An ongoing dearth of inventory and a possible post-summer bump in activity could make it an ongoing challenge for prospective home purchasers to get what they want before 2022, according to new data.
The Northern Virginia Association of Realtors (NVAR) commissioned George Mason University’s Center for Regional Analysis to gaze into its crystal ball and consider the state of the housing market for the remainder of the year. Results were released Aug. 10.
To borrow a line from the much-maligned President Warren Harding, a sense of “normalcy” may be returning after more than 18 months of a wild, COVID-infused ride in the NVAR region of Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church.
“The housing market seems to be stabilizing after several months of atypical behavior – strong sales in mid-winter, price increases not seen since the boom of the early 2000s and unusual weakness for prime-location condos,” said Terry Clower, director of the Center for Regional Analysis.
(The report assumes that the vaccine rollout will help the COVID crisis subside and allow economic activity to continue largely unfettered in coming months, but Clower acknowledged there was “still uncertainty” on the matter.)
Inventory is anticipated to remain below 2020 levels, although it remains elevated in the upper-market condo sector throughout much of the region as many buyers have opted for other options. That reality also likely means condo prices, while continuing to rise, will lag the appreciation rates of other segments of the market.
Single-family homes, which have been in increasingly limited supply over the past several years, are forecast to record the largest price increases. The largest increase in the median prices of single-family homes is expected to be in Arlington due to low inventories. How high they actually can go (and the average sale price of single-family homes in Arlington already tops $1 million) before running into the reality of affordability seems an open question.
Rising home prices and a dearth of inventory in the single-family market, especially in the innermost suburbs, is sure to lead to some cranky would-be purchasers.
“Frustrations among those seeking to buy a single-family home are likely to continue,” acknowledged Ryan McLaughlin, NVAR’s CEO.
Townhouse prices also are expected to increase, with the largest boost coming in Fairfax County and lower, but still solid, rates of appreciation in Alexandria and Arlington.
“Investing in a Northern Virginia townhome is likely as close to a sure thing as you can get in real estate,” Clower says.
The uncertain future could affect the market in different, and sometimes, contradictory, ways.
“Above all is the course of the pandemic and its impacts on work-from-home and public schools,” NVAR officials said. “More subtly, the pent-up demand for travel has likely slowed the pace of buying and selling during summer months. There may be an unexpected increase in activity if would-be buyers and sellers return from vacation ready to jump into the housing market.
Another market factor to monitor is that households who refinanced or remodeled during the pandemic are likely to hold onto their properties longer, which could depress listings.”
The full report is available at https://bit.ly/3jYDp6b.
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