And you thought roller coasters were only at amusement parks, right? Well, it seems that they’re present in the real estate market as well. In February we saw rates go from the high 5s to the high 6s in less than 10 days, and now they are just over 7%. In January buyers came out in full force, and guess what? They’re still getting into the market as we head into March and the spring market.
Inventory continues to be the biggest adversary today; we only had 180 houses come on the market in the 4th week of February, which is well below the last 5-year average of 675. It was only 251 on the first Friday in March, while in the previous 5 years, we averaged 800.
We continue to see around 1,200 active homes for sale in the Northern Virginia market, which is 65% below 2018’s numbers and 45% below 2019’s numbers. I believe if we had more homes for sale, we would have more sales. At a recent open house, three groups came through before the start of the open house, seven groups went in once it was “officially” open, and when I went in with my clients there were two other groups that came in with us – and it wasn’t more than 15 minutes after the scheduled start. I never heard how many visitors they had or how many offers, but I am sure they had many of both.
On the houses we have for sale, we are seeing as many as 10 contracts on some homes, and more than 50 showings in a weekend – and it’s only February. This is all happening even though rates have crept back up. In the third and fourth quarters of last year, when rates were approaching 7%, buyers were hibernating. I think they feel this is the new norm and now is the time to step up and buy. Because inventory is so low and we have multiple offers, prices will not crash, as many are predicting. It’s a simple economic equation of supply and demand – low supply, high demand, high prices.
In summary, don’t listen to reports in the media. If you want real information on the Northern Virginia real estate market, rely on me. As always, if you are looking to sell or buy, I can give you the right advice to make the best decisions.
The real estate market is never boring – it’s always changing. Housing inventory, mortgage rates, buyer demand, consumer confidence, and so much more are consistently adjusting. So what has changed recently?
For starters, buyer demand has picked back up. We are seeing more interest and more questions from people online, more showings at our listings, and more contracts written – and as a result, more sales are happening. It also seems there is a more positive “buzz” around the market.
Why did this happen? As interest rates steadily climbed, buyers became apprehensive. Couple this with the inflation and Fed rate hikes, and people got nervous about the real estate market. When would rates stop increasing? Would prices crash because of the increasing rates? Now rates have come down, inflation has slowed and people are beginning to realize that a rate of 6.125% is historically a decent rate. If you look at the history of rates, 30-year fixed rates have been, on average, 7.75%. All of these factors are bringing back buyer confidence in real estate. It’s why we are where we are today – a healthy real estate market.
Obviously, I have concerns about the future – where will inventory come from for all these buyers?
Right now we have only 1,337 homes on the market in Northern Virginia and with all of the recent sales, we have a one-month supply of homes. As you know, I run the numbers every Friday, and last week, we had 188 homes come on the market in the previous 7 days. By comparison, we had 466 houses go under contract in the previous 7 days. At this rate, we won’t have any houses to sell by Mid-March. What will be the result? Higher prices – it’s a simple supply and demand equation. We are not going to see prices crash. We have little inventory and high demand. Stay tuned for more details as we go into the Spring Market.
As you know, every situation is different, so whether you are looking to sell or buy, please call me to discuss your situation in more detail. I am here to help you!
Enjoy your Valentine’s Day and don’t eat too much chocolate!
It’s time for me to make my predictions on the upcoming year in real estate, so here we go!
People are always interested in the prices of their homes, in their neighborhoods, and in their cities, so I will start here. Fortunately, as we end the year, prices have increased year over year by 8% in Northern Virginia. Other areas of the country have appreciated up to 22%; I don’t believe this is a healthy number, so I think we are in good shape with pricing. While a majority of the 8% was attained in the first half of the year when we had a frenetic market, things have stabilized. With an average sales price of $710,000 in NOVA, who wouldn’t want an extra $56,000+ in net worth? Luckily, we aren’t in areas where their prices were down as much as 5.8%. For 2023, I believe we will have, on average, a 3% appreciation rate. Some houses will sell below market value and others will sell for more – people and property conditions are the deciding factors in each situation, but a housing crash is not on the horizon.
People are also interested in rates since they control buying power if they are selling, and potential refinance opportunities for themselves if they need to refinance. We started the year at an unbelievable rate of 3.22%, and then they raised to a historical rate of 7.5% – rates have never gone up 100% in one year, much less in 6 months as they did in 2022. Currently, rates are in the mid-6s. Either way, I believe rates will be in the low to mid 5’s by the second quarter and remain there for the rest of the year. This, of course, is dependent on inflation and how the Fed deals with it regarding their rate hikes. I think they’ll only have a few, modest rate hikes to keep inflation in check, so rates should remain more stable this year.
This year we’ll also look closely at inventory. We continue to see fewer and fewer homes for sale in Northern Virginia. Inventory of existing home sales is down 55% from 2018, 46% from 2019, 24% from 2020, and even down 8% from last year. There are a few factors to consider why this is the case. People refinanced in 2021 and early 2022 in the low to mid 3% range, and they’re not willing to give up that rate for a much higher rate, so they aren’t selling. As a result of not putting their property for sale, inventory levels go down – it’s a simple concept, but true. If you are considering buying, historically, inventory will pick up as we get into the 3rd week of January and further into the year. The good news is lower inventory levels will also keep prices stable moving forward, and limited supply results in stable to slightly increased prices.
Lower inventory means we’ll have fewer sales. I like to compare 2022 and beyond with pre-pandemic years, as those years were anomalies. Our sales in 2022 were down 8% from 2019 and were down 6.5% from 2018. As we still have demand for housing because inventory is down substantially, I believe sales will be down to 7-8% this year. However – if rates get into the low 5s or high 4s, we may see an uptick in sales.
There’s been a lot of hype around distressed properties. Because of price increases, people will sell before they do a short sale or go into foreclosure to take advantage of the equity they have in their homes. During the great recession, people had negative equity and as a result, walked away from their houses. Lending guidelines are stricter today than they were in the early 2000s so people actually qualify and can afford their homes today. With equity, low inventory, and buyer demand, people will sell versus lose out, but one thing to keep an eye on is unemployment.
Additional key indicators to watch in 2023 are inflation, Fed increases as a result of inflation, stabilization of inflation, and unemployment. It seems inflation is in check, and we’ll start to see year-over-year decreases, so I think the Fed should only have a few increases. Currently, unemployment is around 3.75% and historically we have between 5-10%. I think we’ll see job cuts in the tech and real estate sectors (mortgage, title, iBuyers, and PowerBuyers) so we could get to 5% unemployment, but it won’t have a drastic impact on the housing market.
As we know, time will tell, and barring any other worldwide issues, this is how I see our market moving forward. If you are considering selling, buying, or investing in real estate, call me to discuss how all of this impacts you.
Happy New Year and hope 2023 is your best year ever!
In the blink of an eye, this year is coming to a close. It has been a true whirlwind, to say the least, regarding the real estate market. We had a fury of activity and sales at the beginning of the year with artificially low interest rates, escalating prices, and extremely high demand. Now we will finish the year with interest rates that doubled over the last year (though they are coming back down), stabilizing prices, and less demand. We are in a more balanced market, and it’s nothing like it was earlier in the year.
This ‘slowdown’ has the media going crazy and they continue to put out sensationalized headlines to grab your attention. One topic we’ve all been reading about is the crash of housing prices. While there are some areas that will see price declines, most will see a decline in price appreciation. Areas where prices skyrocketed (and are now spiking in inventory levels) will indeed see prices decline – and decline rapidly. These areas saw the most benefit from the pandemic and remote working environments, and that was not sustainable.
Overall, prices are up year-over-year, but we have been seeing prices decline month-over-month (See Chart 1 below). Historically, price appreciation is 3.8% and the numbers far exceed those historical averages, even today. These declines are slowing down (See Chart 2 below). As a result of the year-over-year price increases, the Federal Housing Finance Agency (FHFA) recently announced the conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023 will be increased to $726,200. This is an increase of $79,000 over 2022. In Northern Virginia, where our area boasts prices that have higher median home values, we have a new loan limit for properties – that number is $1,089,300. These are crazy numbers indeed, but the numbers show that prices may have hit the bottom. Price declines month-over-month have slowed, showing more realistic prices today than earlier this year, as noted in Chart 2. The question is, would the FHFA increase the loan limit if they thought prices would decline substantially? I don’t think so.
In my opinion, and as you can see, the media is not telling the whole story. To get a much more accurate story about housing, please rely on me, your trusted real estate advisor. Real estate is extremely local, so call me to learn more how this affects you if you are selling or buying a home today. Next month, we will debunk another media fallacy – so stay tuned!
In the meantime, have a great holiday season with family and friends!
The leaves are the most beautiful I have seen in years…it must be all the rain we had earlier in the season.
As we enter the shift from fall to winter, we’re all wondering if the market will bring us stability or change. It’s tough to tell right now, as we are on a real estate market roller coaster, not only in Northern Virginia but the rest of the United States. Soaring interest rates and inflation, declining house sales and buyer demand, plus the overall negativity about the economy have put us off (number wise) when we compare this market to last year and 2020. My advice has been, and will continue to be, to stop comparing today’s real estate market to 2021 and 2020. Those years were outliers, and I can explain why. It all began with the pandemic, which resulted in historically low interest rates, remote working conditions, lack of inventory and then resulted in irrational exuberance when it came to making offers. On top of that, the overall mindset about the future contributed to the unique situation we were all in. Taking all of this into consideration, we really should be benchmarking against pre-Covid times and post Great Recession times instead of the pandemic years. If we do this, we’re having very comparable years regarding yearly sales, month supply of homes, and weekly absorption rates – which means we should end up with a historically good year.
The biggest differences are inventory and number of weekly sales. Inventory is down 22% from 2019, down 45% from 2018. At the same time, weekly sales are down 40% from 2019 and 39% from 2018. People seem to remember what their neighbor’s sale was like last year, or even earlier this year, and not what happened when they sold in 2015. Our perspective when selling a home today should change to a more realistic approach to the market we are currently in.
So, what’s the moral of the story? If you are seller, get your house in the right condition to sell, price it right, be patient, and wait for it to sell. You also have the option to sell later. If you are a buyer and you are ready to buy, then buy – don’t wait! If the house fits your needs and lifestyle, make the move. In most cases, you can negotiate and get a home on your terms. When the economy shifts and rates come down, refinance and then it becomes a win-win for you.
If you have any questions at all, feel free to reach out me. I am always here to help you.
Have a great holiday season with your family and friends!
As we enter the last quarter of the year and with Halloween quickly approaching, here’s my question: is the real estate market going to experience a trick or a treat? We are all hoping for a treat but as mortgage interest rates rise along with inflation, it seems like the economy might give us a trick. As a result, buyers are in for a treat if they are in the market to buy a home. There is less competition for houses today. This allows buyers to negotiate with sellers to get lower prices, closing cost credits, and most contingencies they desire as we enter a more balanced market.
In the past, I’ve discussed that buyers should consider alternative financing options like Adjustable-Rate Mortgages and 2-1 Buydowns to temporarily get a more reasonable rate. This still stands. As my friend Jared James says, marry the house and date the rate. When the economy settles in, or if we enter a full-blown recession, we should see rates come down. Buyers can then refinance to the lower rates, especially on 30-year fixed rates.
Now as a seller, it’s going to be more of a trick going forward. Be prepared to settle in when selling your house, as the days on market are increasing. Additionally, the house will have to be in top condition, staged, and most importantly, priced right. Prices have moderated, and in most cases, we are not seeing higher prices on properties.
If you plan to sell, now is not the time to get greedy on the price, but the timing is good as there is less competition in the market. There are still savvy buyers looking to purchase a home today, and the contracts will have contingencies in them. If you are a buyer, call me if you would like to know more about the financing options I discussed, and let me guide you through the home selling process we are encountering today if you are considering selling.
On another note, we are growing! I recently purchased RE/MAX Regency out of Haymarket and Warrenton.
We’re consolidating our Gainesville and Haymarket offices into one, located at Regency’s Haymarket location in the Dominion Valley Country Club shopping center. Please let me know if you would like to check out our state-of-the-art offices – I’d love to show you!
Summer is coming to an end! The question is – is the real estate market coming to an end as well? If you read the headlines, watch the news, and talk with co-workers and family members (who are not real estate professionals), the answer is probably ‘yes’. Prices are going to crash, we are in a bubble, inventory is going to skyrocket, foreclosures are going to ramp up, and more false information floats around regularly. Luckily, you have the voice of reason – me – to tell you the real facts, especially about the Northern Virginia Market.
First things first: prices will go down in some areas, but not all, and not drastically. Some sellers will be desperate and will sell their homes for less than market value, as their circumstances will dictate their motivation. This is the exception and not the norm. They’ll still make money on the sale, as prices have increased in the last few years, so they’ll not be in a negative equity position. Some sellers will receive multiple offers and prices will escalate – again, this is the exception and not the norm. This is ok, as we don’t need the market to continue to have prices escalate $25,000 – $150,000 over the list price. That was just not sustainable.
Inventory is not going to skyrocket, and we won’t suddenly have an oversupply of houses on the market. Why? Many homeowners have 2.5-3.5% interest rates on their mortgages and their payments are affordable, so why would they just suddenly list? Because people say the market is going to crash? Not gonna happen. Inventory levels have dropped in the last six weeks in our market, and that trend will probably continue. People are selling today because they need to – not because the market is on fire. Houses will stay on the market for two to three months – not two to three hours, or even two to three days – and that is ok. We are in a balanced market. This will frustrate some sellers, but the market has changed, so settle in and know that these are the conditions today.
In today’s balanced market, buyers will have time to look at houses more than once and for longer than just five minutes. Their contracts will have contingencies, and this, too, is ok.
Lastly, we are not going to have a foreclosure explosion. People have equity and jobs. They will exist, but there will not be an onslaught of them.
Sellers – it is time to balance the expectations of your sale to mimic the new market. Have patience – your house will sell. Buyers – know you will have time and choices, which is a good thing, but also know that sellers will not drop prices by 10%. Be realistic and you will get a home that fits your lifestyle. Buy for the long term and don’t be concerned about price fluctuations – they are normal.
With all that being said, some parts of the country will see bigger price drops because their prices increased nearly 50% in just a few years. They will see more inventory coming on the market. Their markets are not as sustainable as ours. Remote work situations have reversed in many cases, making these “hot markets” not so hot.
I can tell you more and show you charts and images that back all of this up, so feel free to reach out if you want to learn more. As always, I am here to help you (and those you know) with their real estate needs. Call me to discuss how all of this affects you or them!
It’s the dog days of summer, and the real estate market is generally as it is this time of year, but just a little bit slower. Typically, the market sees less activity in August – people go on vacation, the showings slow, and prices moderate. Nothing to be concerned about, but the difference this year is the market was so fast-paced the first five months that it seems like things are drastically slow now.
The good news is that we have settled into a more “normal” market. The initial shock of the changing market has worn off. Inventory levels have stabilized, prices are settling, and buyer demand remains active. The weekly absorption rate of sales this year is 19% which is good, relative to other non-pandemic years. For comparison, the rate in 2019 was 18%, in 2018 it was 15% and in 2017 it was a mere 12%. What we need now is for seller expectations to be in line with where the current market is. It will take longer for houses to sell; there are fewer buyers in the market due to rising rates, rising prices, and buyer fatigue. The great news is that there are still buyers in the market. There is no bubble and prices are not crashing.
Why you may ask? Today (versus the Great Recession), we have 5 million more buyers in the first-time home buyer age bracket (28-32) and there are 12 million more household formations. Additionally, the number of homes for sale was 3.7 million nationally in 2008. Today we have under 1 million. Builders only build when they have a buyer – they are not building spec homes like they were before the Great Recession. The overall numbers reflect a better market for both sellers and buyers. The frenetic pace from November through the end of April was not sustainable, nor was it healthy.
So, what’s next? We will have a market where buyers will have the ability to take their time when deciding to buy. When they do write contracts, they will have contingencies in them. There will still be some homes that sell quickly with multiple offers, but it won’t be like it was a few months ago. I want to reiterate that this is a good thing for everyone, as we have seen issues with people who bought homes sight unseen, didn’t do inspections, or have appraisal contingencies.
The bottom line is that if you are looking to sell or buy, you need the advice of a trusted professional. Call me to discuss your situation in more detail. I am here to help!
Welcome to the summer – and all the fun associated with it! What does summer mean to you? Trips to the beach? Lazy days at the pool? Cookouts with family and friends? Baseball games? How about amusement parks?
In our current world of real estate, we are at an amusement park and rollercoaster rides are what we are experiencing. We’re facing the ups and downs and twists and turns of the most exciting ride at the park. Now, more than ever, you need to have an agent with experience and knowledge to help you navigate the roller coaster of real estate. We’ve seen some houses sell with multiple offers in just a few days, and other houses sitting on the market with very few showings in weeks. We have a high demand for housing and growing – albeit slowly – inventory levels. Interest rates are up and down regularly, yet they are still at fantastic historical levels.
The rates of the past are the rates of the past. They were artificially low and could not stay that way for an extended period. Even though current rates are higher than where they were, they WILL come down as we enter a recession. The good news for real estate is that in recessionary times, real estate has fared well, with only the Great Recession negatively affecting home values.
The reason for that decline in home values was the exotic home loans and the fallout as a result of them. We are not in the same situation today.
Homeowners have equity today versus the Great Recession, when many people had negative equity the day they bought the house. As a matter of fact, of people in foreclosure today, 90% have positive equity and 25% of those in foreclosure have 50% positive equity or greater.
So, what does all this mean if you are a seller or a buyer in today’s market? Sellers need to be realistic with their pricing and have patience, as it may take time for your house to sell. The good news is that your home will sell as we DO have demand. Even though inflation and rates are up, buyers are out there. If you are a buyer, you may need to be competitive or you may not be able to negotiate like “the old days”. In any scenario you find yourself in, we should speak more specifically about your situation. I am here to help, so give me a call.
Lately, we’ve been having conversations with each other, our clients, and others in the industry both locally and around the country to better understand what is happening today in the real world and the Northern Virginia real estate market. Lots of questions are being asked. Do we have a housing bubble in Northern Virginia? Are prices going to crash? When are prices coming down? Should I wait for prices to drop before I buy? Why is it taking longer to sell a house? How high will rates go? Should I sell (or buy) now or wait?
In my opinion, prices will not be escalating at the rate they were previously. Those dramatic price increases were not sustainable. There may be pockets where prices decline, but we still have high demand at most price points.
Additionally, our price increases were not as drastic as in other parts of the country. According to the FHFA Top 100 Metropolitan Markets Ranking, we rank 99 out of 100! Other parts of the country will see higher price drops, but our area should remain stable. We will not have a “housing crash” in Northern Virginia.
Don’t wait to buy real estate – buy real estate and wait. Buy because of your lifestyle, needs, and wants – and not strictly because of prices. Buy for the long term, not the short-term gains. Yes, the market has slowed down. Buyers are not “rushing” into buying decisions like they were previously, but remember – that type of market cannot be sustained. It is still a seller’s market. It’s a good thing when a house is on the market 7-10 days.
If you are thinking of selling soon, give me a call. Rates are going up on 30-year fixed mortgages, but you do have alternatives – most notably, adjustable-rate mortgages and buydowns. The adjustable-rate mortgages are a great option and not what they were when the real estate market crashed in the past. Buydowns give you another option, with lower than 30-year fixed rates. Let’s discuss why these are often viable options for buyers. If you are looking to sell or buy – now is a great time, so call me to learn more.
Enjoy the last few days of Spring before the summer heat kicks in!