State Real Estate Market Outlook
Realty Market Outlook Virginia State Profile - Spring 2006
Home price appreciation accelerated in 2005
According to the Office of Federal Housing Enterprise Oversight, the house price index for the state rose 19.7 percent in 2005. Median home prices rose by nearly $52,000 last year, which was a record increase and well above the $8,649 average over the last 25 years. The Greater Washington D.C. area was the fastest appreciating metropolitan market in the state with an annual price gain of nearly $100,000. Other areas with rapid price appreciation include Virginia Beach at $37,000 and Charlottesville at $28,000.
Although home price appreciation accelerated in 2005, housing remains comparatively affordable. According to the National Association of Homebuilders-Wells Fargo Housing opportunity index, just 41 percent of homes nationwide are considered affordable for all U.S. households, nearly 51 percent of homes sold in Virginia Beach, for example, would be considered affordable for a family earning the median income in the metropolitan area.
The inventory of unsold existing homes is growing.
By late 2005, home inventory saw significant increases and were outpacing growth in home sales in some Virginia metropolitan markets, such as Northern Virginia. In Northern Virginia, the total number of homes listed for sale in January 2006 was nearly 400 percent higher than a year ago representing a 2.5-month supply, which is up sharply from a 0.4-month supply a year earlier. The slowing pace of home sales and growing inventory levels from a year ago suggest that marketing times may lengthen, potentially leading to slower price gains in 2006.
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