Have questions about what these numbers mean for your real estate plans?
What's Going on in the Northern Virginia Real Estate Market?
Today we are going to dig into Fannie Mae's newest Home Price Index report and review what it actually means for local buyers and sellers here in Northern Virginia.
Fannie Mae just released its Home Price Index report for the first quarter of 2023. The Home Price Index tracks single-family home prices across the nation. After adjusting for seasonality, the report revealed that home prices increased in the first quarter of this year by 1% compared to the last quarter of 2022. If we compare the first quarter of this year to the first quarter of last year, we see that home prices increased by 4.7%. What this means is that despite higher interest rates, home values showed modest increases. Typically when interest rates go up, consumers expect home prices to go down and we have not seen that yet due to the incredibly low number of homes being offered for sale and continued demand from buyers. But, higher interest rates have caused the rate of price increases to drastically slow down. I mentioned that prices increased by 4.7% in Q1 2023 compared to Q1 2022, but when we look at Q1 of 2022 and compare it to Q1 of 2021, we see a whopping 19.5% price increase. That high of a year-over-year price increase was an anomaly fueled by the unprecedented Covid-19 economy. In fact, it is the highest year-over-year price increase in the Home Price Index Reports which date all the way back to 1975.
Those are the national numbers but what's most important is what's going on locally. In Northern Virginia, the average sales price for the first quarter of 2023 was up by 0.93% from the first quarter of 2022. Similar to the national trend, the rate of price increases slowed from the 11.17% that we experienced between Q1 2022 and Q1 2021.
So what does this all mean for sellers in Northern Virginia? Regardless of whatever dooms-day clickbait headlines you might be seeing, your home value probably has not decreased. If you purchased your home 3 or more years ago, it is most likely worth significantly more today. And even if you only purchased in the last year or so, your home has most likely held its value if not slightly increased in value.
For those looking to buy a home in our area, the pressure of seeing each house selling for $10,000 more than the last sale on the street has definitely been released. There is still competition for properly-priced homes in good condition in popular neighborhoods, so you want to make sure that you have everything in place to make strong offers. To combat interest rates, you will want to work with an excellent local lender to make sure that you are in the best loan product for your financial situation. One of the biggest challenges for buyers remains the lack of homes available for sale, so make sure you are working with an agent who is going above and beyond to find you potential homes to purchase.