WINCHESTER — Last year brought plenty of unexpected things, including a boosted real estate market.
Throughout the COVID-19 pandemic, the demand for homes has been considerably high, according to industry experts.
Historically low mortgage rates are helping fuel the boom and resulting in many homes being sold at above-average prices.
“The foremost challenge for Virginia’s housing market has been a lack of supply,” Virginia Realtors’ Chief Economist Lisa Sturtevant said in a blog post. “Declining inventory has limited options for would-be home buyers and has driven up home prices across the Commonwealth.”
A Virginia Realtors report shows 13,603 more home sales in 2020 than in 2019 across the Commonwealth, an increase of 10.8% — Virginia’s fastest growth in annual sales transactions in more than five years.
Regionally, there also was an uptick in homes sold.
Three counties in the Northern Shenandoah Valley sold at least 100 more homes in 2020 than in 2019: 1,860 homes were sold in Frederick County, an increase of 165; 869 were sold in Shenandoah County, an increase of 122; and 883 were sold in Warren County, an increase of 114.
In the city of Winchester, 400 homes were sold in 2020, an increase of 63, while 270 homes were sold in Clarke County, also an increase of 63.
According to the report, home prices have been up by double-digit rates for five straight months.
Year-over-year numbers showed at least a $20,000 increase in the median price of homes sold throughout the region.
The median sale price in Clarke County last year was $402,541, up $30,541 from 2019. Homes in Frederick County sold for a median price of $295,900, a $25,900 increase. Shenandoah County homes sold for a median price of $221,900, a $22,900 increase, while Warren County homes sold for a median price of $265,000, or $20,000 more. In Winchester, the median sale price was $255,000, a $31,000 increase.
Industry professionals predict that trend will continue throughout 2021, despite some unknowns.
“Forecasting economic conditions is tricky under the best of circumstances. In these extraordinary times, it is even more difficult to paint a conclusive picture of what to expect in the year to come. A rise in COVID-19 cases, uncertainties in the political process, and a stalling national economy offer reasons to be cautious when forecasting the performance of the economy and housing market in the year to come,” Sturtevant said. “Other factors, however, including demographic factors and persistently low mortgage rates point to a strong 2021 for housing market activity.”
Lack of inventory still remains one of the biggest challenges for home sales going forward.
“There are no indications that inventory is going to increase in any significant way over the next year,” Sturtevant said. “Some would-be home buyers, discouraged at a limited number of options, may decide to put off their home search. Escalating home prices create growing challenges for some home buyers, particularly first-time buyers, to get into the market.”
A home sales forecast suggests there will be a total of 135,018 sales in Virginia in 2021, which is up about 2% from the 2020 total.
That means home prices will remain higher, she said.
Forecasts indicate that the 2021 median home sales price statewide will be $349,196, an increase of 9.5% over 2020.
New-build permits are also expected to go up about 8.9%, and mortgage rates are expected to stay around 3.2%.
“While the future may not be crystal clear, the outlook for the economy and housing market in 2021 tends to be positive,” Sturtevant said. “Pent-up demand for home ownership and the desirability of Virginia communities, along with the resourcefulness of Virginia Realtors, will keep the real estate industry an important part of the state’s economic recovery in the year to come.”