REALTORS^® In Virginia Are Worried About First-Time Home Buyers Struggling to Enter the Housing Market as Economic Uncertainty Looms

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

Each month, the Virginia REALTORS^® Confidence Survey gathers valuable information from REALTORS^® on local housing markets based on their experiences with real estate transactions in the prior month. This data provides a real-time look at housing market conditions. This month’s Confidence Survey was conducted between June 27th and July 3rd, 2024, and reflects housing market conditions in Virginia in June 2024. A total of 569 Virginia REALTORS^® members responded to the survey, including 430 who had participated in a home sales transaction in the past month.

Current Market Conditions

Buyers

According to Virginia REALTORS®, buyer activity decreased in June compared to May. The Buyer Activity Index dropped to 44 this month, down from 51 in May. About 20% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in June, and 32% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

About 26% of REALTORS^® clients in June were first-time home buyers, which is a decrease from 29% in May. Roughly 27% of the sales transactions in June were all-cash purchases according to the survey respondents, an increase from 23 in May. Approximately 22% of home sales were non-primary residence sales (e.g., rental property, second home, vacation home), up 8% from the prior month.

Recent transactions received an average of 2.4 offers in June, a slight decline from 2.9 in May. About 49% of respondents in June stated that bids came in above the listing price, which is 5% lower than last month.

Sellers

Seller activity in June increased slightly compared to May, according to Virginia REALTORS^®. The Seller Activity Index in June was 27, an increase from 26 in May. Around 7% of REALTORS^® reported that seller activity was “high to very high” in their local market, and 53% of respondents said seller activity was “low to very low.”

Obstacles

Economic worries continue to loom amongst many people. Many potential buyers are not optimistic about purchasing a home in the current housing market conditions and are doubtful about buying or selling their homes. Undesirable mortgage rates and increasing home prices are especially pushing many first-time home buyers to the sidelines. In the survey, we asked Virginia REALTORS^® about the main obstacles their clients are facing.

Buyers

Higher home prices and low inventory are not giving buyers many options to choose from. About 13% of Virginia REALTORS^® stated that rising mortgage rates were holding their buyer clients back from purchasing a home in June, and 38% of Virginia REALTORS^® relayed that the lack of housing in the commonwealth was a major impediment for their clients. A substantial portion of buyer clients faced a combination of these obstacles in June.

Sellers

According to REALTORS^® in Virginia, nearly 13% of Virginia REALTORS^® stated that their seller clients were unwilling to lose their low-interest rate for a higher rate in the June market, and approximately 16% confirmed that the lack of housing in Virginia negatively impacted their sellers’ willingness to move. Just about 10% of REALTORS® said that rising home prices were stopping seller clients from selling their homes in June because they were worried that they would not get the same type/size of a home elsewhere in their price range.

Pending Sales Activity 

According to our most recent data, there were 9,729 pending sales in May, one less compared to a year ago. Most pending sales tend to close successfully, but there has been a common trend as to why pending sales have failed to close. In June, 404 REALTORS^® in Virginia stated that one or more of their seller clients had a purchase agreement, and 100 said that the purchase agreement did not close as intended.

In June, we asked REALTORS^® what the most common reason was for the pending contract to fall through. About 44% of respondents confirmed that the inspection had significant issues, which caused the purchase agreement to fail. About 25% stated that the buyer’s mortgage was not approved in time for closing. Roughly 10% said that the buyer’s old home was unable to sell in time for them to finalize the purchase agreement, and 10% of REALTORS^® said that the buyer lost their job or faced financial issues jeopardizing the mortgage approval. Nearly 16% said there were issues within the title which caused the pending sale to collapse.

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 month of June. According to the June survey, 27% of REALTORS^® in Virginia stated that their seller clients were moving out of the state, and 16% of people were looking to relocate somewhere else in the state. Approximately 15% were looking to downsize within the same area they live in, and 12% were looking for a bigger house within the same location. There were about 10% of sellers who were looking to sell their investment property in June.

Market Outlook

Confidence in future buyer activity decreased in June compared to May, according to REALTORS^®. This index gauges how REALTORS^® think the market will perform in the following three months. The three-month buyer activity index was 49 in June, a slight drop from 51 in May. About 25% of respondents indicated that they think buyer activity will be strong in the next three months in their local markets, and 26% stated that they believed buyer activity would drop in the next three months.

The Seller Activity Index: 3-Month Outlook increased from May to June. The Seller Activity Index in June was 36, down one from the previous month. About 11% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, and 39% said it would be low.

Roughly 43% of Virginia REALTORS^® responding to the survey stated that prices will increase within the next three months. Approximately 22% of REALTORS^® believe that home prices will decrease between July and September, and 31% of respondents indicated that prices would remain the same.

Virginia REALTORS^® Confidence Survey: 2024 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 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®. The statistics from this survey have a margin of error of +/- 3.904%.

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.