sales price in 2021 — a monthly payment at a 3% interest rate would be $1,493 assuming a 20% down payment.

At 6.4%, the payment would jump to $2,008.

Data: Redfin; Chart: Alice Feng/Axios Visuals

Zoom in: And median sales prices and home values keep rising, in part driven by a lack of inventory, according to Zillow.

Richmond saw the highest year-over-year increase in home value in the nation last month, Zillow reported.

The median sales price for metro Richmond hit $385,000 in June, per Richmond real estate agents.

Zoom out: It's not just a local issue. Nine in 10 U.S. homeowners secured mortgage rates below 6% as of late 2022, per the new Redfin report.

Meanwhile, mortgage rates have swung between 6% and 7% nationally in recent months.

Yes, but: Buyers are also exploring adjustable-rate mortgages or buydowns in hopes of a lower monthly payment, Fairweather says.

Reality check: Lower rates could loosen up some supply, but not enough to meet demand, Fairweather says.

New construction isn't keeping up either. Fairweather predicts it'll take the U.S. a decade to repair its housing shortage.

Why Virginia's housing supply is locked up

66% of Virginia homeowners with mortgages have a rate below 4%, per Redfin data shared with Axios.

Illustration of a handcuff on a keychain in a lock

Real estate

The sharp spike in mortgage rates <a class="gtmContentClick" data-vars-link-text="over the past year" data-vars-click-url="https://link.axios.com/click/32079194.121/aHR0cHM6Ly93d3cuYXhpb3MuY29tL2JyaWRnZT91cmw9aHR0cHM6Ly93d3cuZnJlZGRpZW1hYy5jb20vcG1tcyZzPTEyNDY2OCZuPTAxOWI3Y2MxJnQ9MzllNGEzZWQyNWIzNzA2NmEzMTYyYjhjZTQ5ZWJmODM1YmRiYWNlMyZ1dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249c2VuZHRvX2xvY2FsbmV3c2xldHRlcnRlc3Qmc3RyZWFtPXRvcA/621cf7632d0d7c1ea2551892Bfe7cf41b" data-vars-content-id="2adfae61-fc6f-4857-a4b8-0caeb9e99c44" data-vars-headline="Why Virginia&#x27;s housing supply is locked up" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/32079194.121/aHR0cHM6Ly93d3cuYXhpb3MuY29tL2JyaWRnZT91cmw9aHR0cHM6Ly93d3cuZnJlZGRpZW1hYy5jb20vcG1tcyZzPTEyNDY2OCZuPTAxOWI3Y2MxJnQ9MzllNGEzZWQyNWIzNzA2NmEzMTYyYjhjZTQ5ZWJmODM1YmRiYWNlMyZ1dG1fc291cmNlPW5ld3NsZXR0ZXImdXRtX21lZGl1bT1lbWFpbCZ1dG1fY2FtcGFpZ249c2VuZHRvX2xvY2FsbmV3c2xldHRlcnRlc3Qmc3RyZWFtPXRvcA/621cf7632d0d7c1ea2551892Bfe7cf41b" target="_blank">over the past year</a> is locking Virginia homeowners in place and leaving weary buyers with fewer options.What&#x27;s happening: A whopping 66% of homeowners in Virginia with mortgages had a rate below 4% as of late last year, per Redfin data shared with Axios.<ul><li>Nearly 28% have rates below 3%.</li></ul>

Real Estate

Richmond shows no signs of a market crash. Here's what experts say to expect instead.

Supply has been low for years, and Laura Lafayette​​, chief executive officer of the Richmond Association of Realtors, says this won't change in 2023. 

The metro-area housing market already slowed in 2022, and 2023 sales will be flat or slightly down from 2022, Virginia Association of Realtors chief economist Ryan Price predicts.

"It’s likely the first half of the year will be slower than the second half of the year as buyers continue to acclimate to the current interest rate environment," he says.

Since demand is higher than supply, home sales prices will continue to rise, Lafayette​​ says. 

"Even with fewer sales, the tight supply coupled with the strong demand pipeline is keeping upward pressure on home prices," Price explains.

4. Mortgage interest rates will come down, eventually. 

Price anticipates rates will be relatively volatile in the near term and will cool to 5.5-6% by the end of 2023. 

Of note: Many factors could alter this trajectory, Price says. 

Here's what experts say 2023 holds for Richmond real estate

Richmond shows no signs of a market crash.

Illustration of the year 2022, with a keyhole for a zero, which zooms in so you can see through the keyhole to the year 2023.

Richmond shows no signs of a market crash. Here&#x27;s what experts say to expect instead.

With pending home sales falling and asking price decreases more common, Richmond's real estate market is showing early signs of slowing down. 

Why it matters: We keep hearing a market crash is coming, but so far, local data doesn't support that claim.

Yes, but: Monthly data shows early signs of a cooler market, even if it's slight. 

What's happening: From May 2021 to May 2022, new listings were down 12% and pending sales were down 9.3%.

More buyers are holding off as home ownership becomes too expensive — home prices are up 22.6% from June 2021 and mortgage rates recently surpassed 5% for the first time in 10 years.

More sellers are dropping their asking price. There was a 5.2 percentage point increase in price reductions year over year in May, according to Redfin.

Zoom out: Nationally, mortgage applications were down 24%, and on average, 6.5% of sellers dropped their asking price each week in June, per Redfin's latest market update.

In June, national pending home sales were down 13% from this time last year, the largest decline since May 2020, Redfin's report stated.

Be smart: Inventory is still critically low overall, which continues to push home prices up.

What we're watching: New listings and pending sales. If more listings flood the market this summer and buyers don't bite, that's when we would start to see more power shift into buyers' hands.

Richmond's real estate market is cooling, slightly

From May 2021 to May 2022, new listings were down 12% and pending sales were down 9.3%.

Illustration of a downward trend line over a house

With pending home sales falling and asking price decreases more common, Richmond&#x27;s real estate market is showing early signs of slowing down. Why it matters: We keep hearing a market crash is coming, but so far, local data doesn&#x27;t support that claim.

Richmond home prices seem to be leveling off some after soaring for two years, per Redfin data.

Why it matters: Any relief from sky-high home prices is welcome, especially as mortgage rates creep up.

Yes, but: While prices dipped some in January, they're still up year over year, and metro Richmond's supply was at just one month, per the Richmond Association of Realtors — woefully short from the industry recommendation of three months to support a healthy market.

By the numbers: The Richmond metro’s median home sales price was $325,000 in January, per Redfin, up 4.8% from last year and down more than 3% from December.

RAR data puts the median price even higher at $345,000.

Homes sat on the market for a median of 26 days in January, up from 21 days last year.

Of note: The city of Richmond saw the biggest year-over-year drop in median sales price for single family homes in January, falling 11% to $280,000, while also seeing some of the steepest losses in listed and closed sales.

Zoom out: Nationally, median home sales prices have crept up 1.3% from one year ago.

The national median home sales price in January was $383,000.

Sales are down more than 30% from the previous year.

As demand falls, homes sit on the market a little longer, which gives buyers a little more room to negotiate.

What’s next: Spring, which is typically marked by high demand, more competition and higher home prices, is right around the corner.

If spring 2023 follows typical trends, we should expect home prices to rise again in the near future.

Yes, but: Experts predict 2023 will see a far less frantic housing market than in 2022.

The bottom line: We're starting to see a moderate market correction, but home values aren't falling.

Richmond home prices leveled off in January

Any relief from sky-high home prices is welcome, especially as mortgage rates creep up.

Richmond home prices seem to be leveling off some after soaring for two years, per <a class="gtmContentClick" data-vars-link-text="Redfin data" data-vars-click-url="https://www.redfin.com/news/data-center/" data-vars-content-id="cf0549d3-220a-44f2-8067-5242425b226b" data-vars-headline="Richmond home prices leveled off in January" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.redfin.com/news/data-center/" target="_blank">Redfin data</a>.Why it matters: Any relief from sky-high home prices is welcome, especially as<a class="gtmContentClick" data-vars-link-text=" mortgage rates creep up" data-vars-click-url="https://www.freddiemac.com/pmms" data-vars-content-id="cf0549d3-220a-44f2-8067-5242425b226b" data-vars-headline="Richmond home prices leveled off in January" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.freddiemac.com/pmms" target="_blank"> mortgage rates creep up</a>.

Pumpkin spice lattes are back, which means it's time to work on your fall bucket list. Here are some ideas to get you started.

1. Go apple picking at Carter Mountain Orchard.

The family-run orchard has been around for more than 100 years, with U-pick peaches and apples. After your apple-picking adventure, grab some apple cider doughnuts from the country store and get a slushie from the Bold Rock taproom.

Apples are available mid-August through November. You can find the varieties currently available here.

Details: The orchard is open 9am-6pm daily, and tickets are required on peak fall weekends. You can buy them here. 

Address: 1435 Carters Mountain Trail, Charlottesville.

Photo courtesy of Carter Mountain Orchard

2. Hoist a stein at St. Benedict Oktoberfest.

Expect German cuisine, music and dancing, Christkindlmarkt, children's activities and lots of beer. 

The festival runs Sept. 16-18 at 300 N. Sheppard St.

The two-night, Bavarian-style festival features steinholding, live music, polka, lots of beer, German foods and kids' activities. 

 The festival runs Sept. 23-24 at Maymont (1000 Westover Road).

4. Go leaf peeping at Shenandoah National Park.

Drive along Skyline Drive or hike one of the many routes that make up the over 500 miles of Shenandoah trails. Some ideas include:

Big Meadows Area: 1.4-mile moderate roundtrip hike.

Compton Gap Area: 2.4-mile moderate roundtrip hike.

Dickey Ridge Area: 1.2-mile easy circuit.

Hawksbill Area: 2.9-mile moderate circuit. 

Keyser Run Area: 7.4-mile strenuous circuit.

Whiteoak Canyon Area: 4.6-mile moderate roundtrip hike.

shenandoah mountain leaves changing color 

5. See DJ Grandmaster Flash at 2nd Street Festival.

Celebrate the historic Jackson Ward neighborhood with the 34th annual festival Oct. 1-2. Expect kids' activities, food vendors, live performances and an antique car show.

There are plenty of patches to choose from, including: 

Ashland Berry Farm (12607 Old Ridge Road).

Chesterfield Berry Farm (26002 Pear Orchard Road).

For the 18th year, the Richmond Folk Festival promises five stages with performances from artists around the world. Expect more than 30 vendors serving up international cuisine, from Caribbean jerk chicken to Filipino adobo. 

8. Lean into spooky season with a haunted attraction.

From haunted amusement parks to ghost tours, here are some frightening festivities:

Terror on the Farm (12607 Old Ridge Road, Beaverdam).

Creepy Hollow Scream Park (4437 Stone Horse Creek Road, Glen Allen).

Eerie Nights ghost tour (100 N. 17th St., Richmond).

Halloween Haunt at Kings Dominion (16000 Theme Park Way, Doswell).

9. Head to Hanover Avenue for trick-or-treating.

Put on your best costume and stroll around the 1900 block of Hanover Avenue with hundreds of other Halloween fanatics. 

Other trick-or-treat spots include the Church Hill and Oregon Hill neighborhoods. 

Or attend the All Saints Theater Company's 17th annual parade.

10. Vineyard hop along the Monticello Wine Trail.

Romanticize your life and spend a day sipping wine while overlooking rolling hills covered in fall leaves. Some options include:

Jefferson Vineyards: Virginia's first wine company might be a good place to start your wine tour. Sip a flight al fresco surrounded by gardens.

Address: 1353 Thomas Jefferson Parkway, Charlottesville.

Pippin Hill Farm & Vineyards: For elevated cuisine and some of the most beautiful views, head to this popular winery. 

Hours: 11am-5pm daily (closed the first Monday of each month).

Glass House Winery: This boutique winery has a unique tropical (and very Instagrammable) greenhouse-like setting.

Hours: 12-5:30pm Wednesday-Thursday, 12-9pm Friday, 12-8pm Saturday, 12-5:30pm Sunday.

Address: 5898 Free Union Road, Free Union.

See all 40 vineyards and wineries on the trail here.

10 must-do fall activities in and around Richmond

Go apple picking at Carter Mountain Orchard in Charlottesville or stay local and attend Richmond's St. Benedict Oktoberfest.

view from skyline drive in shenandoah national park

The view from Skyline Drive  in the Shenandoah National Park. Photo: Karen Bleier/AFP via Getty Images

Virginia

Pumpkin spice lattes are back, which means it&#x27;s time to work on your fall bucket list. Here are some ideas to get you started.<h2 class="text-h6 !font-sans !font-normal !leading-[1.2em]">1. Go apple picking at <a class="gtmContentClick" data-vars-link-text="Carter Mountain Orchard" data-vars-click-url="https://chilesfamilyorchards.com/carter-mountain-orchard/" data-vars-content-id="f801fe67-28e0-4fc0-968d-2d8f8f591f1e" data-vars-headline="10 must-do fall activities in and around Richmond" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://chilesfamilyorchards.com/carter-mountain-orchard/" target="_blank">Carter Mountain Orchard</a>.</h2>The family-run orchard has been around for more than 100 years, with U-pick peaches and apples. After your apple-picking adventure, grab some apple cider doughnuts from the country store and get a slushie from the <a class="gtmContentClick" data-vars-link-text="Bold Rock taproom" data-vars-click-url="https://boldrock.com/visit/carter-mountain/" data-vars-content-id="f801fe67-28e0-4fc0-968d-2d8f8f591f1e" data-vars-headline="10 must-do fall activities in and around Richmond" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://boldrock.com/visit/carter-mountain/" target="_blank">Bold Rock taproom</a>.

Brianna Crane

Featured stories

Why Virginia's housing supply is locked up

Richmond home prices leveled off in January

Here's what experts say 2023 holds for Richmond real estate

10 must-do fall activities in and around Richmond

Richmond's real estate market is cooling, slightly