February 29, 2024 - Sejal Naik
Potential Rate Cuts In 2024 May Lighten the Mood for Buyers and Sellers Waiting on the Sidelines
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 January 24th and January 31st, 2024, and reflects housing market conditions in Virginia in January 2024. A total of 892 Virginia REALTORS® members responded to the survey, including 562 who had participated in a home sales transaction in the last 31 days.
Current Market Conditions
According to Virginia REALTORS®, buyer activity in January rose from the previous month. The Buyer Activity Index for January was 38, an increase from 31 in December. Around 21% of REALTORS® rated the level of buyer activity in their local markets as “high” or “very high” in January, and approximately 45% of REALTORS® rated buyer activity in their local market as “low” or “very low”.
According to REALTORS® in Virginia, roughly 26% of buyers in December were first-time home buyers, a 1% increase from December. Approximately 23% of respondents accepted an all-cash purchase in January, marking a 3% drop from the previous month. About 19% of home sales in January were non-primary residence sales (e.g., rental property, second home, vacation home), unchanged from December.
Recent transactions received an average of 2.1 offers in January, which is slightly higher than 1.9 in January. About 31% of respondents in December stated that bids came in above the listing price, which is 6% higher than last month.
Seller activity in January decreased slightly compared to December, according to Virginia REALTORS®. The Seller Activity Index in January was 15, a 2% jump from December. Roughly 4% of REALTORS® reported that seller activity was “high to very high” in their local market, and 75% of respondents said seller activity was “low to very low.”
Though sales activity seemed to rise, according to most REALTORS®, many of their clients faced similar challenges in the January market that hindered them or allowed them to buy or sell their homes. In the survey, we asked Virginia REALTORS® about the main obstacles their clients are facing.
Mortgage rates have been moderating for the past three months, and this has been encouraging buyers and sellers to enter the market. Around 22% of Virginia REALTORS® stated that rising interest rates are their buyer clients’ most significant obstacle, 2% lower than last month. Nearly 42% of Virginia REALTORS® stated that the lack of housing inventory in the state was stopping their buyers from purchasing a home in the January market, up 1% from last month. Current homeowners who were able to refinance during the 3% interest rate era between 2020-2022 are still reluctant to move. However, as rates continue to cool, more sellers will enter the market, leading to an increase in inventory.
Approximately 20% of Virginia REALTORS® stated that their seller clients were unwilling to lose their low-interest rate for a higher rate in the January market, up 1% from December. Around 18% of Virginia REALTORS® noted that the lack of inventory in their local market made them reluctant to sell their home in January, up 5% compared to last month. Almost 10% of REALTORS® said that rising home prices were stopping sellers from selling their homes because they were worried that they would not get the same type/size of a home elsewhere in their price range, down 3% from December. Most potential sellers in Virginia faced a combination of these obstacles, according to REALTORS® in January.
Reasons For Selling
Results From Virginia REALTORS® Confidence Survey
We asked Virginia REALTORS® what was the most common reason their seller clients wanted to sell their homes in the last 31 days of January. Many people continue to have reasons to move out of Virginia, making out-migration still one of the biggest reasons people sell their homes in the state. Roughly 24% of clients wanted to sell their homes because they were moving somewhere outside of the commonwealth. Virtually 12% of people were looking to relocate somewhere else in Virginia. Almost 18% were looking for a smaller home within the same area they reside in, and 15% were looking for a bigger house within the same locality. About 9% of sellers were looking to sell their investment property in January.
Confidence in buyer activity increased in January compared to December, say 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 61 in January, three percentage points higher than in December. About 36% of respondents indicated that they thought buyer activity would be strong in the next three months in their local markets, and 20% stated that they believed buyer activity would drop in the next three months.
The Seller Activity Index: 3-Month Outlook increased from December to January. The Seller Activity Index in January was 36, a slight decline from 36 in December. About 12% of Virginia REALTORS® reported they think seller activity will be strong in three months, and 38% said it would be low.
Virginia REALTORS® who responded to the survey believe home prices will increase strongly in the coming months. Roughly 50% stated that they think prices will increase within the next three months. Approximately 17% of REALTORS® believe that home prices will decrease within the next three months. Around 30% of respondents to the survey indicated that prices would remain the same for the next three months.
Virginia REALTORS® Confidence Survey: 2024 Highlights
|Buyer Activity Indexa
|Seller Activity Indexa
|Buyer Activity Index: 3-Month Outlookb
|Seller Activity Index: 3-Month Outlookb
|Current Market Conditions
|First-time Homebuyers, as a Percent of All Sales
|Cash Sales, as a Percent of All Sales
|Sales as Non-Primary Residence, as a Percent of All Sales
|Average Number of Offers, Most Recent Transaction
|Percent of Respondents Who Expect Strong Buyer Activity in 3 Months
|Percent of Respondents Who Expect Strong Seller Activity in 3 Months
|Percent of Respondents Who Expect Prices to Rise in 3 Months
|Percent of Respondents Who Expect Prices to Fall in 3 Months
|Percent of Respondents Who Expect Prices to Remain Unchanged in 3 Months
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 expected 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 +/- 3.27%.
Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate.
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