Central Virginia Housing Market Overview
The Central Virginia housing market continues to show signs of growth. Sales are outpacing last year’s levels in most local areas, and home prices are climbing rapidly. As market activity continues to expand and the inventory continues to shrink, homes across the region are selling much faster on average compared to prior years.
Sales activity continues to outpace last year in the Central Virginia regional housing market. There were 4,869 sales across the area during the first quarter, a 13% increase from a year ago, which is an influx of 557 sales. Other than the pandemic-related slowdown in the spring of 2020, home sales have been trending up in the region consistently over the past two years, a trend that has accelerated significantly over the past three quarters, as pent-up demand and attractive interest rates have fueled the market. The sales growth is widespread across the region,13 of the 16 jurisdictions in the CVRMLS footprint had more sales in the first quarter than last year. Similar trends are occurring in many parts of the commonwealth. Overall, there were 29,128 home sales in Virginia in the first quarter, a 19% increase from the first quarter of 2020.
Sales prices continue to rise rapidly in Central Virginia, as the low supply is making the market increasingly competitive for buyers. At $295,000, the first quarter median sales price in the CVRMLS footprint was nearly $40,000 higher than it was at this time last year, representing a 16% price surge. All 16 local jurisdictions in the region area had price growth this quarter. In Virginia, the median sales price in the first quarter was $325,000, which was up 12% compared to the first quarter of 2020.
Days on Market
As supply continues to shrink, homes are selling much faster on average in the CVRMLS footprint. The average days on market during the first quarter in the region was 23 days, which is three weeks faster than last year (-21 days). The amount of time it takes to sell a home in the area has been trending down for years; the average days on market this quarter is about six weeks faster than in the first quarter five years ago. The average days on market in the Richmond Metro Area was 20 days in the first quarter, 20 days faster than last year. It took 27 days on average to sell a home in the Tri-Cities area in the first quarter, which is 27 days faster than last year. Statewide, the average days on market in the first quarter was 34 days, which is down from 53 days in the first quarter of 2020.
The Central Virginia region is one of the most competitive housing markets in Virginia as the supply of active listings continues to shrink to historic lows. There were 1,719 active listings across the CVRMLS footprint at the end of the first quarter, less than half the number of listings available a year ago (-52%), a decline of 1,836 listings. All 16 localities in the region had significant inventory reductions this quarter compared to last year. The chronically low supply in the region reflects broader market trends both in other parts of Virginia and nationally. In Virginia, there was a total of 15,787 active listings at the end of the first quarter, which is down 46% compared to a year ago. Many would-be sellers are opting to renovate or expand their homes instead of selling. In other cases, homeowners are hesitant to sell their homes because price points have been rising rapidly, so buying another home to move into in a tight market makes less sense financially than staying put in their current home.
Similar to the country overall, the Central Virginia region is in the midst of a rapid economic recovery. While the job base is not yet back at pre-pandemic levels, thousands of jobs have been added to the economy in recent months, a trend that is expected to continue well into this year. As more and more people are finding employment in the region, the unemployment rate has fallen dramatically over the past year, another positive sign for the region’s economy, and more specifically the housing market. Home sales are booming, and prices are soaring throughout the Central Virginia market. Much of this growth is reflective of pent-up demand that is now flowing through the market, and also attractive interest rates. The busy market continues to put a strain on the severe inventory shortage that has shown no signs of improving. It is possible that the very low supply of listings could dampen sales activity in some local markets in the coming months, as eager buyers are unable to find homes in their price range that meet their needs. There were some subtle signs of a looming market slowdown this quarter, as pending sales activity in the region’s largest markets were either flat or declined from last year’s level. Even if sales growth moderates somewhat in specific local markets, price levels are likely to remain steady or rising in the coming months.