Buoyed by an exceptionally strong finish to the year, statewide home sales in 2020 increased nearly 11 percent from the comparable 2019 figure, marking the commonwealth’s fastest rate of growth in more than five years.
The year-end results, reported Jan. 21 by the Virginia Realtors trade group, came in the wake of a roller-coaster year in which the real-estate market was first knocked flat by COVID and government restrictions, then picked itself off the floor to finish exceptionally strong.
“Demand for home-ownership has been strong throughout the pandemic, fueled by historically low mortgage rates,” said Lisa Sturtevant, chief economist for Virginia Realtors, who noted the biggest headwind to ongoing success was not a lack of prospective buyers, but the shortage of homes for them to buy.
“The foremost challenge for Virginia’s housing market has been a lack of supply,” she said. “Declining inventory has limited options for would-be homebuyers and has driven up home prices across the commonwealth.”
For the year gone by, a total of 139,908 properties went to closing across the Old Dominion, up 10.8 percent from 126,908 in 2019. Year-over-year sales were up in each of the eight geographic areas of the commonwealth, with the increases ranging from 7.4 percent (central Virginia, including the Richmond area) to 29.4 percent (eastern Virginia, including the Eastern Shore).
Northern Virginia – which in Virginia Realtors’ parlance is a large swath of territory, more than just the inner and outer suburbs of Washington – ended the year with 49,185 transactions, up 10 percent. Hampton Roads followed with 33,621, up 13.4 percent.
Statewide, the median sales price in 2020 was $319,902, which was up from $295,000 last year, an 8.4-percent increase – significantly higher than the 2- to 4-percent bumps recorded in most recent years.
Among the various reporting areas, year-over-year sales prices increase by double digits in eastern Virginia (up 16 percent to $261,000), west-central Virginia (up 12.7 percent to $214,000) and the Shenandoah Valley (up 12.3 percent to $246,950). Northern Virginia posted an increase of 7.8 percent, lowest among all regions but still highest in dollars ($485,000) of any.
Total sales volume statewide in 2020 was $53.6, up 18.1 percent from a year before. (Proving the market ended with a bang, the total sale volume in normally sleepy December was $5 billion, up more than 47 percent from the same month in 2019.)
At the end of the year, there were 17,537 properties on the market, compared to 28,428 a year before less than half the 39,085 available at the end of 2016.
“Despite the [recent] increase in monthly new listings, the pace of sales activity continues to outpace supply,” Sturtevant said, “which has resulted in inventory being drawn down even more quickly in 2020.”
At the end of 2020, there were 8,151 pending sales in the pipeline awaiting final consummation, up more than 20 percent from the same point in 2019.
In the year-end report, Virginia Realtors offered three forecasts for the coming year:
• Demand for home-ownership will continue to be strong in Virginia in 2021, while a lack of inventory will constrain market activity. Virginia Realtors forecasts that home sales will increase in 2021, though the pace of transactions will slow due to insufficient supply.
• Rising home prices have been a positive for home sellers but have eroded affordability in many markets. Forecasts suggest that home-price growth will continue to be significant in 2021, with the median statewide home sales price increasing by 9.5 percent.
• An uptick in new construction will be a welcome trend in 2021, the organization said. It is expected that the number of new homes under construction in 2021 will be 8.9-percent higher than in 2020. The increase in new construction will help ease the inventory shortage, but the supply of homes available for sale will remain far below what is needed to meet demand.
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For more, see the Website at www.varealtors.org.
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