The Northern Virginia Housing Market is Driving me Crazy
March Market Update
As we look forward to the busy summer months, the biggest news is that prices have not significantly dropped as many people had predicted. Interest rates have risen, and most analysts believe one or two more small rate hikes will happen before the Federal Reserve pauses.
While home prices throughout Northern Virginia are still relatively high, the volume has gone way down and inventory levels are well below their five year averages in most areas. Prince William County has 372 current active listings, well below its five year average of 450. Loudoun County has 401, Fauquier County has 113, Fairfax County has 932, and Alexandria City has 153, all significantly below their five year averages as well. Arlington County has 296, roughly in line with its five year average and the outlier is Washington, DC with 1,694 actives, well above its five year average of 1,433.
Mainly what we are seeing throughout the area is a flat market, with listings remaining on the market longer than average. Prince William County has an average DOM of 21 days, Loudoun and Fairfax Counties 20 days, Alexandria City 25 days, Washington 42 days, and Arlington County 29 days, all well above their five year averages. Fauquier County is the outlier this time, with 39 average DOM, compared to a 45 day five year average.
Year over year prices, for the most part, are in line with their 2022 comparisons. Median sold prices in Fauquier County for March were $500,000, down 11% from last year. Prince William County was $520,000, in line with a year ago. Washington was $640,000, down 3%. Loudoun County was $720,000, up almost 6%. Fairfax County was $662,000, up only .3%, and Arlington County was up only .7% to $650,000. Alexandria City was the outlier here, up 26.7% to $665,000.
Real Estate Market and the Federal Reserve
Interest rates are a hot topic in the real estate market report as both the Federal Reserve and the national market indicates that we are close to the top of the interest rate cycle. While the Fed sees rates remaining elevated for some time and possibly rising further, markets anticipate that rate cuts may be coming as soon as this summer.
Although the Fed is expected to increase rates on May 3, we have already seen weakening economic data and a slowing of the inflation rate. The trajectory of rates ultimately hinges on economic data, particularly reports on inflation and employment, which will inform both the Fed and markets as 2023 progresses. If the economy remains robust and inflation stays high, the Fed's assessment on rates may prevail. However, if employment weakens, the fixed income market's assessment may prove correct.
Northern Virginia is mostly insulated from the drastic ebbs and flows of the economy compared to areas associated with heavy manufacturing such as the cities in the rust belt and midwest, so the area tends to see less drastic swings in the real estate market compared to the national average, the most likely scenario is that we will start seeing an uptick in activity as the summer progresses.
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