Pessimism About the Economy Is Making Buyers Reluctant to Buy a Home
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 May 22^nd and May 31st, 2023, and reflects housing market conditions in Virginia in May 2023. A total of 1,507 Virginia REALTORS^® members responded to the survey, including 1,142 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 May. The Buyer Activity Index for May was 63, a fall from 65 in April. Roughly 44% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in May, and about 17% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

According to survey respondents, around 33% of buyers in May were first-time home buyers, unchanged from last month. In May, approximately 19% of respondents accepted an all-cash purchase, which is also unchanged from a month ago. About 15% of home sales in May were non-primary residence sales (e.g., rental property, second home, vacation home), 1% higher than it was in April.

The average number of offers decreased from April to May, according to REALTORS^® responding to the Confidence Survey. Recent transactions received an average of 2.6 offers in May, a decrease from 4 on average in April. Virtually 60% of respondents in May stated that offers came in above the listing price, which is lower than it was in April, at 65%.

Sellers

Seller activity increased slightly in May, according to Virginia REALTORS^®. The Seller Activity Index in May was 16, up from 11 in April. About 4% of REALTORS^® reported that seller activity was “high to very high” in their local market in May. Approximately 72% of respondents reported that seller activity was “low to very low” in May, a fall from 81% in April.

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

Roughly 48% of Virginia REALTORS^® stated that the lack of inventory in the state’s housing stock is impeding buyers from purchasing a home in the spring season. In the survey, approximately 17% of Virginia REALTORS^® emphasized that rising interest rates are their buyer clients’ most significant obstacle. In May, about 2% of Virginia REALTORS® stated that saving for a downpayment and increasing home prices are the biggest challenges for their buyer clients.

Sellers

Overall economic issues are making sellers reluctant to sell their homes, as they were able to obtain a lower interest rate on their current homes, and low inventory gives them fewer options to choose from in the market. Around 14% of Virginia REALTORS® stated that their seller clients are unwilling to lose their low interest rate for a higher rate when they sell their home. About 23% of Virginia REALTORS® stated that the lack of 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 May. Just about 9% of REALTORS^® in May said that rising home prices are stopping sellers from selling their homes because they are worried they will not get the same type/size of a home elsewhere in their price range.

Market Outlook

Confidence in buyer activity decreased in May from REALTORS^® in Virginia. This index gauges how REALTORS^® think the market will perform in the following three months. The index dropped to 57 in May from 64 in April. About 33% of respondents indicated that they thought buyer activity would be strong in the next three months in their local markets, a decrease from 42% in April.

The Seller Activity Index: 3-Month Outlook increased slightly in May. The Seller Activity Index in May was 28, an increase from 25 in April. Around 8% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, increasing by 1% from a month ago.

The share of survey respondents who expect prices to rise in their local markets in the next three months decreased in May. Nearly 46% of Virginia REALTORS^® responding to the survey stated that they believe prices will increase within the next three months. Roughly 16% of REALTORS^® believe that home prices will decline within the next three months. About 34% 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^®. These statistics from this survey have a margin of error of +/- 1.8%.

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.