Sejal Naik, Deputy Chief Economist for the Virginia Association of Realtors (VAR), provides insightful predictions for Virginia’s housing market in 2024. Let’s delve into the three key predictions shaping the real estate landscape in the Commonwealth.
1. Rebounding Home Sales Activity: 2023 faced sluggish home sales, driven by rising interest rates and inventory constraints. However, Naik’s first prediction indicates a positive turn for 2024. Lower mortgage rates, anticipated due to the Federal Reserve’s potential rate adjustments, are expected to breathe new life into home sales activity. The market foresees a renewed interest from potential homebuyers, previously deterred by high interest rates. This surge in interest is likely to create a competitive environment, with multiple buyers vying for available houses, resulting in faster home sales. While 2024 promises a respite from the challenges of 2023, overall sales volume is expected to remain below recent years’ averages.
2. Shift in New Construction Dynamics: 2023 witnessed a slowdown in inventory growth due to the lock-in effect, where existing homeowners clung to favorable interest rates. Additionally, higher interest rates impacted new construction activity. Naik predicts a change in this landscape for 2024. Single-family housing construction is poised for an upward trend, offering potential homebuyers more options. Conversely, multifamily construction is projected to experience a slowdown. The shift in construction dynamics indicates a strategic move by developers to meet the rising demand for single-family homes and townhomes in various local markets.
3. Moderate Growth in Home Prices: Continuing the pattern observed in 2023, home prices in Virginia are anticipated to climb but at a slower pace. Tight inventory conditions led to higher median home price growth, but rising interest rates tempered the speed of this ascent. With more inventory expected to enter the market in 2024, the upward pressure on prices is expected to ease. However, the persistent supply-demand imbalance will likely result in stable and gradually increasing home prices. Naik suggests that while the trajectory remains upward, the pace of home price growth is anticipated to be more measured.