A relatively flat month in August is not deterring optimism for the remainder of the year in the Northern Virginia real-estate industry, which continues to make do to a severe lack of available inventory.
“As the leaves begin to fall, so might housing inventory, but Northern Virginia Realtors still expect buyer and seller activity to pick up this season,” said Christine Richardson, president of the Northern Virginia Association of Realtors (NVAR) and an agent with Weichert in Great Falls.
Prospective buyers are navigating the current environment carefully, trying to avoid pitfalls, NVAR officials said. And having learned the lessons of the real-estate bubble a decade ago, they are focused on not overspending.
“It’s a busy market, but buyers and their Realtors are educated and cautious,” Richardson said. “Despite low interest rates and falling inventory, we’re not seeing dramatically escalating prices.”
Inventory has been an ongoing issue since back in 2015, but the issue has accelerated over the past year for a variety of reasons. In August, the 2,595 homes on the market represented a drop of fully one-third compared to 3,875 properties from a year before.
(Figures represent data from Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church.)
The inventory dropoff is widespread, but is most concentrated in areas around the planned Amazon “HQ2” in Crystal City, Pentagon City and Potomac Yard. Alexandria saw a year-over-year inventory decline 64 percent, while Arlington saw a dip of 52 percent, as property owners are holding onto their homes in expectation – real or imagined – that prices will continue to rise and investors are snapping up homes while taking a hold-and-wait approach.
But Amazon is only one factor affecting the marketplace.
“This [low inventory] is not something that emerged all of a sudden. This is not something that happened because Amazon HQ2 was announced in November. This is a continuation of the trend,” said Terry Clower, director of the George Mason University Center for Regional Analysis, which partners with NVAR.
While the lack of inventory has bumped up prices in recent months, August was relatively flat: The average price of a single-family home rose 4 percent to $831,889, with the average price of attached properties (townhouses/rowhouses) falling 1.8 percent and the average price of condominiums up 1 percent.
A total of 194 properties across Northern Virginia went to closing for more than $1 million in August, including eight selling for $2.5 million or more. Total sales volume for the month was $1.2 billion, down a fraction of a percent from a year before.
High prices are forcing prospective buyers to get creative, particularly if they cannot tap previous equity to fund purchases.
“We are seeing more first-time buyers investing with a friend or family member in order to be able to afford the purchase,” Richardson said. “I am currently working with several first-time buyers in their 30s who are looking for something with at least two bedrooms and two baths, so they can rent out a room to help cover their new mortgage payment.”
August often marks the turning point of Northern Virginia’s cyclical real-estate calendar, with the top sales of the year usually occurring in May, June and July before mellowing in autumn and (sometimes) hibernating in winter. But there does seem to be good news on the horizon: Homes under contract and pending sales were higher in August from a year ago, suggesting the fall market may have some spring in its step – which might even continue into the winter months.
Data represent most, but not all, homes on the market. Figures are preliminary, and are subject to revision.