Home prices in Virginia have been up by double-digit rates—or close to it—for ten consecutive months. According to Lisa Sturtevant, Chief Economist of the Virginia Association of Realtors, in May, the median home sales price in Virginia was $367,000 which was up 16.6% compared to the median sales price a year ago. The pace of sales growth this year has been much faster than in recent years, fueled by strong demand, favorable mortgage rates, and low inventory.
Strong Prices Across All Regions
There has been phenomenal price growth in all regions across Virginia. So far, for sales in 2021, the median statewide home price is 13.2% higher than it was during the same period in 2020. The strongest price growth in 2021 has been in some of the state’s smaller markets. For example, the year-to-date median price in the Eastern region is up 25.7%. In the Southside region, prices are 24.2% higher in 2021 compared to 2020.
There has been double-digit price growth in all areas of the commonwealth, including the state’s largest and highest-cost markets. The median price in Northern Virginia climbed 11.9% in the first five months of 2021. Prices are up 15.0% in the Central Virginia region and are 11.1% higher in the Hampton Roads region.
Prices Growing More than Twice as Fast as in Recent Years
In most markets, home prices are growing more than twice as fast as they have in more typical years. Between 2016 and 2021, for example, the median sales price statewide increased by 6.2% on an annual basis. Over the past eight years, since 2013, annual price growth averaged just 4.6% in Virginia.
Price Growth Will Likely Slow
Recent trends in home prices suggest that this past year has, indeed, been extraordinary. While price growth will remain strong throughout 2021 and into 2022, it is likely that the pace of home price appreciation will slow as demand softens, mortgage rates tick up, and inventory expands.
Virginia REALTORS® will release its economic and housing market forecasts later this year, at the 2021 Annual Convention. Several national organizations are forecasting above-average home price growth through 2021, although there is evidence of a slow down in appreciation in 2022. Only the Mortgage Bankers Association (MBA) is predicting a price drop in 2022. The vast majority of economists, however, expect prices to continue to rise.