2025 Northern Virginia Market Forecast

by Tracey Barrett
January 3, 2025

The Northern Virginia Association of Realtors (NVAR) in conjunction with the George Mason University – Center for Regional Analysis (GMU-CRA) released the 2025 NVAR Regional Housing Market Forecast on December 17, 2024. “NVAR Predicts 2025 Northern Virginia Housing Market will Continue to Strengthen with Higher Levels of Market Activity and Growth in Housing Inventory.”

The National Association of Realtors (NAR) 2025 predictions are sales will be up by 7-12% across the country and prices will be up 2%.

Bright MLS 2025 projections for the mid-Atlantic region are that sales will be up 7.5% and prices up 4%, with a small increase in inventory.

Northern Virginia’s real estate market tells a different story from the national real estate market. The December 17, 2024 NVAR report is specific to the jurisdictions within our region. As the push into Loudoun County, Prince William County and Stafford County continues, so must the consideration for projections. GMU-CRA and NVAR worked together to break down the data by county.

In 2024, the market performed better than predicted. Coming out of 2023 they expected sales to be down upwards of 10%. In June this was adjusted to up to 3% appreciated and as of November were up to 1% over 2023. Prices are up over 7% with a median price of $730,000 for the year. The story of 2024 is the market acclimating itself back to more normal, longer term interest rates in that 6% band.

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Per the report, “The Northern Virginia housing market will continue to strengthen with moderate price increases and higher levels of market activity. Northern Virginia’s outlook is similar to the national 2025 housing forecast that predicts the worst of the housing inventory shortage is ending, mortgage rates are stabilizing, and job additions are continuing, according to the National Association of REALTORS®. ”

Fairfax County (view charts) may see a slowing in the escalation (1.5%) of the detached single-family home. The home values already had a sharp appreciation a few years back. They predict a notable uptick in inventory and the number of homes sold (5.7%). The townhome market is another story. They expect prices to rise 3.9% given the next level of affordability, unit sales to increase 2.9%, and inventory to increase 6.0% – opening up the supply for buyers. Condos are more unpredictable but expect a modest appreciation, 3.5% in value.

Arlington County (view charts) may have an increase in demand if workers have to drive into the office. Peak sales price will be $1.4-million which is less affordable and only 1.8% of the inventory (only 4 units per month). The prices are predicted to increase 5.3%. Townhouses are still in high demand. Prices will escalate 8.7% and supply is constrained. “If you’re in a townhome inside the beltway, you’re staying.” Condos continue to be in less demand and inventory essentially stagnant having not recovered from the pandemic. The condo fees continue to be very high in the older buildings.

Alexandria City (view charts) is following Arlington’s suit. Median prices of Alexandria’s single-family homes are expected to jump 9.9% in 2025, being influenced by return-to-office.  Already low unit sales are set to contract further, with a total of just 285 sales in 2025, down 4.7% from 2024.  Alexandria’s townhome market will see prices increasing 3.9% in 2025. Along with other core condo markets, Alexandria condo prices will rise 1.5% in 2025, with slightly higher inventories and a flattening of unit sales.

Prince William County (view charts) unit sales may flatten (1%) but prices will escalate 3.5% because it is a more affordable option and the toll lanes along 66 and 95 has made it more accessible. Townhouses are a hot commodity – you will have a buyer. Prices will continue to rise 4.0%, days on market less than 2-weeks. The condo market, while not large, anticipates a 6.2% increase in prices.

Loudoun County (view charts) just keeps growing and the property taxes are affordable due to the data centers. All housing prices will appreciate: detached 5.5%, townhouses 3.8% (median sales price of $710,936) and condos 8.1%. Per Dr. Clower “Loudoun could fill up as many houses they are willing to build on. Unfortunately, they are kind of in a mode that they don’t want to build more.”

Stafford County (view charts) detached homes continue to see prices rise (predicted 4.5%) and units in demand (2.2%) due to affordability for buyers with family pressures. Townhouses should remain strong at 3.5% price appreciation. They are building in the County, demand is high, and the predicted drop in inventory is due to buyer demand.

Additional notes:

• Interest rates should stay in the 6-7% range with no expectation to decrease.
• Market indications that purchasers are more acclimated to the 6% interest rates .
• Move up activity is anticipated for condo owners moving to townhouse owners.
• Detached homes are more and more expensive.

Townhouses are a sweet spot

• A condo is supposed to be entry level housing however the condo fees are expensive with no caps. This may exclude purchasers from purchasing.
• There is still the desire to have open space so the condo market can be sluggish.
• This may put a demand on this type of property however it will put upward pressure on sales prices.

Job Growth

• Job growth in our region is a bit of an unknown given the incoming administration looking to disrupt the current organization.
• Federal workers returning to the office, downsizing, etc will impact the housing market.
• There continues to be a migration of workers out of our direct region due to housing affordability.
• We need to focus on retaining workers within the region. Increasing supply through building is a partial solution.

Data centers the real story.

• Data centers are usually in commercial and industrial centers. Most would want a park rather than a data center in their backyard.
• With that said, Loudoun County has far more data centers than Fairfax County which translates to approximately $3500/year in property tax savings for a Loudoun County resident.
• NoVA is a high cost-of-living area. Industries must have a high value to attract the salaries that keep our economy growing.
• Tech jobs like AI and Quantum will require data centers and attract these jobs.
• Data centers are income generators and are here to stay.
• Concerns with power consumption, utility prices will need to go up and policies need to go in place now.

Federal workforce in the region.

• Retirement, forced or otherwise, may happen and spur some downsizing moves out of or within the region.
• Many may stay in the region.
• The bigger question is whether folks will be required to be in the region.
  • This impacts traffic, where to live (price vs location)
  • The work from home phenomenon pushed outer lying jurisdiction’s economic growth in Stafford,  PWCo, Frederick MD.
  • Hybrid work models have benefited the workforce and sprawl of growth in the region.

Politics – the change in Administration

• When you change administrations the workforce does not actually exit or enter the area.
• Rather, they already live here and then reinvent their position within the government.
• For 2025, as the new administration enters the market there are other factors.
  • If tariffs are placed on Canadian lumber, the cost to build a home goes up.
  • If actions cause interest rates to stay up this will affect the housing market.