While the Washington DC Metro area has shown increases in sales prices for the last two/three years, the rest of the nation is starting to see housing growth as well. Nationally determined interest rates are still at record lows, allowing many potential home owners to purchase. According to an analysis done by Zillow Real Estate Market Reports, homes “are expected to gain more than $1.3 trillion in cumulative value in 2012.” This would be the first annual gain since 2005 (nationally). This gain represents a six percent increase from 2011 and 75% of metro areas saw increases.
There is still talk of the “shadow inventory” or the foreclosed homes that have yet to go on the market and are currently sitting vacant affecting the market negatively. According to the National Association of Realtors, in 2011 they represented a third of the active market, dropped to 25% in 2012 and are expected to continuously decline. In addition, with new construction still at historic lows, existing homes sales are strong and foreclo- sures are expected to thin out, hitting single digit percentages of inventory by 2014. (January/February 2013 edition of Realtor® magazine).
State (Virginia only)
Virginia continues to see strong improvements in the housing market, due in part to low unemployment in the state and the low mortgage interest rates. In November, the number of Virginia residential sales increased by 12% over the previous year. Historically there will be a drop in December and January with the market picking back up in February. During this same time period, median prices increased by approximately 2% to $235,000 according to the Virginia Association of Realtors. So how does Northern Virginia factor into this?
Northern Virginia (Loudoun, Fairfax, Arlington, Alexandria City, Fauquier & Prince William Counties)
The Northern Virginia area has continued to see a very strong recovery and ranks as one of the best metro areas in the nation for the housing market. In a report put out by the Real Estate Business Intelligence a part of the Metropolitan Regional Informational System (our area’s Multiple Listing Service) the end of year 2012 report shows a 6.94% increase in median sold price, much stronger than the state wide and a 5.12% increase in AVERAGE sold price, a better representation of housing prices than median. Days on market are down again and the percentage of List Price to Sold Price is very high, meaning sellers are getting exactly or very close to what they are asking. McGrath Real Estate has seen an increase in multiple offer scenarios which can result in sold prices even higher than the list price. While financing isn’t easy to get, interest rates being so low have allowed many younger, qualified first time home buyers into the market. Appropriately priced homes get snapped up quickly and inventory is low.
The Future – 2013
McGrath Real Estate as well as the Northern Virginia Association of Realtors all forecast the continued improvement of our local market. Three important national real estate provisions were extended that all help make home ownership more affordable/enticing including:
- The Mortgage Cancellation Debt Relief, which protects homeowners that have mortgage debt forgiven by a lender from paying a tax on the amount forgiven through 2013.
- The Mortgage Insurance Premium remains deductible for tax filers making less than $110,000 through 2013.
- Energy efficiency tax credit remains in effect allowing home owners who make energy efficiency improvements to be eligible for a 10% tax credit (up to $5,000) on such improvements in 2013 (must be primary residence, check out our program for energy efficient windows at a discounted price on our website.)
As discussed in a previous McGrath Quarterly, the metro expansion continues to be on track for a late 2013 opening of the Reston/Wiehle station and the continued expansion into Herndon and Loudoun counties in on schedule. More and more buyers are listing “convenience to public transportation” and “walkability” as main decision points in their home buying process. According to NVAR, 38% of Northern Virginia buyers cited convenience to public transportation as a factor in buying their home. With more towns like Reston, Tysons and the new “One Loudoun” designing their development and redevelopment around the “walkability” and mixed use neighborhoods we expect this to continue to be a trend over the next year or two. If you are interested in learning more about the sales market in your neighborhood or would like a no-obligation sales market analysis please feel free to reach out to McGrathSales@McGrathRealEstate.com.