Projected increases in home-value appreciation across Northern Virginia have been revised upward – in some cases, significantly so – as the full impact of Amazon’s planned move into the region takes shape.
A housing forecast issued by the Northern Virginia Association of Realtors and George Mason University’s Center for Regional Analysis, which earlier had pegged Arlington’s 2019 median home appreciation at 5.1 percent and Fairfax’s at 3.1 percent, now suggests those numbers are way too low.
The new projections: Median sales prices of homes sold in Arlington are expected to show a 17.2-percent rate of growth, while those in Fairfax are expected to see a year-over-year gain of about 7 percent.
“This is a market response to the Amazon HQ2 announcement, with investors competing with residents for a shrinking number of homes for sale,” said Terry Clower, director of the Center for Regional Analysis.
The projected price gains “do not reflect an overall bubble in housing prices, but rather reflect the specific circumstances of our current market,” the analysis noted.
According to the experts, the closer one is to Amazon’s pending headquarters in Crystal City, the more likely a homeowner is holding back on selling – testing the market to see how high prices might climb, or alternately considering keeping it as a rental. As a result, availability in close-in areas has dwindled.
“Arlington inventory has fallen off a cliff,” Clower said, and is expected to be nearly 19 percent lower at the end of the year than it was at the end of 2018 – compared to an earlier projection of 7 percent.
And it’s even more off the charts in Alexandria; the original inventory forecast projected a 0.6-percent year-over-year decline; the new forecast is a drop of 37.5 percent. In Fairfax County, the earlier projected drop of 2.4 percent has been revised to 10.2 percent.
While inventory is down, “buyer interest is not likely to decline in the near term,” said Ryan Conrad, CEO of the Northern Virginia Association of Realtors, who pointed to healthy employment figures across Northern Virginia.
How high might prices climb? Clower said mortgage-qualification criteria will be a firewall to unbridled growth.
Unlike the pre-recession bubble of more than a decade ago, those in the lending industry these days have returned to old-fashioned values. “They expect that [buyers are] actually able to pay [the loan] back,” Clower said.
For now, sellers in Arlington and Alexandria are getting at or above 100 percent of listing price for their homes.
“Ratios at that level reflect a housing market with multiple offers on the table, and that’s what we’re continuing to see,” said Christine Richardson, chairman of the Northern Virginia Association of Realtors.
The tightening of inventory may be one reason why May’s home sales across Northern Virginia were down slightly, declining 1.8 percent to 8,393 transactions. Figures represent sales in Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church.
Year-over-year prices were up, with the average price across Northern Virginia rising 3 percent to $626,345 and the median price up 2.8 percent to $552,750. Part of that growth was in the higher chunk of properties being single-family homes in May 2019 compared to a year before.
Total sales volume for the month rose 1.6 percent to $5.05 billion.
Figures represent most, but not all, homes on the market. May 2019 figures are preliminary and are subject to revision.
For full data, see the Website at www.nvar.com/marketstats.