Local real estate market slowed heading into 2024 – WHSV

HARRISONBURG, Va. (WHSV) – Home prices across the country have hit record highs while mortgage rates are beginning to slowly fall as the Fed has lowered interest rates. In the Shenandoah Valley, the situation is very similar with record-high prices and very few homes on the market.

“The median sales price in 2023 was right around $330,000 which is the highest we’ve seen. Just to give a comparison in 2022 it was $300,000 and in 2021 it was $270,000. So we’ve seen a pretty significant, almost 10% or more every year, increase, and over the last five years that’s been about $120,000 which means the house you bought five years ago is worth significantly more today,” said Zach Koops, a Harrisonburg and Rockingham County realtor brokered by eXp Realty.

Home sales in the area have been on a steady decline over the last two years after a major spike in sales in 2021.

“In 2021 we had over 1,600 homes that were sold in that year and then it started to decline. In 2022 it was a little over 1,500 and then we had a significant drop this past year in 2023 it was 1,190,” said Koops. “Combining high prices with high-interest rates just makes things slow down. Until one of those things changes: inventory, prices, or rates, I don’t think we’re going to see things pick way up really fast.”

Interest rates are beginning to be slowly lowered by the Fed after reaching their highest levels in decades back in October. Koops said that the Fed estimates it will decrease interest rates three times over the course of 2024 which should get the local housing market moving again.

“Now that interest rates are on the move downward we’re looking at under 7% now heading back toward 6.5%. I think once we get under that 6.5% mark which I think could happen in the first half of this year, we’re going to start seeing increased activity,” said Koops.

Koops said it is unlikely that home prices in the area will drop at all in the near future. He said while new construction has helped inventory levels somewhat there are still not nearly enough homes available. Interest rates dropping will ultimately be the biggest factor in the housing market in the immediate future.

“Now it’s looking like rates is going to be the factor that drops. Once that happens hopefully that will give sellers the confidence to put their houses on the market which will then give buyers things to buy. So we’ll see what happens but I don’t see something just blowing up I think it’s going to be a slow and steady wins the race situation,” said Koops.

With sky-high home prices, the housing market remains a major seller’s market. Koops offered some advice for those who are still trying to buy a home in the area despite the high prices.

“My biggest piece of advice for people who are looking to buy a home would be to just try and get in the game. Be flexible on your expectations, don’t look for that perfect house right out of the gate really just try to get that investment going. Because even though rates fluctuate, they go up and they go down, if you can lock in a decent rate under 7% for 30 years the chances are really good that in 5-10 years or even less, you’re going to make money on that if you turn around and sell,” he said. “So get in the game as soon as you can, don’t stretch yourself too thin, and be flexible with your expectations.”

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