Less frenetic but still fast paced is the prediction for the 2022 housing market in Northern Virginia, which echoes national expectations, according to the Northern Virginia Association of REALTORS® (NVAR) in its annual forecast produced in conjunction with George Mason University’s Center for Regional Analysis. Regionally, home sales are expected to drop only 0.8%, providing a slight break from 2021’s frenzy. Nationally, home sales are expected to drop 1.7%, according to data released by the National Association of REALTORS®
“The market will be a bit cooler, but it will still be a very good year for home sales,” said Ryan McLaughlin, CEO, NVAR, in a statement. “We expect a slower pace in home sales as mortgage rates increase; and housing options will remain scarce.”
“Although home prices will continue to rise, they will still be at a more moderate pace than the past year,” McLaughlin added. “Moderation will be the theme for 2022.”
According to the forecast, the greater D.C. regional economy will continue to perform well bolstered by the technology sector and supported by new rounds of federal spending. Rising incomes and more openings for new jobs than workers to fill them—especially in high wage sectors of the economy—will propel confidence in making major purchases–like homes.
However, the Federal Reserve action may contribute to upward pressures on mortgage rates throughout the year. Business cost increases—tied to surging wages for skilled workers—will push prices higher across a wide range of goods and services, which will impact housing affordability. Home prices are expected to go up 3.2% in Northern Virginia; while nationally, prices will rise closer to 5.7%.
“By year end, we expect mortgage rates to be near 4%, still less expensive by historical patterns, but high enough to push some buyers out of market affordability,” said Terry Clower, PhD, director, George Mason University Center for Regional Analysis, in a statement.
Other factors affecting the real estate market include the continuing hybrid work arrangements persisting if not made permanent. Prices for building materials will remain substantially elevated for most of 2022, which means that new construction will be very expensive, likely leading to delay in building some multifamily developments.
Below is the outlook for each of Northern Virginia’s sub-markets:
Single family: Prices predicted to grow 3.3%, while sales down 0.8% and inventories shrink.
Townhomes: Inventory gains will track closely with 2021 for most of the year but will remain somewhat elevated in the fourth quarter.
Condos: Prices are expected to be somewhat flat for most months next year; inventories will remain elevated compared to pre-pandemic markets, but somewhat lower than last year. Total units sold will decline by 9.7% compared to an unusually active 2021.
Single family: Unit sales will increase modestly (+1.7%), even though inventories will be even tighter than 2020, making Arlington the hottest sub-market.
Townhomes: Sales, which saw notable increases in inventories of the past year and a half, will likely return to levels before the Amazon HQ2 announcement. Prices will stabilize with overall increases of about 3.1%.
Condos: Inventories will drop somewhat but will remain at levels not seen since 2017.
Single family: Unit sales will rise 4.1%. Median sales prices will lose some of the volatility seen in 2021. Prices will rise, but in a pattern more like pre-pandemic Alexandria. Expect year-end prices to be up 5.3%.
Townhomes: Inventories will shrink though total annual unit sales predicted to rise 4.1%.
Condos: Sales expected to grow 11.2% while inventories will generally be flat on average.