Three factors contribute to changes in the housing market – unemployment levels, interest rates and the housing supply and demand curves being out of balance. Let’s look at key indicators to see how they are affecting home sales in our area right now.
- Unemployment: Northern VA’s unemployment rate (2.7%) is significantly lower than the national average (3.7%) due to our diverse employment market of federal and local governments, military, tech companies, government contractors, non-profits and corporate HQs. Our average annual income is also greater than the national average. All that said, buyers in our area are poised to still make a home purchase when the price is right.
- Interest Rates: Over the past 10 years, we’ve been accustomed to 30-year fixed mortgage rates in the 3-5% range. Today, the average mortgage rate is 6.7%. The last time we saw 30-year fixed rate mortgages above 6% was 1993 to 2008. What were home prices doing at that time? In Northern VA, average home prices were up to a high of 12.7% with no decline until the financial crisis of 2008 when we experienced an average price decline of 14.4%. It then took only four years for prices to increase and recover.
- Supply and Demand: Homes are staying on the market slightly longer, averaging 19 days which is up 5.6% from this time last year. The number of homes sold is down 25%, listings are down 19.6% while median home prices are up 3.2% (a much lower increase than seen in previous years) compared to this time last year. We also look at “months of inventory” to gauge how the market is behaving. Currently, there is slightly more than one month of housing inventory available in Northern VA which is 8.7% lower than the inventory available last year. This means that at current buyer demand all homes available on the market will be sold in one month. Realtor.com states a balanced market should have 6-7 months of inventory.
So what does this mean for buyers and sellers? Given the shrinking supply of listings, the market still favors sellers in most areas, but the market is showing some relief for homebuyers. The market is projected to cool off – and flatten a bit, with slight increases. But we don’t expect a bubble or a crash.
If you own a single-family home or townhouse and are considering selling, you’re in a position to receive a price you’ll be proud of. That is, assuming your house is staged, move-in ready and priced at market. However, the days of multiple offers driving prices way above list price are waning. Now is still a good time for sellers to cash out the high equity they have in their homes.
If you’re a buyer, you have a little more time to decide and a bit more negotiating power with homes staying on the market longer and buyer demand not as aggressive as earlier in the year with the rising interest rates. Interest rates fluctuate and refinancing is an option. The price buyers pay for their homes is permanent.
The Magnificent Manors Team of KW Metro Center has the experience and resources to help you reach your real estate wealth goals. If you’re considering buying, selling, or investing in Northern Virginia or Washington DC, we’re available to start the conversation. Contact me to join the many clients whose expectations were surpassed by the dedication and professionalism of The Magnificent Manors Team of KW Metro Center.
[email protected] | 703-798-1803 | www.magnificentmanors.com
MARYBETH G. FRASER, MBA, & Realtor®, is the CEO and Team Leader of The Magnificent Manors Team of KW Metro Center. She is a Certified Luxury Home Marketing Specialist®, Accredited Staging Professional® and Member of the Northern Virginia Association of REALTORS® (NVAR) and Greater Capital Area Association (GCAAR). Licensed in VA & DC.
