Short answer: Like the weather, it’s really HOT!
The last time I wrote an article for InsideNoVa, it was March, and we were at the beginning of closures due to COVID-19. We were all very nervous about what lay ahead for our health, wealth, and employment. For some, it has been a very challenging and heartbreaking time; for others, it has been OK.
Here we are, four incredibly unusual and stressful months later. So what happened in the real estate market? And what does it look like now?
The Northern Virginia real estate market saw a very quick slowdown at the end of March. The bottom of the market for contract activity over the same week the year before occurred during the week of April 5 - April 12 in the Washington metro area with a drop of 44%. The following week, Northern Virginia contracts bottomed out with a 40% drop over the same time last year. Surprisingly, only three weeks after the shutdown, the market started to show signs of rebounding. This made sense, as the beginning of 2020 started strongly.
Since the beginning of July, we have seen an incredibly active and extremely competitive market. The biggest part of the story is the lack of inventory. Active listings are down 35% from this time last year and a whopping 52% down from same time in 2018. With spring level demand and exceedingly low summer inventory, we have ourselves a very strong seller’s market. In some pockets, we are seeing 15 or more offers on a property. Contingencies are being thrown out the window. It’s very challenging for buyers.
So what to do? Sellers thinking about listing, PLEASE do! We know there are still some sellers nervous about their health and safety and therefore are holding off putting their homes on the market. Our industry has done a fabulous job of trying to make seeing properties as easy and as safe as possible through such avenues as online showings, virtual showings, 3D floor plans, FaceTime Live, and more. If you search through previous McEnearney posts on InsideNoVa or visit our company website, you will see all the wonderful things we are doing as a community to keep you safe.
Buyers, buckle up! It’s going to be rough. Here are a few things you can do in order to put yourself in the best position to make an offer.
First, and this is true in any market, get pre-approved! Know what you can afford. Don’t just look at properties at the top of your price range either. If the homes are good, you should expect the price to escalate. If you’re making a cash offer, that’s wonderful, but make sure you have proof of funds to submit along with your offer.
Understand what an offer looks like. What are the various contingencies? What impact can they have on an offer? One contingency that is critical in a competitive market is the appraisal contingency. In some offer situations, you may be up against buyers who can waive appraisals. Meaning that, if the appraiser doesn’t value the home at the sales price, you will have to make up the difference of the shortfall. Maybe you can’t do that; if not, don’t waive the appraisal.
Be prepared to invest a few hundred dollars for a pre-offer home inspection. In a competitive situation, offers waiving a home inspection will be stronger than those that still have an inspection contingency. If you’ve done the walk-through with the inspector, you’ll know if the home is in suitable condition before you to make an offer.
As always, the best way to arm yourself in this market is with a knowledgeable agent who has a good reputation for being easy and professional to work with, and listing agents pay attention to that. The thought of winging it without an agent may sound appealing but will hurt you in a tough negotiation. A good agent is one who knows the market well, has extensive experience negotiating offers and can protect you from unexpected contract mishaps. Those agents will almost always out negotiate an unrepresented buyer trying to save a few dollars.
Also, agents know when homes are coming soon to the market. Marketing websites like Realtor.com and Zillow can’t post those. By the time you may see these listings on Zillow, represented buyers will have been mulling over the properties for days and be fully prepared to do a pre-market inspection when the property is active. Sometimes, there are deadlines for offers giving buyers some time, but not always. The early, prepared bird may definitely get the house in this case!
Finally, more good news. There is no sign that activity is slowing down. Stagers are busy! This is a good sign that there are lots more listings to come. And just when we don’t think interest rates can go any lower, they do. It’s really a great time to buy and sell! Northern Virginia's appeal may be even stronger down the road as people work more from home, and the freedom to roam and play in suburbs becomes more desirable.
Happy house hunting!
Rebecca McCullough is a licensed real estate agent in Virginia with McEnearney Associates, Inc. in Old Town Alexandria, VA. If you would like more information on selling or buying in today’s complex market, contact Rebecca at 571-384-0941 or visit her website RebeccaMcCullough.com.
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: InsideNoVa@mcenearney.com or call 703.549.9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreMcEnearney