The beginning of the year always brings about hope, excitement and anticipation of good things ahead and 2015 is no different. We believe that this year will be a much better year for real estate in Northern Virginia. There are many reasons for this optimism – great rates, new financing programs, lower inventory levels, positive consumer confidence and pent-up demand.
Let’s review each of these areas.
- Great rates. Although there has been a very slight uptick in rates recently, rates remain very low historically. Additionally, the interest rates will remain low through 2015 perhaps not reaching 5% until later in the year.
- New financing programs. Freddie Mac and Fannie Mae have both begun to accept 3% down payments for first time home buyers. There will be guidelines such as a minimum 620 credit score, borrowers will have to take an educational class, and they couldn’t have owned a home in the last 3 years to qualify. With 45% of renters delaying a home purchase because of available funds for a down payment, this should increase the number of home buyers in 2015.
- Lower inventory levels. In September of this year, we reached a 7 year high in inventory in Northern Virginia with 9,163 houses for sale. Since that time, the number of available homes has declined each week. We now have just 5,944 homes for sale which resulted in a brisk sales month for December. Some of these properties will come back on the market this upcoming spring, but many sold. As long as we have a moderate winter weather-wise, inventory will slowly enter the market and we won’t have the accelerated inventory levels we experienced in May of 2014 due to the weather.
- Positive consumer confidence. Many more people today believe that the economy, their personal situation and the real estate market are all going to be better in the future. These optimistic expectations are leading indicators to people purchasing in the upcoming months – including housing. Additionally, Freddie Mac and builders also have high expectations of the housing market. These expectations will have a positive impact on housing in 2015.
- Pent up demand. As previously mentioned, December experienced a brisk sales month here locally. We continue to receive calls, emails and internet requests on our homes for sale. This shows us that there are many people ready to buy the right home that suits their personal lifestyle needs. Also, many people who went through distressed sales just a few years ago are able to purchase again. Job growth coupled with population growth locally will also increase demand for housing.
One other area to see home ownership grow in 2015 and beyond is the Millennial homebuyers. They believe in home ownership as a wealth building opportunity and an overwhelming majority of them will be buying in the next 5 years. Lastly, rising rental rates will push more people into ownership as a cost savings measure.
All of these positive influences in our region will strengthen our housing market in 2015 and beyond. As we see our local economy continuing to rebound after 4 years of stagnant growth, this will have a positive impact on housing. To see what this means to you, please feel free to contact me.
Cheers in the New Year!