Virginia Home Sales Report Fourth Quarter and Year-End 2018

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SWVAR Home Sales Report

1st Quarter 2020

Southwest Virginia Association of REALTORS®

Market Report Key Takeaways

Economic Conditions The Southwest Virginia regional economy continues to struggle, with persistent job losses in the

Manufacturing and Health Care sectors.

Like the rest of Virginia and the nation, the Southwest Virginia region will be experiencing the economic impacts of COVID-19 this spring.

Consumers’ confidence in the economy has been declining somewhat for several months. Expectations about future economic conditions have become pessimistic in the early spring.

Mortgage rates are still low, but there has been substantial volatility and growing uncertainty in the mortgage market.

Housing Market Conditions Sales activity decreased this quarter in the SWVAR housing market. There were 132 sales in the

region in the 1st quarter, a 6% decline from last year.

Home prices continue to climb in the SWVAR region. At $149,950, the 1st quarter median sales price increased by 14% from last year, a gain of about $18,500.

The supply of active listings on the market in the SWVAR footprint continues to decline. There were 1,545 active listings on the market at the end of the 1st quarter, a 6% reduction from last year.

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Economy

-1,021 Fewer jobs in the SWVAR footprint between Sep-2018 and Sep-2019

4.0% Is the Feb-2020 unemployment rate in the SWVAR footprint, which is down from Jan-2020

3.33% Is the 30-year fixed-rate mortgage rate during the 1st week of April 2020, which is down 0.75 percentage points from a year ago

Housing Market

-8 Fewer home sales in the SWVAR footprint in Q1-2020 compared to last year

14% Percent change in median sales price in the SWVAR region in Q1-2020 compared to a year ago

‐$1.6 Million dollars less in total sold volume in the SWVAR footprint in Q1-2020 compared to last year

-6% Percent change in active listings at the end of Q1-2020 in the SWVAR market compared to a year ago

25.4 Months of supply in the SWVAR footprint in Q1-2020, which is down from a year ago

Key Trends Dashboard, SWVAR

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Economic Overview

The Southwest Virginia region continues to shed jobs, which has been a struggle for the region since 2017. The Manufacturing and Health Care sectors lost jobs in 2019, though there have been bright spots in the Educational Services and Administrative Support sectors.

Through 2019 and into 2020, the unemployment rate in the Southwest Virginia region has been relatively low, though still above the statewide rate. In February 2020, the regional unemployment rate was 4%, higher than both the Virginia and U.S. unemployment rates.

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Figure 1 Annual Change in Jobs, SWVAR

Source: Virginia Employment Commission, Quarterly Census of Employment and Wages

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Consumer confidence took a dip in March, though confidence in the present economic situation remains strong so far. Among residents of the South Atlantic region of the U.S., which includes Virginia, the measure of confidence in current economic conditions was 168.4 in March, down slightly from February, but still in positive territory. The measure of consumers’ confidence in future economic conditions fell to 99.4 in March. The future expectations metric had been trending down beginning at the end of 2019. A level below 100 indicates consumers are feeling more pessimistic about future economic conditions.

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

Figure 2Unemployment Rate

Feb 2020

3.8%2.8%

U.S.

VA

SWVAR

4.0%

Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics

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100.0

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Figure 3Consumer Confidence

South Atlantic Region

Source: The Conference Board

Present Situation

Expectations

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In the 2nd week of April, the 30-year fixed-rate interest rate was 3.33%, virtually unchanged from a month ago. However, there has been a tremendous amount of volatility in the mortgage market, with mortgage rates bouncing around on a daily basis. In addition, there are growing concerns about a lack of liquidity in the mortgage market which has led to higher-than-expected rates, as well as more stringent lending requirements. Stabilization in the mortgage market and more predictable interest rates that link back to fundamentals will be an important signal of a return to normalcy in the housing market.

Like the rest of the country and Virginia, the Southwest Virginia area is feeling the economic impact of COVID-19. The 1st quarter 2020 housing market data do not reflect the current economic situation. Since February, more than 22 million Americans, including more than 400,000 Virginians, have applied for unemployment benefits. Housing market activity likely will slow in the Southwest Virginia region in the 2nd quarter of 2020.

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Figure 4Mortgage Interest Rates

Weekly Rates, Not Seasonally Adjusted

30-Yr Fixed 15-Yr Fixed 5/1-Yr AdjSource: Federal Reserve Bank of St. LouisSource: Federal Reserve Bank of St. Louis

%

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Housing Market Overview

It has been a relatively sluggish start to the year for the SWVAR housing market. While home prices climbed in some local markets, the total number of sales decreased, which led to a drop in the sold dollar volume. However, homes are selling faster, on average, in the area, and the inventory of active listings available on the market continues to shrink.

Sales

After rising at the end of 2019, sales activity slowed down in the SWVAR housing market in the 1st quarter of 2020. There were 132 sales in the region, 8 fewer sales than last year, representing a 6% decline. Sales have been trending down 5 of the past 6 quarters, evidence of cooling demand in the market. At the State level, sales increased 4% this quarter compared to last year.

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2016 - Q1 2017 - Q1 2018 - Q1 2019 - Q1 2020 - Q1

Sale

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Figure 51st Quarter Home Sales, SWVAR

2016-2020

-4%+7%

+31%

-6%

Source: Virginia REALTORS®, data accessed April 28, 2020

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Russell County: There were 11 sales in Russell County in the 1st quarter of 2020, 7 fewer sales than last year, a 39% drop. Sales have been trending down in the County for 5 consecutive quarters.

Smyth County: Sales activity was flat in Smyth County this quarter. There were 38 sales in the County in the 1st quarter, 1 fewer sale than a year ago, a modest 3% reduction.

Washington County: There were 83 sales in Washington County in the 1st quarter, which is unchanged from a year ago. Other than a surge in sales at the end of 2019, sales activity has been trending down for several quarters in the County.

Local Snapshot – Total Home Sales

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Jurisdiction 2019 - Q1 2020 - Q1 % Change

Russell County 18 11 -39%

Smyth County 39 38 -3%

Washington County 83 83 0%

Source: Virginia REALTORS®, data accessed April 28, 2020

Figure 6 Change in Sales by Jurisdiction

SWVAR 1st Quarter 2019 to 1st Quarter 2020

-8%

-39%

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-3%

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Sales Prices

Home prices continue to climb in the SWVAR region. At $149,950, the 1st quarter median sales price rose 14% from last year, a gain of $18,450. The median sales price in the region has been trending up for much of the past 2 years. Price growth is also occurring in other parts of the State. Overall, the median sales price in Virginia rose 7% in the 1st quarter compared to last year, to $295,100.

$123,750

$115,000

$130,000 $131,500

$149,950

$100,000

$120,000

$140,000

$160,000

2016 - Q1 2017 - Q1 2018 - Q1 2019 - Q1 2020 - Q1

Figure 71st Quarter Median Sales Price, SWVAR

2016-2020

+1%

+14%

-7%+13%

Source: Virginia REALTORS®, data accessed April 28, 2020

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Russell County: Home prices fell sharply in Russell County in the 1st quarter. The median sales price in the County was $76,387, which is about $21,000 lower than it was a year ago, representing a 22% decrease.

Smyth County: At $108,500, the 1st quarter median sales price in Smyth County climbed $18,600 from a year ago, a 21% surge. This is the 2nd consecutive quarter of median price gains in the County, and the largest price gain in 2 years.

Washington County: Home prices are rising in Washington County, a trend that has been consistent since the end of 2018. At $184,900, the 1st quarter median sales price is nearly $15,000 higher than it was a year ago, a 9% gain.

Local Snapshot – Median Sales Price

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Jurisdiction 2019 - Q1 2020 - Q1 % Change

Russell County $97,500 $76,387 -22%

Smyth County $89,900 $108,500 21%

Washington County $170,000 $184,900 9%

Source: Virginia REALTORS®, data accessed April 28, 2020

Figure 8 Change in Median Sales Price by Jurisdiction

SWVAR 1st Quarter 2019 to 1st Quarter 2020

-22%

+9%

+21%

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Sold Volume

Despite the strong price gains this quarter, fewer sales transactions led to a decrease in the total sold dollar volume in the SWVAR housing market. There was approximately $22.9 million of sold volume in the 1st quarter in the SWVAR footprint, a 6% reduction from last year, a $1.6 million decline. This is the first drop in sold dollar volume in the region since the Fall of 2017.

$17.5$18.6

$24.1 $24.5$22.9

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Figure 91st Quarter Sold Dollar Volume (Millions), SWVAR

2016-2020

-6%+2%

+30%+7%

Source: Virginia REALTORS®, data accessed April 28, 2020

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Russell County: There was about $1 million of sold volume in Russell County in the 1st quarter, a 40% drop from last year, a decrease of nearly $700,000. The sold volume has been declining in the County for 5 straight quarters.

Smyth County: While sales were flat this quarter, rising home prices led to an increase in the total sold dollar volume in Smyth County. There was approximately $4.4 million of sold volume in the County in the 1st quarter, up 9% from a year ago, a gain of about $350,000.

Washington County: There was approximately $17.5 million in sold volume in Washington County in the 1st quarter, $1.3 million less than the 1st quarter last year, a 7% reduction.

Local Snapshot – Sold Dollar Volume

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$18.8

$4.1

$1.7

$17.5

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$0 $5 $10 $15 $20

Washington County

Smyth County

Russell County

Millions ($)

Figure 101st Quarter Sold Dollar Volume, SWVAR Jurisdictions

2019 and 2020

2020 - Q1

2019 - Q1

Source: Virginia REALTORS®, data accessed April 28, 2020

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Days on Market

Homes sold faster, on average, in the SWVAR housing market this quarter. The average days on market in the region was 13 days faster than last year. Prior to this drop, homes had been taking longer to sell, on average, for 2 quarters in a row. The average days on market is falling in many regions throughout Virginia. At the State level, homes sold in 49 days, on average, during the 1st quarter, which is 11 days faster than a year ago.

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Figure 111st Quarter Average Days on Market, SWVAR

2016-2020

Source: Virginia REALTORS®, data accessed April 28, 2020

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Russell County: The average days on market in Russell County in the 1st quarter was 165 days, which is 50 days less than a year ago. Homes have been selling faster in the County 4 of the past 5 quarters.

Smyth County: It took about 5 months, on average, to sell homes in Smyth County in the 1st quarter (148 days), which is about 3 weeks faster than last year (-22 days).

Washington County: The average days on market in Washington County was flat this quarter. At 153 days, it took 2 days longer, on average, to sell a home in the County compared to the 1st quarter last year.

Local Snapshot – Average Days on Market

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Washington County

Smyth County

Russell County

Days

Figure 121st Quarter Average Days on Market, SWVAR Jurisdictions

2019 and 2020

2020 - Q1

2019 - Q1

Source: Virginia REALTORS®, data accessed April 28, 2020

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Inventory

The inventory in the SWVAR housing market continues to decline. There were 1,545 active listings on the market at the end of the 1st quarter, a 6% reduction from last year, 94 fewer active listings. The supply of listings has been shrinking consistently for several years in the region. Similar inventory trends have been occurring in regions throughout the State. The supply of active listings in Virginia, overall, declined by 19% in the 1st quarter compared to last year.

There was an estimated 25.4 months of supply in the SWVAR housing market at the end of the 1st quarter, down from 27.1 months of supply a year ago. The months of supply is calculated by taking the average monthly sales over the preceding 12-month period and dividing it by inventory of active listings. In most housing markets, a supply above 6 months tends to favor buyers rather than sellers.

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Figure 13End of 1st Quarter Months Supply, SWVAR

2016-2020

Source: Virginia REALTORS®, data accessed April 28, 2020

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Russell County: There were 299 active listing on the market in Russell County at the end of the 1st quarter, which is unchanged from a year ago.

Smyth County: There were 420 active listings in Smyth County at the end of the 1st quarter, up 2% from last year, an increase of 8 active listings. This is the 1st supply increase in the County in over a year.

Washington County: The inventory in the Washington County housing market continues to shrink. There were 826 active listings on the market at the end of the 1st quarter, 102 fewer listings than a year ago, an 11% drop.

Local Snapshot – Active Listings

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Washington County

Smyth County

Russell County

Active Listings

Figure 14End of 1st Quarter Active Listings, SWVAR Jurisdictions

2019 and 2020

2020 - Q1

2019 - Q1

Source: Virginia REALTORS®, data accessed April 28, 2020

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