There is lots of good news in play and more on the horizon for the Fairfax County real estate market. Homes that are presented well are generating multiple offers and conducting fast and smooth transactions. Market conditions are literally unprecedented because most (if not all) of the major forces are related to Coronavirus. For examples: The Median Sales Price is $615K, up 14% YoY. Inventory is the real crisis number: 1,590 homes on the active market, a whopping 38% lower than last year and less than one month’s supply! New Listings are finally improving from low spring offerings and at 2,135 are up 21% YoY. Closed sales are at 1,507, up surprisingly 14.7 % YoY and Pending Sales at 1,728 are up a staggering 23.7% YoY. The market is moving at lightning speed at an average of only 18 Days on Market.
The most conspicuous facet of the current market is the critically low inventory. The number of houses on the active market is only about a seven-week supply! Three to six months is considered a balanced market, so we’re far from that: we are solidly in a Sellers’ Market—even more so than before the pandemic! The obvious cause of this dearth of listings is the state of emergency brought on by the pandemic. Many folks who plan to sell are not yet comfortable with or willing to undergo the challenges of listing now, such as shopping for their next home, showing their present home either virtually or with proper virus safety protocols, extra housekeeping from the family living and working at home 24/7. When the active inventory is so low, demand goes way up. Many buyers really need to move for work, elderly family, schools, etc. Many simply have a strong desire to move after living with the inadequacy of their current home for their size family. Still others are shifting to permanent telecommuters working from home and must have more outdoor space and extra rooms to accommodate a new lifestyle. Notice the trend in COVID’s impact on real estate? And there’s still more!
Mortgage interest rates affect home sales in every price category and are now historically low. This is a major motivator of buyers to shop now while the payments will be affordable for the size home they desire. It’s also another factor causing selling prices to steadily rise since buyers are paying more to get low rates before they increase. The major cause of rising prices is, of course, the first law of economics: supply and demand – lots of buyers but not many homes to choose among. How often do we, as sellers, enjoy receiving multiple offers and selling above list price?
What will the general housing recovery look like? Mark Fleming, chief economist at First American Financial Corporation, a provider of title insurance and settlement services, told Forbes Magazine recently that, “It seems hard to deny that when one looks at many of the housing market statistics, a “V” shape is quite apparent. The main reason for the strong rebound is that factors existing before the coronavirus hit (lack of supply, low mortgage rates and a millennial demand for homeownership) have continued or even gained strength. Mortgage rates are even lower, supply is even tighter and millennials are still house hunting.”
Taking the opposite tack, Forbes quoted Ralph McLaughlin, chief economist and senior vice president of analytics at Haus, a home equity startup, “It’s going to be a W shape housing market recovery for three reasons. First, we think there will be an initial rebound simply due to pent-up demand for home buying that would have otherwise occurred in March, April, and May but will simply be pushed to June, July, and August. But after that, we’re not expecting new demand to replace it at comparable levels, which will lead to another drop of activity. Second, and I think we’re seeing this already, is that the virus will make a comeback, which will lead to less demand for homebuying in the fall. Third, there’s a possibility that we’ll see a broader impact on housing demand if the federal unemployment insurance bonus runs out at the end of the month.”
Have you been thinking about selling? Let’s talk. I am happy to do a complimentary home analysis and present a customized marketing plan that will give you a great result.
Steve & Sarah