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Despite COVID and the economic downturn, the local real-estate market continues to roll along. But is there an upper limit to price appreciation, and if so, when might it hit?

The Sun Gazette asked some top real-estate professionals if they believe average sales prices in the Northern Virginia market will continue to rise. Here are their answers:

Dean Yeonas, Yeonas and Shafran Real Estate: If there is an end to the appreciation, it would be the result of more inventory on the market, but I don’t know when that will be, at least in our little gold coast inside the Beltway. We’ve had low inventory for a while now. In this particular market, we are fundamentally blessed. There are a lot of motivated sellers and buyers. That keeps prices going up. Maybe interest rates going up could change things a little bit.”

Jean Beatty, McEnearney Associates:  “Having lived in the D.C. area for almost 30 years, I can honestly say that I have only seen an upward trend in real estate. Because of the tremendous amount of high-tech jobs, the federal government and its contractors, as well as the planned Amazon headquarters, there is no shortage of clients needing to enter in or move upwards in the market. Home prices may level off in the short term, but it is my belief that they will continue to appreciate in the years to come.”

Casey Margenau, Casey Margenau Fine Homes & Estates: Do I think we are at the limit? No. The D.C area always goes through price-appreciation rises, and I think we are closer to the beginning than the end of this round. Prices will rise next spring. The Washington area is the most affordable of the top 20 markets in the nation. The prices here are not out of whack. Because of COVID, home is now our safe place and people put more value on that. Owning a home now with a yard are things are of more importance.”

Gloria Adams, TTR Sotheby’s International Realty: “It’s great to have the sales prices in Northern Virginia rise as they have. I believe any upward jump to the interest rates will affect this issue, but am unsure when the Federal Reserve and other institutions will take this initiative.”

Mark Middendorf, Long & Foster: I don’t really have an answer. I thought, at the end of March, real estate was done for a while. That was clearly not the case, and it’s clearly not the case now. There is such a low inventory, and along with the low interest rates, that’s driving the prices up. And that’s not just in Arlington. It’s all over. Things are selling overnight. Working with a buyer now can be difficult because they can’t get a house. They might offer the moon, then another buyer offers two moons and gets the house.”

Diane Lewis, Washington Fine Properties: “It’s really hard to predict. We never expected the market to be as busy and robust as it has been during these last few months. We are seeing a lot of people moving here from out of the area, which is really driving the market, along with historically low interest rates. It’s a great time to be a seller in Northern Virginia.”

Dave Adams, Coldwell Banker: “It’s almost impossible to make a reliable real-estate market prediction for 2021. Everything depends on how much longer the nation can deal with the pandemic and how quickly the economy is able to recover.  Home prices in Northern Virginia continue to rise, and low inventory, high demand and historically low interest rates have propelled the median sales prices. We are also seeing days on the market at new lows. Will the rates and inventory remain low into 2021? Only time will tell.”

Debbie McGuire, Compass: “Home prices are high now due to the demand exceeding the supply of homes to buy. Inventory levels are 30 to 40 percent below the last few years’ levels. This will change when inventory increases. There are some headwinds that may cause inventory to increase, such as foreclosure forbearance ending, investors who cannot carry properties that are not cash-flowing due to rent payments not being made and layoffs yet to come in many bankrupt businesses. Interest rates should remain low, keeping buyer demand strong. If someone wants to sell, I would do it sooner than later.”

Archie Harders, Long & Foster: “I think we will see the increase flatten as condo-sellers experience more and more trouble selling their units. Prices on the Orange Line are falling, and those folks can no longer afford top-of-the-market purchases. They’re moving farther out.”

Betsy Twigg, McEnearney Associates: “I think there is an upper limit, and I think we are approaching that, like it happens every year about this time. All of the COVID-related job situations eventually will have to affect home values. How much longer can we fund all of the COVID issues with not having some type of effect? I don’t think the market will go unaffected.”

Casey Samson, Samson Properties: Lack of inventory was the driving cause of rising prices in the first half of 2020. Good homes priced right were rewarded with bidding, higher prices and, many times, no inspection contingencies. The second half has seen more inventory, but the market is still underserved. There are two things that could push inventory to very high levels next spring: One, sellers who were concerned about selling this year because of COVID will be out in the spring. Two,  homeowners that see the new values and decide this is the opportunity to sell, like 2015. When inventory took off in 2015, prices softened. I see the same pattern forming right now for the spring of 2021. I tell my sellers, ‘sell when they yell, and buy when they cry.’ Sellers are yelling, so we are selling.”

Karen Briscoe, Huckaby, Briscoe, Conroy Realty Group, Keller Williams: I think we could have several years of appreciation. People aren’t traveling, going out to eat or to concerts or movies. So they are rededicating resources into their homes. Their homes are now their sanctuaries, and they are safe at home. Sellers are selling only if they are committed to moving.”

Jack Shafran, Yeonas and Shafran Real Estate: I think there is an upper limit, but it is all related to inventory. It’s all about supply and demand. As inventory increases, prices will stabilize. There are more buyers out looking this time of the year than I can remember.”

Eli Tucker, Eli Residential Group: “I don’t expect too many years in the next five to 10 with this much appreciation, but I do think we can expect continued, steady appreciation given the projections for historically low interest rates to remain in place through 2023 and a strong jobs market throughout Northern Virginia.”

Lori Shafran, Yeonas and Shafran Real Estate: “I believe that the price appreciation for homes in Northern Virginia will continue as market conditions influence the supply and demand. Housing prices are not being pushed up by a false demand as a result of (over-lending) as was the case a decade ago. Today’s housing prices are being driven by the low supply of available homes for sale coupled with the lack of new homes being built. My crystal ball is a little hazy, but all facts point to a continued  seller’s market in the foreseeable future.”

Terry Belt, The Belt Team, Keller Williams: “The factors and variables that affect home values are supply and demand, interest rates, jobs and incomes and consumer confidence. In the market locally, we are experiencing historically low inventory fueled by high demand because of low interest rates, a good economy, and bullish consumer sentiment for housing, with the net effect of upward pressure on home values. This will continue until prices reach a point that are unaffordable as a result of higher interest rates, incomes not matching affordability, a change in the supply and demand equation, or another long-term, deep recession. It is possible we could start to see a flattening in values if interest rates creep upward. Real estate, historically, always goes in cycles. So, at some point, the current levels of appreciation are not sustainable in perpetuity and will slow down, flatten, or correct for a period of time before going up again. “

Donna Moseley, Sotheby’s International Realty: “I think we are seeing the upper limit right now. We are at a tipping point for sellers and buyers and the teeter-totter is the fluctuation in perceived value. With the tight inventory, sellers have been, overall, eager to push for the highest price possible. Sometimes they are listing too high to be supported by comparable properties, and sometimes listing aggressively and encouraging bidding wars. What we are seeing right now is that sellers still want optimum pricing, but when they price too high, and they don’t get an immediate full-price offer, they do want a well-qualified buyer and will accept below list price to get a ratified contract. While they are eager to get a great savings on interest rates, buyers are not compelled to pay for an overpriced home.”

Craig Burns, Keller Williams: “The market will decide its upper limit, and no one can predict what, when and if there will be an upper limit. Some buyers and sellers are waiting until after the election to decide to buy or sell, so there will be some market shift in November. Whether it is up or down is unpredictable. Unemployment rates will determine many things, and for now it is unclear how the election and all aspects of the pandemic will affect the working life in Northern Virginia. For now, it seems like a steady rise in home values in Northern Virginia will continue even during the uncertainties of the present time.”

Craig Mastrangelo, Compass: “Prior to COVID, our local real-estate market had been experiencing very low inventory for about two to three years, and the combination of low interest rates and desire for people to move to larger homes and/or more space has resulted in strong home-price appreciation. As long as interest rates and inventory remain low, our region could continue this upward trend. We’re not making any more land inside the Beltway. So prices are fairly well-protected, save for another financial crisis or spike in interest rates, which affects borrowers’ buying power. To what degree would this affect the buying public and demand? That remains to be seen.”

Dawn Wilson, TTR Sotheby’s International: It continues to be a seller’s market. In fact, it has gotten more competitive for buyers since June. There is still low supply and high demand. The Fed does not have any imminent plans to raise interest rates, which will keep buyers in the market looking for homes. More supply may enter the market in 2021 as sellers who have been fence-sitting waiting on the pandemic to get better, will decide that things are better. It is difficult to foresee far out, because there are so many unknown variables. The continuation of the pandemic may continue to affect the type of housing buyers are looking for. This may affect the rate of appreciation for different types of homes. It is likely that there will be a slowdown in the rate of appreciation in 2021, but I still expect there to be appreciation next year.”

Steve Wydler, Wydler Brothers: “For the first time in the last 20 years, we are seeing de-urbanization, as people are moving away from density and out to the suburbs for more square footage, outdoor space, privacy, safety, etc. This shift has benefited the single-family-detached home segment the most, and we are seeing a softening in the condo market. Upper limits are tough to predict, but are subject to realities such as income, unemployment, interest rates and supply.”

David Howell, McEnearney Associates: “There are two reasons the average sales price continues to rise. First, very low inventory has buyers competing for those scarce listings, and that will certainly move prices higher. But the other reason is math – COVID-induced job losses in the service and hospitality sectors have had a material impact on the number of entry-level home sales. Year-to-date there has been a 17-percent drop in the number of contracts on homes priced below $300,000, and a 30-percent increase for homes priced over $1 million. When there are fewer low-end sales and more high- end sales, the average sales price simply skews higher. The increase in the average sales price in Northern Virginia doesn’t mean all homes are appreciating at that rate, by any means. As long as inventory and mortgage interest rates remain low, average sales prices will continue to rise, and I don’t see anything on the horizon over at least the next six months that is likely to change that equation.”

Natalie Roy, Keller Williams: “With thin inventory and historically low interest rates, our current strong seller’s market will probably continue to be robust for the foreseeable future. This applies to sellers who prepare their homes for the market adequately and price competitively. I am seeing more sellers price unrealistically high. Despite strong demand, this market is unforgiving for wildly overpricing. We are also starting to see a slight slowdown in the condo market. More than likely there will be the typical slowdown over the holidays, even though nothing about 2020 is typical. The spring market will continue to be strong, though probably not at the same strong level being experienced now.”

[Sun Gazette Newspapers provides content to, but otherwise is unaffiliated with, InsideNoVa or Rappahannock Media LLC.]

 

 

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