A strong seller’s market continues in Northern Virginia as we near the close of 2016. A strong uptick in sales, despite low inventories, demonstrates the overall strength of the market. It seems that the temporary paralysis caused by the end of the unprecedented and contentious election cycle has given way to urgency to take advantage of lower interest rates while they last.
While this chart shows little change in closed and pending sales, there was a strong drop off in active and new listings. The lack of supply to meet the pent-up demand continues to put pressure on prices.
Broad market measures appear to still be in a stable range month-over-month, compared with early spring 2016. We can likely expect that volatility will begin to return in the post-holiday period, but what is yet unclear is whether enough sellers will enter the marketing to meet demand.
Strong sales in the Northern Virginia area are offset by slightly softening prices year-over-year. The one exception is the Falls Church City area, which saw significant declines in both sales and price.
According to the Northern Virginia Association of Realtors, election uncertainty has given way to a drive to purchase before more interest rates hikes occur. It has become apparent, both through statements made by President-Elect Trump and Federal Research Chairwoman Janet Yellen that the likely expectation is accelerated interest rate hikes in 2017. We have already seen a small increase in December. The likelihood of more increases could be driving buyers into the market to capture low rates before rates go up. It could make for a very interesting spring market!
Pricing is still strong in many areas in Northern Virginia. While there has been a slight decrease in year-over-year prices, potentially due to election uncertainty, buyers are confidently moving the market along with strong, competitive offers. With sale price-to-list ratios at better than 96%, buyers are not letting lack of inventory keep them out of the market.
Months of Supply
When we look at the change in supply of homes on the market, you see a steady decline from last year, exemplifying the tightening of supply in the area. The downward trend is a strong and long-lasting one, and will take a flood of fresh sellers to create enough supply to meet demand. It’s unclear as of yet if the spring high season will yield the increase in sellers needed to meet demand.
There is still plenty of uncertainty in the market. We know that interest rates will likely continue up in 2017, but we don’t know exactly when and by how much. We also do not know what downrange impacts there may be once the new administration is in place and we begin to feel the effects of policy changes trickle through the economy. If you are thinking about buying, selling, or refinancing, now may be a good time to think about making a move, before the any changes to interest rates occur.
We are always here to help! If you are unsure of your home’s value or if you are thinking about buying or selling, contact Jason at 703-298-7037 or SandersNoVA@gmail.com.