The Spring market in Northern Virginia is hot. It is not uncommon for new listings to receive multiple offers. In fact, I had 3 homes sell this month with multiple offers that were above asking. Why is this happening?
Well, interest rates are still very attractive and buyers are out in force but sellers are not. We are in an inventory drought.
INVENTORY LEVELS ARE DOWN 11 OF THE LAST 12 MONTHS
Since inventory levels naturally fluctuate throughout the year, you don’t get true picture of the market by comparing one month to the prior month. For example, there are almost always more homes for sale in March than February. Comparing year over year numbers, March 2017 to March 2016, demonstrates where we are at. And that exercise shows that for the last 9 months we have had double digit declines. The last month with an increase was April 2016. Here are the number of homes on the market in Fairfax County, Fairfax City, Arlington and Alexandria at the end of the given month and the change from a year earlier.
3/2017 – 3668 homes -14%
2/2017 – 2974 homes -12%
1/2017 – 2731 homes -16%
12/2016 -2873 homes -17%
11/2016 – 3653 homes -19%
10/2016 – 4437 homes -20%
9/2016 – 4855 homes -16%
8/2016 – 4564 homes -20%
7/2016 – 4991 homes -15%
6/2016 – 5184 homes -9.6%
5/2016 – 5122 homes -9.7%
4/2016- 5128 homes +3.5%
I believe, we should have about another 1000 homes on the market now for proper balance.
I really don’t know why there is a shortage of inventory. I have heard all kinds of reasons from “I don’t want to give up my super low mortgage rate” to “since there is no inventory, I can’t move up.”
HARD TO FIND ENOUGH HOMES IN ANY ONE MARKET SEGMENT
Over 3000 homes may seem like a nice number but break it down into market segments and you can see how a buyer gets frustrated.
How many of the 3500 or so homes are $350,000 to $400,000 townhomes in Centreville VA?
Or a $500,000 to $600,000 single family in Springfield VA? And of those how many are in good condition and how many need work? Different buyers want one vs the other.
Or $800,000 to $900,000 home on a 1/2+ acre lot in the Madison HS district in Vienna VA.
Or a 1 bedroom condo in Annandale?
Or a $3,000,000 estate in Great Falls?
Each of these buyers has a very small number of homes to tour. Without enough homes out there, they will fight hard over the homes that are up for sale.
ARE WE REPEATING HISTORY?
I know, I know, there are those who say, don’t you remember 2005 and 2006? Well, some of these buyers don’t because they were in HS or college and real estate was the last thing on their mind. But just as I said back then, if you buy a home you should have a plan to keep it for at least 5 to 7 years and in most, not all but most, market cycles in our area, you typically come out just fine. (Sales Price in our area since 1975)
Like stocks or any fluctuating asset, it is hard to know when the peak or the valley is really here. If you need a home for yourself or your family, often you can not wait and need to deal with whatever market you are in. So I do not fault buyers with a long term perspective for being aggressive.
A ONE WAY SELLER? THE TIME IS NOW!
But if you are a seller who does not need to buy immediately, this is one of the best times in the past few years to jump into the market. How long it will last is anybody’s guess but now it is wonderful to be a seller and not so much fun to be a buyer.
Let me know if you want to talk about your specific plans and together let’s formulate a strategy to make it happen.