The Northern VA Housing Market

The housing market here in northern Virginia is changing.  There are a few things to note as we move toward the end of the summer and some predictions we can make about the upcoming year.

First, there is a change in the type of real estate activity.  Short sales are on the decline.  Most of the short sales that were going to take place already have.  The increases in values, albeit modest increases, have taken some of the pressure off.  That means the portion of healthy sales is up compared to a year ago.

We’re also seeing demand increase in the northern Virginia area.  There is no question that inventories are low and the market is responding.  An article in Patch made a great point about the convergence of a few key indicators:

“In the first quarter of 2013, we’ve seen the number of new contracts, new listings, and fully available inventory converge. A specific example: in March, there were 2,270 new contracts, 2,730 new listings, and just 2,341 listings on the market at the end of the month. Two short years ago in March 2011, there were twice as many available listings and 50% more new listings than new contracts.It’s a tight market in most prices ranges right now, and we haven’t seen these indicators so closely aligned since the peak of the market in 2004. It’s so tight that there has actually been an 8% drop in contract activity year-to-date for homes priced less than $500,000. There simply isn’t enough inventory – just a three-week supply – to support the level of demand. But the upper brackets, while still a small slice of the market, are doing well. There’s been a 22% jump in contract activity through the first three months of the year for homes priced more than $750,000.”

That coincides with what we’ve been seeing in the marketplace.

Of course, the elephant in the room is the interest rate.  Rates climbed at the beginning of the summer as the Fed warned that it may stop buying up US securities, which would certainly drive interest rates up.  This rhetoric was softened a few weeks ago and the stock market responded in kind.  Mortgage rates, too, seemed to stabilize.   But the Fed can’t go on like this forever, and there are some who warn of a long term detriment to the Fed’s activities.

One thing is for sure, interest rates will not stay this low forever.  Combined with relatively low housing prices from their peak and low interest rates, if you’re considering buying, this is probably a good time.