Changing Northern Virginia Real Estate Market

PRINCE WILLIAM County Up while Alexandria Down

Northern Virginia and Washington DC June Market Report

After an unprecedented red hot market the last two years, fueled by historically low interest rates and changing needs due to the pandemic, June data is showing that the housing market is slowing. This does not, however, mean that the market is crashing. The rate at which homes were selling from 2020 through 2021 was simply not sustainable for the long term, and it appears that we are simply reverting to the historical means.

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Data Throughout Northern Virginia and DC

The most significant changes we are seeing are a drop in listings and closed sales and an increase in day in market to healthier levels. New listings in Fauquier County, for example, are down 26% year over year (YoY) in June. Counties throughout the area have all seen similar drops. Prince William County was down 15%, Loudoun down 11%, Arlington down 16%, Fairfax down 14%, Alexandria down 25% and DC down 11%.

Pending and closed sales were also down from June of last year. Prince William County pending sales and closed sales were down 34% and 27%, respectively. Loudoun down 31% and 26%, Fauquier down 32% and 38%, Arlington down 33% and 22%, Fairfax down 32% and 28%, Alexandria down 19% and 2%, and DC down 23% and 20%.

Median Sold Prices are not quite as consistent among the counties as the other data. Median prices are up 12% in Prince William County, 5% in Loudoun, 14% in Fauquier, 3% in DC, 5% in Fairfax and down 6% and 11% in Arlington and Alexandria, respectively.

We are also starting to see an increase in average Day on Market throughout Northern Virginia as well, although most places are still well below the five year averages.

What the Data Tells Us

So the big question is what does all this data tell us about the direction of the housing market? We do know that nationwide, in May of this year that over 15% of all home sale contracts fell through, which is the highest since March of 2020, the very beginning stages of the pandemic when no one had any idea how things would play out and weeks before we started using phrases like “Zoom meeting” and “work from home”.

Clearly the market is coming down from the last two years when buyers were frantically looking for larger houses and fleeing densely populated areas in search of more space to accommodate home offices and social distancing needs.

Interest rates have increased several percentage points, which could add as much as $800 to the monthly mortgage of a median priced home in Northern Virginia, also buyers now tend to be much more likely to demand home inspections and submit offers with contingencies, often giving them an out if buyers feel prices are likely to drop. Most importantly, buyers now are much more likely to be content to wait a few months if they cannot find a home that perfectly fits their needs or wants, which was rarely the case during the height of the pandemic.

Both buyers and sellers should be incentivized to move sooner rather than later if they are going to transact in 2022, as interest rates will certainly continue to rise throughout the year, which will both push down sale prices while pushing up most monthly mortgage payments.

Chris Colgan

EXP Realty

ChrisColgan@ColganTeam.com

Licensed in Virginia

571-437-7575