The U.S. housing market has been in a unique position throughout the COVID-19 pandemic. In 2021, home sales reached its peak with an estimated 6 million homes sold. With homes selling at record speeds, the average home price has increased nearly 20% with many buyers paying significantly more than asking price. As we anticipate what is to come regarding the Virginia housing market, here are a few key things to consider:
First, supply and demand indicate that the housing market will remain a seller’s market. Virginia’s current highly competitive housing market is, in part, due to the years-long labor and supply shortages. Even as these industries recover from the pandemic, Virginia showed a sharp decrease in inventory late 2021. There are more people who want to buy houses than there are houses available. With a strong buyer demand and very low inventory, we can expect the market to remain a seller’s market with a continual rise in home prices.
Second, there will likely be a shift in favor of suburban and urban markets. During the early days of the pandemic, with many people working from home or desiring to live in less populated areas due to the virus, the urban market was less impacted. As we shift back to a pre-COVID normal and people return to work and school, we can expect to see more demand for homes in urban areas.
Finally, mortgage rates are expected to continue rising. The Federal Reserve indicated that their pandemic monetary policies may end soon, and Virginia REALTORS® predicts that the 30-year fixed-rate mortgage will rise from 3.1% in December of 2021 to 4.0% by the end of 2022.