As always, time really flies during the summertime. It is hard to believe that we are already entering August. In the real estate world, we typically see a slowdown this time of year with vacations, back-to-school activities, and the last month of “summer”. With rising mortgage rates, lower activity, and high demand, I’m interested in what we will see for our real estate market for the rest of the year. 

While this activity this year has made it difficult to predict, I believe we will see more of what we have seen so far this year. Inventory will remain low, and with the high demand due to demographics and life circumstances, prices will continue to increase. One thing to remember is time to contract has remained at 16 days for the 4th week in a row, which means we are in a strong seller’s market. In the past, time to contract usually begins to slow down later in the summer as the fall approaches, but the elevated competition among home buyers in the Northern Virginia region from the lack of inventory is keeping the time to contract low and prices high. 

Another thing to remember is that prices don’t increase as rapidly this time of the year as they do in the Spring Market. As a result, you will start to see headlines saying things like ‘Prices are Plunging’, ‘Prices Continue to Fall Due to Higher Mortgage Rates’, ‘Prices are Plummeting’…and so forth. Do not be alarmed. We will see a decrease in the pace of price appreciation, but not a depreciation in housing prices. There is a huge difference, but the media loves to terrify – more than clarify – what is truly happening in the real estate market. It’s always best to contact me when you are looking to sell or buy to get the right information on the market and market conditions.

So – where are we today on inventory levels, sales, and prices? As of the end of July, we had 1,746 homes for sale in Northern Virginia – this is 53% below last year and 58% below the last five years’ average for the same week. Contracts written the previous 7 days were at 572 sales – 20% below last year and 35% below the last 5 years’ average. We currently have a .9-month supply of homes available – last year it was 1.5, so we are experiencing high demand with low supply. Lastly, prices are up 1.3% over last year, and if we go back to 2019, the last “normal” year before the pandemic, prices are up 26%. As you can see, homeownership is a great way to build wealth. The good news for our area is that out of the top 20 Metro areas in the US, we have had the most stable market in terms of prices. We are not experiencing the drastic increases and now, the subsequent declines, like other areas. To learn more, please feel free to call me.

Stay cool!

The real estate market continues to amaze me.  As many of you know, interest rates more than doubled in 6 months.  From May to November, the rates went from 3.5% to over 7%. At that time, the market came to a halt as there was much speculation about how high mortgage rates would climb (and how that would affect prices). Most people said rates would trend downward, but to date, that’s incorrect in our area. Fast forward to today and it appears that buyers have now settled into mortgage rates being in the 6-7% range. This is resulting in sales happening again along with the price growth that I mentioned.  As a result, today’s market is filled with uncertainty due to several factors. 

Both sides of the aisle in DC are dealing with the upcoming debt ceiling, inflation, and rising interest rates.  As a matter of fact, today’s rates are over 7% again. The other looming issue is that people are married to their current homes because of their super low-interest rate. Many people have FOMO of their 2.5 – 3.5% interest rates. This results in a huge shortage of homes for sale in our area. With high demand, this creates multiple contract situations on many homes on the market today.  On the flip side, we have a strong job market, a growing population, and a stable economy which all has a positive impact on the real estate market – especially for sellers. Additionally, the area’s natural beauty, cultural amenities, and excellent quality of life can make it attractive for people to relocate to the Northern Virginia area. This makes today’s market tough for buyers.

It is important to note that even though market trends and economic indicators can provide an idea of what may happen in the future, they cannot predict sudden market disruptions or unforeseen events that might impact the real estate market. The banking industry being in distress is one area of concern, as is the Fed continuing to raise the overnight rates they charge banks. With so many factors affecting the real estate market, it is always recommended to consult with me as your professional real estate agent to help you determine if now is the right time for you to sell or buy. I can provide you with market data including inventory levels, absorption rates relating to sales, month’s supply of houses available, immediate sales, and other data that can be valuable to you when you are considering selling or buying a home today.

There are also additional data points that are important to consider, like the number of houses with multiple contracts, how high above list price houses are selling, what contingencies are being waived or accepted by sellers, and the timing of sales from contract to close. It is a complex time in the real estate industry, to say the least. The market today is complex as you can see. I am here and happy to help, so please feel free to call or email me today.

Enjoy the summertime weather!

Spring has sprung in the real estate market once again in Northern Virginia. We are back in the frenzy of dozens of showings almost immediately on homes, resulting in multiple offers for sellers to choose from. Open house activity has been outstanding for sellers but frustrating for buyers, as you can’t always see the condition of the house with so many people in them. This leads to stressed-out buyers, Realtors, and sellers.

We’ve had buyers bid 6 – 8% over the list price in the $850,000 range, waive every contingency, and give a free 60-day post-settlement occupancy, and they’ve still lost out several times. They’re disappointed and anxious, as they feel they should have “won” a bid at this point. Realtors are stressed out as they’re dealing with multiple offers and agents continuously calling, texting, and emailing demanding answers. In other situations, the listing agents are not communicating at all with the agents about the status of the offers, the number of offers, when they will be presenting the offers, where contracts rank versus others, etc. This makes a stressful situation even more tenuous for agents and buyers.

You may be asking why sellers are stressed. They’ve had to prepare their home for sale and determine if they did the right things to attract buyers, and they often question if they did enough to sell for top dollar. They have many people coming through their homes and feel they have to “choose” the right contract for them, which leaves other potential buyers “homeless” – and in some cases, they even wonder why they don’t have more offers. In this environment, it is critical to set realistic expectations for everyone. Communication is key and helps ease the pain of the buyers and agents that lose.

The big question is – why is this happening again? The short answer? We have very few homes for sale.

But why is this? Homeowners currently have 2.5-3.5% interest rates on their homes and don’t want to lose their great rate and payment, so they aren’t selling. This situation will keep inventory low for the foreseeable future. Additionally, buyers are used to the 6% interest rate environment we are in. Over the last 50 years, interest rates for 30-year fixed rates are 7.75%, and we are well below that today. Buyers also realize that we won’t return to 3% interest rates anytime soon, so they are ready to buy now.

If you are considering selling or buying, please call me. It is important today to have a professional in your corner to help you navigate the home selling and buying process, and I am here to help you.

Have a great spring season with your friends and family!

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.

Have a great St. Patrick’s Day!

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!

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!