West Virginia Housing Market Report - 2023 Update
What is the West Virginia Housing Market Like?
West Virginia has long been one of the country's most affordable states for real estate and features one the lowest cost of living. However, the West Virginia housing market has been heating up significantly in the past decade, and particularly since the COVID-19 pandemic, following similar trends to the ones observed nationwide. West Virginia home prices skyrocketed to new heights in the months following the pandemic, with increases in the double digits in a year-over-year comparison. However, this situation could soon come to a stop.
After sitting near historic lows in the past couple of years, mortgage rates have been rapidly increasing as the Federal Reserve Bank initiated an aggressive monetary policy destined to slow down the fast-paced inflation. As a result, the demand is quickly decreasing as would-be buyers have found themselves priced out of the market or are considering putting their homebuying plans on the back burner until the interest rates return to more reasonable levels.
According to data collected in October 2022, the latest available at the time of writing, the median sale price in West Virginia has started to decline in year-over-year comparisons, falling to $279,700, 2.1% lower than the year before. The number of transactions is also decreasing sharply, with 382 houses sold in October 2022, 24.2% less than the previous year.
The inventory has slowly started to return to more sustainable levels, with 1,513 houses for sale in October 2022, 6.3% more than in October 2021. However, this increase is not due to an influx in new listings, which have actually gone down 18.8% compared to the previous year, but to longer times spent on the market, with the median number of days on the market rising to 42 compared to 38 the year before. As a result, the housing supply has raised to three months of available inventory, an improvement from one the year prior but a far cry from the five to six months required, according to real estate experts, to reach a balanced market.
How does the West Virginia Housing Market Compare to the National Housing Market?
Despite recent increases, West Virginia house prices remain among the most affordable across the country. In March 2022, the Federal Reserve Bank took steps to address inflation which stood at a forty-year high, proceeding with several major interest rate increases. At the time of writing, the interest rate for a 30-year fixed-rate mortgage was hovering around 7%, twice as high as the year before. In addition, the Fed has already announced its intention to keep increasing the interest rates until inflation slows down to a targeted rate of 2%. As would-be homebuyers must contend with the combination of sky-high property prices and high interest rates, the average mortgage is tens of thousands of dollars higher than in previous years, significantly affecting house hunters’ buying power.
Although West Virginia home prices stand lower than the national average, the state also has one of the lowest income per capita and one of the highest poverty rates in the country. Therefore, it should come as no surprise that West Virginia housing prices have started to decline earlier than many other more expensive but also wealthier states. Nevertheless, the housing inventory remains tight and is keeping West Virginia house prices relatively high. West Virginia’s natural beauty and relatively affordable real estate attract many out-of-state buyers looking for an investment property or vacation home.
West Virginia Metro Areas with the Hottest Housing Markets
Located at the crossroad of the Appalachian, Mid-Atlantic and Southeastern regions of the United States, West Virginia is the 10th-smallest state by area. It ranks as the 12th-least populous state in the country. West Virginia inherited an economy firmly anchored in the coal mining industry – a sector suffering from severe decline – along with a growing natural gas industry. As a result, West Virginia produces 15% of the nation's fossil fuel energy. Research and development, along with tourism, are in development. West Virginia is a primarily rural state. Here are the hottest housing markets in West Virginia in terms of volume.
Charleston is the capital and most populous city of West Virginia, with a population of 48,864 at the 2020 US census. Government, trade, utilities, education, and medicine have major economic roles in Charleston, along with the chemical industry and the manufacturing sector. The Charleston housing market is showing signs of cooling down in the wake of interest rate increases but remains a sellers’ market at the time of writing. The median sale price has declined to $179,933 in October 2022, 3.3% less than the year prior, as 56% of listings sold below the asking price, while the median number of days on the market has increased to 33 days compared to 26% the year before.
Huntington is the second-largest city in West Virginia, with a population of 46,842 at the 2020 US census. Surrounded by extensive natural resources, Huntington’s economy relies heavily on its industrial sector, based on coal, oil, chemicals, and steel. The railroad founded Huntington as one of the nation's first planned communities to facilitate the railroad and other transportation-related industries at the railway's western terminus. The Huntington housing market is still going strong, with the median sale price climbing to $126,000 in November 2022, 9.8% higher than the previous year. Homes are selling at a slower pace than typical, with an 81 median number of days on the market.
The largest city in North-Central West Virginia, with a population of 30,712 residents at the 2020 US census, Morgantown is best known as the home of West Virginia University. The housing market in Morgantown is slowing down, with the median sale price declining to $207,250 in November 2022, 1.3% less than the previous year. Inventory is increasing, with 80 properties for sale in November 2022 compared to 55 the previous month.
Higher Mortgage Rates Could Slow Down the Price Growth in West Virginia
The sudden rise in interest rates has taken a significant toll on housing affordability in West Virginia. The West Virginia housing market is already showing signs of cooling down: West Virginia house prices are declining in year-over-year comparisons, properties are staying on the market for longer periods of time, and the number of real estate transactions has gone down.
The West Virginia housing market is still suffering from a lack of inventory, but it should be noted that the state is one of the poorest in the country, with high poverty levels and low income per capita. Therefore, although West Virginia home prices remain relatively affordable compared to the national average, the increasing cost of borrowing money is taking a significant toll on the demand. As the average mortgage has increased by tens of thousands of dollars due to the combined pressure of high interest rates and high property prices, many would-be home buyers have been priced out of the market. Therefore, West Virginia house prices are expected to keep decreasing.
Key Market Stats for the West Virginia Housing Market
According to October 2022 data, some of the key market stats for the West Virginia housing market appear as follows:
- Median home price: $251,800 – a 12.4% Y.o.Y. increase.
- Home sales: 2,381 – 24.6% less than a year ago.
- Months supply of inventory: 3 – compared to 1 in October 2021.
- Mortgage rates as of December 1st, 2022: 6.49%
West Virginia Historic Price Changes and Affordability
Home prices in West Virginia have steadily been increasing for the past decade, and the price growth accelerated during the COVID-19 pandemic due to workers’ newfound mobility as telecommuting became an everyday occurrence and interest rates stood at historic lows. The West Virginia housing market has long been one of the most affordable in the country, but the situation has been jeopardized by the increased demand, including from a significant number of newcomers from out-of-state with deeper pockets than the locals. The median home price has increased from $193,900 in October 2019 to $279,700 in October 2022, with a peak of $291,700 in May 2022, representing a 44.23% increase in 36 months.
However, such price growth is not sustainable compared to local income. As the mortgage rates have increased sharply in recent months, housing affordability is becoming a growing concern, and West Virginia housing prices have started to decline in the year-over-comparison. Similar trends are to be expected in short- to mid-term.
- West Virginia home prices are more affordable than the national average, but as the median income for the state is one of the lowest in the country, housing affordability remains a concern, especially as interest rates keep rising.
- West Virginia home prices have started to decline in a year-over-year comparison.
- The demand has cooled down significantly, but inventory remains limited.