What will the housing market look like in 2024 in Hampton Roads, Virginia and nationwide? In our 2023 real estate recap and 2024 housing predictions, we’ll look at the ins and outs of what’s happening in the housing market right now and in the year to come.
At a glance, the trends of the 2023 housing market tell us that homebuyers will have more options in 2024, but affordability issues will persist. Read on for the specifics we see coming over the next year.
Housing Market 2023 Recap: What trends did we see in Virginia Beach?
The 2023 housing market in Virginia Beach and Hampton Roads continued to bring challenges for both house buyers and sellers. High mortgage interest rates, listing shortages, and steady demand made decisions to invest or move complicated.
Here are a few trends we saw in the Hampton Roads real estate market this year:
Increased Mortgage Interest Rates
After dropping to historical lows during the pandemic, we saw mortgage interest rates rise rapidly toward the end of 2022. The climb didn’t stop throughout 2023, with rates averaging between 7-8% throughout the second half of the year.
Higher rates continued to dissuade many potential buyers, as housing affordability was the lowest in the last three decades. Economists predict rates will cool off and stabilize in 2024, giving both buyers and sellers more confidence in their real estate decisions.
Decreased Home Sales
As predicted, the quick rise in interest rates cooled demand for housing market inventory significantly. In fact, 2023 was the slowest year for home sales in Hampton Roads in the last decade.
For comparison, take a look at how monthly home sales in Southside Hampton Roads trended year-round over the past three years:
The total homes sold through November in the last three years were:
In 2023: 13,979
In 2022: 18,411
In 2021: 21,958
For reference, 15,262 homes were sold through November in 2016 – still more sales than we will likely see in all of 2023.
That doesn’t mean 2023 wasn’t a seller’s market. There was still enough demand that properties were bought almost as fast as they hit the MLS. We even saw bidding wars throughout Hampton Roads in 2023 for properties that were priced properly for their condition and location.
Housing Inventory Still at Historic Lows
Demand during 2020 to 2021 cleaned out much of the active inventory on the Hampton Roads MLS, and it has yet to bounce back. While a rapid increase in rates, like we saw in 2023, would usually support an increase in supply, local housing stock bucked historical trends.
The 2023 housing market in this part of Virginia saw the lowest number of new listings added in a decade – a major contributing factor to available inventory hovering at all-time lows.
That said, rising mortgage rates this Fall did allow available active listings to slightly rise towards the end of the year – a time when inventory typically drops.
Though that slight gain brings a little hope, the peak number of listings for this year and last shows just how abnormal the current housing market has been.
2,346 listings in June 2022
2,096 in November 2023
Increased House Prices
Despite the slowdown in sales, median sales prices (MSP) for homes continued to grow in 2023. For many hopeful buyers, this further aggravated affordability issues.
Even as affordability hit new lows in 2023, many homebuyers found a way to still purchase when they needed a home. One housing market trend we saw was about 40% of first-time home buyers getting assistance from family to afford a down payment.
The MSP for all residential properties (that were not new construction) in Southside Hampton Roads from January to November 2023 was $325,000. This is up 5.18%, from $309,000 in January-November 2022. (For reference, this MSP in 2016 was only $235,000.)
Hampton Roads Real Estate Predictions: What Will the Housing Market Look Like in 2024?
After being an absolute roller coaster ride since the pandemic, everyone is wondering what the housing market will look like in 2024. While it’s unlikely to miraculously return to its historic "norms," the good news is that our housing struggles should subside in 2024.
Let’s take a look at what’s in store for both buyers and sellers of houses over the next year.
What are the Mortgage Rate Predictions for 2024?
Mortgage interest rates peaked in the fall of 2023 at over 8% before starting a slow decline as we neared winter. Experts predict that mortgage rates will continue to drop going into the spring of 2024.
Real estate investors could benefit from keeping an eye on the 10-year Treasury yield. Financial professionals believe that because it's already falling below 4.34%*, average mortgage rates could drop under 7% during the first half of 2024.
*Note: As we published this post, the 10yr Treasury yield fell below 4%. Subscribe to our email newsletter to stay up to date on mortgage rate trends and impacts.
What Will Housing Market Demand Be Like in 2024?
A variety of conflicting real estate market factors will influence demand for houses in 2024. Lowering interest rates will bring some sidelined buyers back into the hunt for properties. In addition, 2024 will continue to see multiple generations primed for home purchases: Gen Z looking for starter homes; Millennials looking to upgrade or invest in their first home; and Boomers looking to down-size.
That said, high listing prices and the lack of supply on the housing market will keep demand lighter than it was during the pandemic. Buying a home will continue to be cost-prohibitive for many who would love to purchase.
Ultimately, as mortgage rates begin to drop, we expect home sales in Hampton Roads to increase by about 3-4% in 2024 compared to 2023.
Will Housing Prices Drop in 2024?
In Virginia Beach and the greater Hampton Roads, many have wondered: “Will the housing market crash in 2024?” Whether you’re relieved or distressed to hear it, it’s unlikely we’ll see a repeat of the housing market crash of 2008.
The market is still in need of a correction to return to a healthy state. (More details on this in our last section of this post!) A correction, will in part be indicated by a drop in median sales prices (2-3%).
However, 2024 housing prices will continue to be affected by the known housing shortage, the current large demographics of generations seeking new homes, and the renewed demand that will come with lower interest rates. Therefore, we predict a 4-6% increase in median sales prices in 2024 for the Hampton Roads’ housing market.
Quick Tip: Most of the price increases will happen between late spring and early fall, when demand is typically at its highest. If this proves true, the first quarter of 2024 will be the best time to buy a home next year.
Will Housing Inventory Increase in 2024?
Housing inventory is the most painful 2024 housing market prediction to make, as it seems the path to a healthy level of listings remains long and arduous.
Even as the pace of home sales slowed, new supply added to the market was beyond lackluster in 2023. This was due in part to potential sellers feeling trapped by their current low rates, affordability issues, and lack of housing options. The good news is that by the end of 2023, the new listings data line seemed to bottom out; therefore we expect to see an increase in listings added to the market in 2024.
That said, don’t expect sidelined home sellers, emboldened by lower rates, to increase housing inventory quickly in 2024. Historically, when rates decrease, demand tends to pick up and inventory drops.
We predict that inventory will increase in 2024, but not enough to make a significant impact or lead to a crash. It’s more likely that active listings will begin to truly stabilize in late 2025.
A Few Other 2024 Real Estate Predictions
Real estate is a wide-reaching industry, affecting not just buyers and sellers but also rental property owners, agents, Realtors, and government offices. We’ve got our eyes on several parts of the industry that could affect our clients in 2024. Here are a few things your top Virginia Beach real estate experts are keeping an eye on:
The Future of Airbnb and Short-Term Rentals
The short-term rental and home-sharing industry (think: Airbnb, VRBO, and Homestay) seems to have peaked for the time being. The vacation rental market is fairly saturated in Hampton Roads, and extra fees and local legislation (like Virginia Beach’s short-term rental laws) make it harder to get to profitability quickly.
Although it may not have a huge impact on housing inventory in Virginia Beach, 2024 may be the time pandemic investors choose to sell properties they purchased as short-term rentals if they are less profitable or more of a headache than they hoped.
The Federal Reserve and 2024 Elections
As real estate experts, we won’t predict what will happen in political elections or how the Federal Reserve will fluctuate in 2024. However, we can say that both tend to heavily influence the economy and ultimately the housing market.
Hampton, Virginia Sweetening for Investors
Virginia Beach has always been a draw for real estate investors, and now surrounding cities are becoming points of interest as well. In 2024, we are keeping an eye on Hampton, Virginia in particular for a few reasons.
At the end of 2023, median sales prices for homes in Hampton were about $100,000 less than those in Virginia Beach. This Hampton Roads city features waterfront properties, some great beaches, and enough room for housing to grow and develop. And when the HRBT expansions are complete, commuting to or from Hampton from the southside will be much easier.
Real Estate Commissions Lawsuits
Recently, state and federal courts have turned a critical eye to the way real estate commissions work. While proceedings (mainly focused on the NAR) are ongoing and the outcomes unpredictable at present, they could bring about major changes in how real estate representation compensation works.
What doesn’t change – at least at CGP Real Estate – is our commitment to serving our clients’ best interests and needs at the highest level of excellence. We plan to continue to offer a variety of professional services so that you can get the specialized help you need to invest with confidence, including flat-fee consulting services, top Hampton Roads real estate representation for buying or selling, and help selling your house fast for cash.
THE BOTTOM LINE: Will the Housing Market Crash in 2024?
After a few years of inflated demand for homes, many have wondered if the housing market will crash in 2024 like it did back in 2008. Rather than a housing bubble about to burst, however, we are in a housing affordability crisis that isn’t likely to reverse quickly.
Stricter lending standards and a lack of inventory make the situation vastly different from 2008, when a surge of loan defaults led to a high influx of inventory onto the Hampton Roads housing market. Today, the continued steady demand for what little inventory is available means that no quick drop in home values is likely. Because supply has yet to overtake demand, the market is likely to remain quite competitive in 2024.
In 2024, we expect the housing market to trend toward stabilization. We expect inventory to begin to grow – slowly but steadily – providing more options for buyers and would-be sellers. Home prices may continue to grow next year, but at a healthier rate than before. Mortgage rates should also stabilize, adding affordability relief.
Looking for more insight on how to navigate the 2024 housing market? Schedule a call with our team of local experts today and move forward into the new year with confidence.