The lack of inventory that has plagued the Virginia real-estate market over the last several years could prove a blessing in disguise, helping the commonwealth weather the public-health and economic downturns with less than catastrophic damage.
“The strength in local housing markets, fueled by strong demand, can help to cushion Virginia” from a broad-based housing downturn, said Lisa Sturtevant, chief economist for the Virginia Realtors’ trade group.
While spring sales activity has slowed in recent weeks, “the market can rebound and regain those lost sales later this year, if the current efforts to control the coronavirus are effective,” Sturtevant said.
The state also benefits from federal-government employment and spending, which traditionally has moderated the impact of national recessions in the Old Dominion.
Limited inventory in most parts of the commonwealth has been a fact of life for years. The 27,903 active listings reported at the end of February represented a drop of more than 40 percent from the 47,497 homes offered for sale in February 2016.
The result of the sellers’ market, at least until virus concerns took hold, was a market that was seeing prices continually inching upward and the number of days homes spent on the market before finding a buyer declining.
In February, the median sales price of all homes that sold statewide was $292,000, up 8.3 percent from a year before and higher by nearly 20 percent than the $245,000 reported in February 2016. Average days on the market between listing and ratified sales contract this February stood at 52, down from 65 a year before and a decline from 89 in February 2016.
In many parts of the commonwealth, prices being recorded in late 2019 and early 2020 were at or above the previous peak of the market in 2005-06, before the recession hit.
The percentage of lower-priced housing in the overall sales mix is declining: Between February 2019 and February 2020, the number of homes selling for $200,000 or less declined by 15.5 percent even though overall sales jumped 5.6 percent. Meanwhile, the homes in the $600,000-to-$800,000 range reached 7.2 percent of the total sales mix, up from 3.7 percent a year before – although part of that is due to sales growth in the northern and central areas of the commonwealth, where prices are generally higher than elsewhere.
Of homes that went to closing in February, sales were up in Northern Virginia (where they had been flat for several months) as well as in central Virginia and Hampton Roads. They represent the three most populated geographic areas of the commonwealth.
Year-over-year sales were lower in the remaining, less-populated areas of the commonwealth.
February saw an early boost of spring enthusiasm by prospective sellers, perhaps with dollar signs flashing in their eyes, as the number of listings coming onto the market statewide up 2.5 percent from a year before. But “even as listing increase modestly, homes continue to sell even faster,” Sturtevant said, resulting in constricted inventory.
With the COVID-19 crisis still in play, however, “it is not possible to predict” what will happen to inventory in the near term, Sturtevant said. Some sellers have pulled their properties off the market to wait for the situation to stabilize.
– Scott McCaffrey