Are You Ready for Virginia's 2021 Real Estate Market?
It’s fair to say that all of us were very optimistic about 2020’s outlook pre-pandemic, and although COVID-19 has shaken up the market, the prediction of home prices dropping significantly during the pandemic never materialized. In fact, the opposite happened, leading experts to adjust previous predictions and leaving them more optimistic than even before the pandemic. Previous predictions were set at a 3.7% increase in home prices; the current increase in Virginia home prices is 6.3% with a forecasted 7.4% increase by October 2021. With this in mind, let’s delve into our market predictions for Virginia in the coming year.
2021 Virginia Real Estate Outlook: Hot
The decrease in the number of homes listed, homes built, and the high number of retired residents in the state has driven Virginia’s inventory to a historical low, resulting in a market that’s seeing its highest home sale prices to date. At the beginning of this year, Virginia held an estimated 2.7 months of home inventory. The state’s active housing inventory is down 38.5% from last year, but new listings are up 14.4% in the same timeframe. Virginia’s lack of home inventory is creating a competitive market where sellers have the advantage.
In fact, Virginia’s home sale prices continue to rise and meet historical highs, as the housing inventory continues to decrease and mortgage rates remain low. Experts predict Virginia’s home sale prices will grow another 9.5% in 2021. Rental prices also continue to increase, year-over-year: Virginia’s average rent has increased by 1.4%, showing an increased desire to live in the Old Dominion state.
64.0% of Virginia residents are homeowners, and only 0.7% are late on their mortgage payments. Virginia ranks 37th for delinquent mortgages across the country, giving the local market an additional boost of confidence heading into the new year. Coupled with the current low rate of homes with negative equity (only 2.7%), lower than the nation’s average, Virginia’s real estate market outlook is positive and one of the more stable markets in the country.
2020 Virginia Real Estate Market Data
|Zillow Home Value Index||$299,164|
|1-Year Change on Home Values||+5.2%|
|1-Year Change on Rent Prices||+1.4%|
|Homes With Negative Equity||2.7%|
|Delinquent on Mortgages||0.7%|
|Buyer or Seller’s Market||Seller’s|
Market Insights for Virginia
At 5.3%, Virginia’s current unemployment rate is below the national rate. Despite the pandemic, this figure is only 2.1% above Virginia’s unemployment rate in 2019. Employment rose in eight of the eleven most impactful industries, with leisure and hospitality experiencing the highest increase of +13,300 jobs. The second largest growth was in trade and transportation, with the third being professional and business services. Northern Virginia’s housing market has been hot ever since the announcement of Amazon’s second headquarters in Arlington. However, after two years and a pandemic, the initial boom in activity has begun to ease.
Virginia will continue to be a sought after relocation destination for professionals looking for a high quality of life, along with conditions conducive to business growth. The high quality life comes with a higher cost of living, but for Virginians, it's worth it. Here’s how the Old Dominion state ranks across the nation:
- First in quality of life
- Third in labor supply
- Fourth best state for business
- Seventh best place to live in the U.S.
Home sales, despite COVID-19, have shown resilience despite economic lockdowns. The number of sales and home sale prices is expected to grow well into 2021, but might meet resistance from the lack of inventory. Overall sales are forecasted to increase, raising concerns about home prices outpacing homeowner income, and similar signs led into the 2008 housing bubble. However, chief economist for Virginia REALTORS® Lisa Sturtevant is not concerned, citing that conditions today are different than in the early 2000s. Today, lending standards for home mortgages are strict compared to the early 2000s, when financing was easy to come by. As a result of these stricter lending standards, price growth for homes has been stable, with prices up 2.0%-4.0% annually.
Take On 2021 With the Best Virginia Real Estate Courses From The CE Shop
Enroll in our Pre-Licensing program now to get your career started and begin connecting your fellow Virginians with the home of their dreams. Or keep going strong with one of our comprehensive, 100% online Continuing Education packages. Want to stay up to date on everything in Virginia? Join the South Real Estate Facebook Group!