A combination of low inventory, high demand, and low interest rates had boosted the Virginia real estate market through 2021. But, changes may be in store for the balance of 2022. Here's a look at what's in store for the Virginia real estate market for 2022.
Fastest Growing Real Estate Markets in Virginia
Mortgage rates and median home price aren't the only factors involved in a buyer's decision to purchase a home in certain Virginia markets. As always, purchasers are on the hunt for quality of life. Buyers seek out healthy employment markets, strong school systems, unique ways to have fun, and low crime rates.
Here's a look at eight Virginia real estate markets listed by Redfin as communities with the fastest-growing median sales prices in the commonwealth.
1. Harrisonburg, Virginia
Rising to $290,000, Harrisonburg has witnessed a 45% boom in median sales price in the last year through May 2022. Median listing prices have also risen to $306,000. That figure marks a 42.3% year-over-year increase. Home to James Madison University, the town is situated between the Blue Ridge Mountains. This area is a perfect playground for outdoors people who enjoy hiking and mountain biking.
2. Blacksburg, Virginia
Very strong demand for homes in Blacksburg sees listings sitting on the market for an average of only five days, compared to 47 days in May 2021. Sale dollars per square foot came in at $218 in May 2022, which shows an annual increase of 10.4% over twelve months. Another college town, Blacksburg is home to Virginia Tech and an attractive labor market. Jobs increased 5.2% in the Blacksburg/Christiansburg region between April 2021 and April 2022.
3. Spotsylvania Courthouse, Virginia
Spotsylvania Courthouse is an area that's also seen significant demand for home purchases. Despite a 21.2% decline in homes sold from May 2021 compared to May 2022, the median sale price jumped 32% to $475,000 in the same time frame. This region attracts history buffs and stands out as a Civil War landmark. A famous battle took the lives of more than 30,000 soldiers over 13 days in 1864.
4. Poquoson, Virginia
Set on the Virginia Peninsula and bordered by the Chesapeake Bay to the east, sits the town of Poquoson. Sellers have realized an average sale-to-list price of 101.6%, a 0.8% increase over May of the previous year. About 48% of listings sold above the asking price over the same period. Poquoson has a population of about 12,000 people and crime rates are below the national average in the town that also borders the larger city of Hampton.
5. Annandale, Virginia
Annandale is one of the Northern Virginia communities that borders the Washington D.C. metro area. At $811,550, the median sales price here is one of the highest figures in the Commonwealth. A 4.4% decrease in homes sold in the past year could mean that fewer homes are available and affordable for buyers. Being close to the nation's capital gives buyers and sellers advantages by being close to major entertainment venues and professional sports stadiums.
6. Cherry Hill, Virginia
The Cherry Hill, Virginia area can be found where the Potomac River meets Occoquan Bay. The region has experienced a 48% boom in population growth from 2010 through 2020. Easy access to Route 95 and a manageable commute to the D.C. metro area is the primary reason why median sales prices rose from approximately $511,000 to $670,000 as of May 2022. As would be expected from median home prices, the Cherry Hill cost of living is about 15% higher than the U.S. national average.
7. Short Pump, Virginia
A suburb of Richmond, Short Pump was transformed from farmlands into a desirable place to live. Both average and high-end homes have sold quickly on the Short Pump market. Average homes sell about 9% over the asking price and luxury homes sell around 14% higher than list price. These upscale properties go pending in five days on average, making the Short Pump area a very competitive place to shop for a home.
8. Smithfield, Virginia
Anyone looking to purchase a home in Smithfield may be helped by rising interest rates and lower demand. While the average sale price has increased over the past year, about 20% of listed homes saw owners drop asking prices in the same time frame. Average homes sit on the market for about 20 days, which is a longer period than many other Virginia markets. Just across Burwell Bay from Newport News, the Smithfield employment scene boasts a large meat-processing employer known by the same name.
2022 Virginia Real Estate Market Trends
Rising Mortgage Rates Paired With Slowed Home Price Increases
The Federal Reserve is fighting inflation by having raised interest rates three times in 2022. The latest rate hike was an aggressive 75 basis point increase that surprised many economists.
Despite rising mortgage rates, Virginia Realtors' chief economist, Ryan Price, still expects growth in the sale price of homes. However, home prices may increase less rapidly than in 2021. "Home prices will rise at a lower rate than they have been, but there are no apparent risks of a price drop across most local markets, " he offered.
While market shifts appear likely, the Virginia median March 2022 home sale price jumped to $375,000, which represents a 12% increase over March of 2021.
More Available Inventory
A lack of inventory was a 2021 trend that has continued into 2022. New listings decreased from 16,262 in March 2021 to 14,817 in March 2022. However, because mortgage rates are rising, more sellers may list their properties to try and cash in while it's still affordable for buyers. It's possible inventory rates may start to rise, finally.
Taking Advantage of Virginia's Fastest Growing Markets
Rising interest rates could slow existing home sales overall in Virginia. But, many economists feel that home prices will not bottom out as they had during the financial crisis of 2008-09. Rather, many homeowners may choose not to sell since increased rates may prohibit buyers from shopping. On the plus side, owners could hang onto the large gains in home value that they have realized over the past year. In most cases, it's a win to own a home that's worth 30-40% more than it was a short twelve months ago.
Clearly, if you're thinking of becoming a real estate agent in Virginia, now's a great time. Help homeowners understand whether now is the best time for them to sell or not when you earn your Virginia real estate license. Get started with our Virginia online real estate course today!