Many REALTORS^® Believe Buyer Activity Will Continue to Slow Down Due to Low Inventory and High Mortgage Rates

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 September 25th and October 3rd, 2023, and reflects housing market conditions in Virginia in September 2023. A total of 1,022 Virginia REALTORS^® members responded to the survey, including 775 who had participated in a home sales transaction in the last 30 days.

Current Market Conditions

Buyers

According to Virginia REALTORS^®, buyer activity fell short in September. The Buyer Activity Index for September was 37, a decline from 39 in August. Around 17% of REALTORS^® rated the level of buyer activity in their local markets as “high” or “very high” in September, and roughly 44% of REALTORS^® rated buyer activity in their local market as “low” or “very low”.

According to survey respondents, about 29% of buyers in September were first-time home buyers, up 1% from August. Approximately 26% of respondents accepted an all-cash purchase in September, which is a 3% increase from a month ago. Around 18% of home sales in September were non-primary residence sales (e.g., rental property, second home, vacation home), up from 17% in August.

The average number of offers rose slightly from August to September, according to REALTORS^® responding to the Confidence Survey. Recent transactions received an average of 2.3 offers in September, a rise from 2 in August. About 9% of respondents in September stated that bids came in above the listing price, a 9% decline from a month ago.

Sellers

Seller activity in September increased compared to the previous month, according to Virginia REALTORS^®. The Seller Activity Index in September was 14, a rise from 10 in the previous month. In September, approximately 3% of REALTORS^® reported that seller activity was “high to very high” in their local market, and 74% of respondents said seller activity was “low to very low.”

Obstacles

As we begin to enter 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

Virtually 35% of Virginia REALTORS^® stated that the lack of housing inventory in the state was hindering buyers from purchasing a home in the September market. In the survey, about 29% of Virginia REALTORS^® emphasized that rising interest rates are their buyer clients’ most significant obstacle, the highest recorded since collecting this data. Down payments continue to be the least of potential buyers’ concerns in Virginia. Less than 1% of Virginia REALTORS^® stated that saving for a down payment was their clients’ most significant concern in September. Potential buyers have been able to save money to buy a home, but tight inventory and high-interest rates are pushing them out of the market.

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

Sellers

Roughly 18% 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. Nearly 15% of Virginia REALTORS^® noted that the need for more 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 September, unchanged from the previous month. Approximately 11% of REALTORS^® in September said that rising home prices were stopping sellers from selling their homes because they are anxious that they won’t get the same type/size of a home elsewhere in their price range. Most sellers in Virginia struggled from all these factors in September. 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 summer 2023 market?

Reasons For Selling

Results From Virginia REALTORS^® Confidence Survey

There are many reasons why people decide to sell their homes. In September, we asked Virginia REALTORS^® what was the most common reason their seller clients wanted to sell their properties in the last 30 days. Nearly 28% of clients wanted to sell their homes because they were moving somewhere outside the state, unchanged from last month. About 13% of people were looking to relocate somewhere else in Virginia. Around 17% 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. Virtually 7% stated that their clients aimed to sell their second home/investment property in September.

Market Outlook

Confidence in buyer activity decreased in September compared to the previous month from 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 36 in September, down from 37 in August. About 13% of respondents indicated that they thought buyer activity would be strong in the next three months in their local markets, a decrease from 15% in August.

The Seller Activity Index: 3-Month Outlook increased in September compared to August. The Seller Activity Index in September was 22, an increase from 17 in August. Nearly 4% of Virginia REALTORS^® reported that they think seller activity will be strong in three months.

The share of survey respondents who expect prices to rise in their local markets in the next three months fell in September. About 34% of Virginia REALTORS^® responding to the survey stated that they believe prices will increase within the next three months. About 32% of REALTORS^® believe that home prices will fall within the next three months. Approximately 30% 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 +/- 3%.

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.