The Northern Virginia real estate market continues to face challenges, but there are signs that the current situation is not as bad as feared.
Prices have come down in some areas, but new listings are down as well, showing that there will not be a glut of inventory continuing to push prices downwards. Also, average Days on Market throughout the area are close to the five year averages, showing a healthy balance between supply and demand.
The median sold price for September in
Alexandria City was $493,500, down almost 10% from a year ago
Arlington County had a median sold price of $557,500, down over 13%
Fairfax County had a medium sold price of $630,000, up about 5%
Loudoun was up 6% at $639,900
Prince William was also up 6% at $498,500
By far the most significant changes were the decrease in both closed sales and new listings throughout the area. New listings are down 29% in Alexandria City from this time last year, down 15% in Arlington County, down 27% in Fairfax County, down 24% in Loudoun County, and down 28% in Prince William County.
Closed sales were down 31% in Fairfax County, 14% in Arlington County, 35% in both Alexandria City and Loudoun County, and 29% in Prince William County.
Looking at the data, we are actually most likely seeing a balancing between supply and demand. We had an unprecedented strong demand throughout most of the pandemic months that pushed up prices to overinflated levels, and while the rising rates have undoubtedly pushed some prices down, much of the decrease is likely due to a healthy return to the mean as well.
Interest rates have climbed and will almost certainly continue to rise throughout the rest of 2022 and into 2023. While there is no getting around the fact that this will increase monthly mortgage payments, there is a loan program that is rising in popularity that can significantly reduce the sting of rising rates and help some buyers still find an affordable mortgage.
A 2-1 Buydown is a closing concession that is negotiated during the sales process. The buyer gets to have the interest rate on the mortgage reduced by 2 percentage points in the first year and one in the second. The difference is made up by a concession where the seller makes up the difference by putting cash into an escrow account at closing.
The buyer makes the smaller payments with the difference coming out of the escrow account until it is depleted after two years. The advantage is that sellers are able to move houses quicker and buyers can see a smaller payment for the first two years of home ownership when other expenses may be higher.
Programs like this are making it easier for prospective buyers to navigate the higher interest rates while still finding a quality home with an affordable monthly mortgage payment.
Chris Colgan - EXP Realty - Powered by Place
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ChrisColgan@ColganTeam.com
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