September 13, 2023 - Abel Opoku-Adjei
By Lisa Sturtevant, PhD
Chief Economist, 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 February 23 and 27, 2022, and reflects housing market conditions in Virginia in February 2022. A total of 701 Virginia REALTORS® members responded to the survey, including 535 who had participated in a home sales transaction in the prior 30 days.
Virginia REALTORS® Confidence Survey: Highlights
|Key Indicators||July 2021||
|Nov 2021||Dec 2021||Jan 2022||Feb 2022|
|Buyer Activity Indexa||77||68||66||66||66||64||76||78|
|Seller Activity Indexa||41||38||35||36||30||24||20||19|
|Buyer Activity Index: 3-Month Outlookb||68||63||59||58||72||78||83||77|
|Seller Activity Index: 3-Month Outlookb||50||47||42||41||49||50||43||40|
|Current Market Conditions|
|First-time Homebuyers, as a Percent of All Sales||31||33||32||29||33||31||29||32|
|Cash Sales, as a Percent of All Sales||16||18||20||18||18||19||18||18|
|Sales as Non-Primary Residence, as a Percent of All Sales||16||16||16||16||17||18||21||14|
|Average Number of Offers, Most Recent Transaction||3.5||3.2||3.1||2.4||2.9||3.0||4.1||6.3|
|Percent of Respondents Who Expect Strong Buyer Activity in 3 Months||44||35||28||29||50||60||70||63|
|Percent of Respondents Who Expect Strong Seller Activity in 3 Months||24||16||11||12||22||25||19||20|
|Percent of Respondents Who Expect Prices to Rise in 3 Months||50||44||37||42||49||59||64||69|
|Percent of Respondents Who Expect Prices to Fall in 3 Months||20||24||27||27||17||11||7||8|
|Percent of Respondents Who Expect Prices to Remain Unchanged in 3 Months||27||29||35||31||31||27||
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”.
Current Market Conditions
Buyer activity strengthened in February, according to the Virginia REALTORS® Buyer Activity. The Buyer Activity index for the month was 78, up from 76 in January. About 65% of REALTORS® rated the level of buyer activity in their local markets as “high” or “very high”, which is higher than last month. Less than 10% of REALTORS® rated buyer activity in their local market as “low” or “very low”.
According to survey respondents, 32% of buyers in February were first-time buyers. About 18% of purchases in February were all-cash purchases, the same share as reported in January. Second home and investor purchases dropped in February. According to the Virginia REALTORS® Confidence Survey, 14% of sales in February were non-primary residence sales (e.g., rental property, second home, vacation home). This share is down from 21% in January and is the lowest share since the survey began in July 2021.
Multiple offers were on the rise in February, according to REALTORS® responding to this month’s survey. Recent transactions received an average of 6.3 offers, up from an average of 4.1 offers in January. This is the highest average number of offers since the REALTOR® Confidence Survey began in July 2021.
REALTORS® report that rising mortgage rates—and the anticipation of further rate increases—fueled very strong buyer activity in February. Nearly 30% of REALTORS® in Virginia said that rising mortgage rates are definitely creating urgency for buyers to purchase now. Another 50% of REALTORS® said that rising rates might be creating urgency for some buyers in the market.
Seller activity continues to decline, according to Virginia REALTORS®. In February, the Seller Activity Index was 19, down from 20 in January. Only 8% of respondents reported that seller activity was “high to very high” in their local market. Seven out of 10 REALTORS® (70%) reported that seller activity was “low to very low.”
The inventory shortage is by far the biggest challenge in the market. Nearly nine out of 10 REALTORS® said that a lack of inventory is the biggest challenge in today’s housing market. The next most common response was high home prices (7%), which is directly related to a lack of supply.
Confidence in future home buyer activity remains upbeat among Virginia REALTORS® but fewer REALTORS® see seller activity improving in the months ahead.
The Buyer Activity Index: 3-Month Outlook was 77 in February, down from 83 in January but still at a very high level. About two-thirds (63%) of REALTORS® responding to the survey indicated that they thought buyer activity would be strong in their local market in three months.
The Seller Activity Index: 3-Month Outlook fell again in February, as REALTORS® indicate they do not see an increase in the number of sellers in the market. The index was 40 in February, which is down from 43 in January. Only 20% of Virginia REALTORS® reported that they think seller activity will be strong in three months. Forty percent REALTORS® report they expect seller activity to be weak in three months, which is higher than it has been in recent months.
Survey respondents continue to expect prices to rise in their local markets in the next three months. Nearly seven out of 10 Virginia REALTORS® responding to the survey (69%) expect prices will rise. The largest share, 41% of respondents, said they think home prices will rise by between one and five percent, while 28% think home prices will grow by six percent or more.
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®. These statistics from this survey have a margin of error of +/- 3.5%.
Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate.
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