Economic Uncertainty is Causing Fatigue Amongst Buyers and Sellers as Consumer Activity Continues to Moderate

Results from the Virginia REALTORS^® Confidence Survey

By Abel Opoku-Adjei
Research Associate, Virginia REALTORS^®

Each month, the Virginia REALTORS^® Confidence Survey gathers insights from REALTORS^® on local housing markets based on their experiences with real estate transactions in the prior month. This information provides a real-time look at housing market conditions. This month’s Confidence Survey was conducted between July 24th and July 31st, 2023, and reflects housing market conditions in Virginia in July 2023. A total of 638 Virginia REALTORS^® members responded to the survey, including 494 who had participated in a home sales transaction in the last 31 days.

Current Market Conditions

Buyers

According to Virginia REALTORS®, buyer activity decreased in July. The Buyer Activity Index for July was 49, a decline from 59 in June. About 30% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in July, and about 32% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

According to survey respondents, about 29% of buyers in July were first-time home buyers, down 3% from June. Approximately 21% of respondents accepted an all-cash purchase in July, which is unchanged from a month ago. Nearly 16% of home sales in June were non-primary residence sales (e.g., rental property, second home, vacation home), down from 18% in June.

The average number of offers increased slightly from May to June, according to REALTORS^® responding to the Confidence Survey. Recent transactions received an average of 3.2 offers in July, an increase from 2.7 in June. Virtually 58% of respondents in July stated that bids came in above the listing price, a slight increase from 55% in June.

Sellers

Seller activity fell short in July compared to the previous month, according to Virginia REALTORS^®. The Seller Activity Index in July was 10, down from 14 in June. This is the lowest recorded Seller Activity Index since the survey was established in 2021. In July, roughly 2% of REALTORS^® reported that seller activity was “high to very high” in their local market. About 83% of respondents said seller activity was “low to very low” in July.

Obstacles

As we start to fade out of the spring market, many potential buyers and sellers face similar challenges that hinder them from participating in the housing market. In the survey, we asked Virginia REALTORS^® about the main obstacles their clients are facing.

Buyers

About 45% of Virginia REALTORS^® stated that the lack of housing inventory in the state was hindering buyers from purchasing a home in the July summer season. In the survey, about 18% of Virginia REALTORS^® emphasized that rising interest rates are their buyer clients’ most significant obstacle. In July, about 1% of Virginia REALTORS^® stated that saving for a down payment and increasing home prices is the biggest challenge for their buyer clients. According to the survey respondents, housing stock conditions still seem to be the biggest concern for buyers.

Sellers

Virtually 16% of Virginia REALTORS^® stated that their seller clients were unwilling to lose their low interest rate for a higher rate when they sell their home. About 19% of Virginia REALTORS^® noted that the need for more inventory in the market is hindering their seller clients from being able to sell their homes and find a different home to move to in July. About 9% of REALTORS^® in June said that rising home prices are stopping sellers from selling their homes because they are anxious that they won’t get the same type/size of a home elsewhere in their price range. Many sellers face a combination of all these factors, making them insecure about selling their property. Lack of inventory continues to be the most significant impediment amongst sellers in Virginia.

Market Outlook

Confidence in buyer activity lowered in July compared to last month from REALTORS^® in Virginia. This index gauges how REALTORS^® think the market will perform in the following three months. The three-month buyer activity index was 48 in July, down from 57 in June. About 25% of respondents indicated that they thought buyer activity would be strong in the next three months in their local markets, a decrease from 32% in June.

The Seller Activity Index: 3-Month Outlook fell short in July compared to June. The Seller Activity Index in July was 20, a decrease from 25 in June. Around 5% of Virginia REALTORS^® reported that they think seller activity will be strong in three months.

The share of survey respondents who expect prices to rise in their local markets in the next three months decreased in July. Approximately 38% of Virginia REALTORS^® responding to the survey stated that they believe prices will increase within the next three months. Around 25% of REALTORS^® believe that home prices will fall within the next three months. Nearly 32% of respondents to the survey indicated that prices would most likely remain the same for the next three months.

Virginia REALTORS^® Confidence Survey: 2023 Highlights

 ^A An index greater than 50 indicates more respondents reported the level of activity as “high to very high” than reported the level of activity as “low to very low.”

^B An index greater than 50 indicates more respondents expect future activity to be “strong” than expect future activity to be “weak”.

A note about surveys: This is not a randomized sample survey of Virginia REALTORS^® members. However, the number of responses and the geographic coverage of respondents make it possible to draw conclusions about the opinions and expectations of Virginia REALTORS^®. The statistics from this survey have a margin of error of +/- 3.8%.

Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate.

For more information about Virginia’s housing market, check out our most recent home sales report, local housing market data, or Facebook Live.