Virginia Real Estate Report: Market strong prior to Coronavirus outbreak

The Virginia Real Estate Indexes remain strong going into 2020 buoyed by low mortgage rates and robust labor markets and consumer sentiment prior to the Corona virus outbreak in the United States. Rising income, wealth, low unemployment, and job security bolster consumer sentiment and encourage spending. Low mortgage rates encourage households to also participate in the housing market despite high prices.

Figure 1. Virginia Real Estate Index: Overall, past five years

Figure 1 shows the overall real estate indexes for today and the next few years.  The indexes indicate the difference between the share of respondents who are positive and negative about the real estate markets. A value of greater than zero means more Many more Virginians are positive about the market than negative. In the first quarter of 2020, almost forty percent of respondents are positive about markets today compared to a year ago, while just over twenty-eight percent more are positive about markets over the next few years.

Figure 2. Virginia Real Estate Index: Sellers, past five years

Figure 2 focuses specifically on seller sentiments. Sellers are increasingly positive about the current and future real estate markets, likely due to the low interest rates that lower the price of borrowing for buyers looking at their homes. The uptick in current seller sentiment is a reversal of a six-month downward trend.

Figure 3. Virginia Real Estate Index: Buyers, past five years

Figure 3 shows the indexes from the perspective of buyers. Buyers are less optimistic than sellers, primarily due to rising housing prices. Inventories are low and prices are rising to ration homes across the Commonwealth. The future buyer measures fell from last quarter but both current and future measures remain above the breakeven value of zero.  Zero indicates equality between positive and negative sentiments.

Analysis

“In the face of the current Corona virus fears, we need to remember that the polling for this report happened before the massive shock to all markets,” Dr. Alice Kassens, senior analyst for IPOR, said. “During the survey period, unemployment was low, prices were low and stable, and incomes were rising.  Complemented by low mortgage rates, these factors fueled a robust real estate market in the nation and the Commonwealth.  We will have to wait and see how deep of an effect the Corona virus has on our economy. We are lucky that we went into the shock with a fundamentally strong economy. That should mitigate the long-term effects of the virus.”

Methodology

Interviewing for The Virginia Consumer Sentiment and Inflation Expectations Report was conducted by The Institute for Policy and Opinion Research at Roanoke College in Salem, Va. between February 9 and February 18, 2020. A total of 601 Virginians were interviewed. Telephone interviews were conducted in English.

The landline sample consisted of random-digit numbers generated in proportion to the Virginia population so that all residential telephone numbers, including unlisted numbers, had a known chance of inclusion. Cell phone samples were purchased from Marketing Systems Group and Call Delivery Systems. Cell phones comprised 55 percent of the completed interviews.

Questions answered by the entire sample of 601 respondents are subject to a sampling error of plus or minus approximately 4.2 percent at the 95 percent level of confidence. This means that in 95 out of 100 samples like the one used here, the results obtained should be no more than 4.2 percentage points above or below the figure that would be obtained by interviewing all Virginians who have a home telephone or a cell phone. Where the results of subgroups are reported, the sampling error is higher.

Quotas were used to ensure that different regions of the Commonwealth were proportionately represented. The data were statistically weighted for gender, race, and age. Weighting was done to match Virginia census data. The margin of error was not adjusted for design effects due to weighting.

A copy of the questions and all toplines may be found here.

For more about the Institute for Public Opinion Research, click here. 

Contact Name: Dr. Alice Louise Kassens, Senior Analyst, IPOR
Contact Phone: (540) 375-2428 Office, (540) 816-8830 Cell
Contact Email: kassens@roanoke.edu

The Virginia Consumer Sentiment and Inflation Expectations Report and the Virginia Real Estate Report are sponsored by Atlantic Union Bank.