December 7, 2023 - Sejal Naik
By Ryan Price – Chief Economist, Virginia REALTORS®
The Virginia REALTORS® Confidence Survey is sent out to Virginia REALTORS® members every month to collect their insights on local housing market conditions. This information provides a real-time look at housing market conditions. This month’s Confidence Survey was conducted between May 25 through May 30, and reflects housing market experiences in Virginia in May 2022. A total of 887 Virginia REALTORS® members responded to the survey, including 751 who had participated in a home sales transaction in the prior 30 days.
Current Market Conditions
According to Virginia REALTORS®, buyer activity dropped in May. The Buyer Activity Index for the month was 56, which is down from 71 in April and is the lowest level since we began tracking this information in July 2021. Just 36% of REALTORS® rated the level of buyer activity in their local markets as “high” or “very high” in May, which is down from 56% in April.
Thirty percent of buyers in May were first-time buyers, according to respondents to this month’s survey. This is unchanged from April. About 16% of purchases in May were all-cash purchases, which is tied for the lowest share of all-cash purchases since the survey began in July 2021. About 15% of sales in May were non-primary residence sales (e.g., rental property, second home, vacation home).
While multiple offers continue to be common, the average number of offers has dropped off considerably in May compared to earlier this year, according to REALTORS® responding to this month’s survey. Recent transactions received an average of 2.9 offers, this is down from 5.3 offers on average in April. About 69.6% of respondents indicated that offers came in above list price in May, which is down slightly from April.
The housing market in Virginia has been showing some signs of cooling in recent months, and rising mortgage rates are certainly playing a role. When asked about what their buyer clients are doing in response to the jump in mortgage rates, the most common response (406 responses) was that buyers are pushing pause on their home search. The second most common response (364 responses) was that buyers are changing their home search criteria. This includes either changing the price range they are looking for, changing the location they are looking in, or both. The third most common response (300 responses) was that buyers were seeking a new pre-approval for a mortgage reflecting current rates. Based on these responses, it is pretty clear that the buyer market is being impacted by the recent jump in mortgage rates, and this is likely slowing buyer activity in the market.
Seller activity continues to pick up according to Virginia REALTORS®. In May, the Seller Activity Index was 33, up from 26 in April, and the highest level since October 2021. About 14% of respondents reported that seller activity was “high to very high” in their local market in May. About 48% reported that seller activity was “low to very low,” which is down from 59% last month.
The Buyer Activity Index: 3-Month Outlook continues to fall sharply. The index fell to 45 in May, down from 61 in April, and well below the March level of 75. This index gauges how REALTORS® think the market will be performing in three months’ time. Just 18% of REALTORS® responding to the survey indicated that they thought buyer activity would be strong in their local markets in three months. This share dropped significantly from April when 36% of respondents said buyer activity would be strong in three months.
The Seller Activity Index: 3-Month Outlook held relatively stable in May. The index was 42 this month, inching up from 41 in April. Only 14% of Virginia REALTORS® reported that they think seller activity will be strong in three months. This share is down from 16% a month ago.
The share of survey respondents who expect prices to rise in their local markets in the next three months dropped to the lowest level since we began tracking the survey in July 2021. About a third of Virginia REALTORS® responding to the survey (32%) said that they expect prices will rise. Another third of REALTORS® (33%) responding to the survey said they think home prices are set to fall over the next three months. This share is up significantly from the start of 2022 when it was at just 7%.
Virginia REALTORS® Confidence Survey: 2022 Highlights
|Key Indicators||Jan 2022||Feb 2022||Mar 2022||Apr 2022||May 2022|
|Buyer Activity Indexa||76||78||84||71||56|
|Seller Activity Indexa||20||19||20||26||33|
|Buyer Activity Index: 3-Month Outlookb||83||77||75||61||45|
|Seller Activity Index: 3-Month Outlookb||43||40||40||41||42|
|Current Market Conditions|
|First-time Homebuyers, as a Percent of All Sales||29||32||33||30||30|
|Cash Sales, as a Percent of All Sales||18||18||18||21||16|
|Sales as Non-Primary Residence, as a Percent of All Sales||21||14||16||19||15|
|Average Number of Offers, Most Recent Transaction||4.1||6.3||6.6||5.3||2.9|
|Percent of Respondents Who Expect Strong Buyer Activity in 3 Months||70||63||59||36||18|
|Percent of Respondents Who Expect Strong Seller Activity in 3 Months||19||20||18||16||14|
|Percent of Respondents Who Expect Prices to Rise in 3 Months||64||69||68||43||32|
|Percent of Respondents Who Expect Prices to Fall in 3 Months||7||8||10||25||33|
|Percent of Respondents Who Expect Prices to Remain Unchanged in 3 Months||26||21||18||28||32|
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 +/- 3.3%.
Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate.