Economic Uncertainty Continues to Dampen The Housing Market As Mortgage Rates Reached A 20-Year High.

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 October 25th and November 2nd, 2023, and reflects housing market conditions in Virginia in October 2023. A total of 694 Virginia REALTORS^® members responded to the survey, including 473 who had participated in a home sales transaction in the last 31 days.

Current Market Conditions

Buyers

According to Virginia REALTORS^®, buyer activity declined in October. At 27, the Buyer Activity Index for October declined from 37 in September. Around 11% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in October, and approximately 57% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

Around 29% of buyers in October were first-time home buyers, according to survey respondents, which is unchanged from last month. About 29% of respondents accepted an all-cash purchase in October, a 3% rise from the previous month. Approximately 18% of home sales in October were non-primary residence sales (e.g., rental property, second home, vacation home), unchanged from September.

The average number of offers fell slightly from September to October, according to REALTORS® responding to the Confidence Survey. Recent transactions received an average of 2 offers in October, a decline from 2.3 in September. About 34% of respondents in October stated that bids came in above the listing price, 25% higher than September.

Sellers

Seller activity in October fell compared to September, according to Virginia REALTORS^®. The Seller Activity Index in October was 10, three percentage points lower than September. In October, around 3% of REALTORS^® reported that seller activity was “high to very high” in their local market, and 81% of respondents said seller activity was “low to very low.”

Obstacles

As we go through the fall 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

Almost 27% of Virginia REALTORS^® stated that the lack of housing inventory in the state was hindering buyers from purchasing a home in the October market. In October, about 33% of Virginia REALTORS^® emphasized that rising interest rates are their buyer clients’ most significant obstacle. Down payments continue to be the least of potential buyers’ concerns in Virginia. Around 1% of Virginia REALTORS^® stated that saving for a down payment was their clients’ most significant concern in October. Most buyers have been able to save up for a home, but high interest rates and home prices are keeping them on the sidelines.

Thinking about your buyer clients. Which factor is the primary impediment to purchasing in the fall 2023 market?

Sellers

Nearly 24% of Virginia REALTORS^® stated that their seller clients were unwilling to lose their low interest rate for a higher rate when they sell their homes in October. About 13% of Virginia REALTORS^® in the October survey stated that the lack of inventory in their local market is making clients reluctant to sell their homes. Approximately 7% of REALTORS^® in October said that rising home prices were stopping sellers from selling their homes because they are anxious that they will not get the same type/size of a home elsewhere in their price range. Many Virginia REALTORS^® are facing a combination of all these issues which has stopped them from selling in the October market. Those who were able to acquire low interest rates during the pandemic are reluctant to sell their homes for higher interest rates.

Thinking about your seller clients. Which factor is the primary impediment to selling their home during the fall 2023 market?

Reasons For Selling

Results From Virginia REALTORS^® Confidence Survey

There are several reasons why people decide to sell their homes. In October, we asked Virginia REALTORS^® the most common reason their seller clients wanted to sell their properties in the last 31 days. About 25% of clients wanted to sell their homes because they were moving somewhere outside the state. Roughly 12% of people were looking to relocate somewhere else in Virginia. Almost 17% were looking for a smaller home within the same area they reside in, and 10% were looking for a bigger house within the same locality. Around 9% stated that their clients aimed to sell their second home/investment property in October.

Market Outlook

Confidence in buyer activity decreased in October in comparison to September according to 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 26 in October, down from 36 in September. Virtually 10% of respondents indicated that they thought buyer activity would be strong in the next three months in their local markets, and 57% stated that they think it will be low in the next three months.

The Seller Activity Index: 3-Month Outlook decreased in October compared to September. The Seller Activity Index in October was 16, a decline from 22 in September. About 3% of Virginia REALTORS^® reported that they think seller activity will be strong in three months, and 71% said it would be low.

Virginia REALTORS® that responded to the survey believe that home prices will begin to fall in the next three months. Around 41% of Virginia REALTORS® responding to the survey stated that they believe prices will decrease within the next three months. About 25% of REALTORS® believe that home prices will increase within the next three months. Approximately 31% of respondents to the survey indicated that prices would 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®. The statistics from this survey have a margin of error of +/- 3.72%.

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 or local housing market data.