The Springfield area has been subject to many of the same market pressures that the Northern Virginia region has been experiencing. While individual communities within a given area may vary, Springfield on average has experienced similar pent-up demand and lack of supply that has affected the greater Northern Virginia region.
General Market Conditions
We’ll discuss the individual charts for each of these categories a little later, but this “speedometer” visual is a great at-a-glance representation of the current market in Springfield. You may note that the “needle is buried” on the New Pending listings in December, while Closed Sales is a little below the 5-year average. This is indicative of the seasonal slowdown around the holidays. There weren’t a lot of closings in December, but there is pent-up demand behind it, just waiting to close after the New Year.
Active Listings are also slightly behind the 5-year average. This is the real story. The high Pendings demonstrate the fact that the buyers were still pretty active in December, ignoring the holiday slow-down. However, the lower-than-average available listings isn’t enough to meet demand. This is borne out with the Months of Supply, which is way below the 5-year average.
It appears that much of the demand is driven by the still-low mortgage interest rates, and the rush to lock-in before the expected rise in 2017. It’s also good to note how Springfield compares with the rest of the country, which currently has 4-6 months supply of inventory, while the 5-year December average for Springfield is 1.1 months. This long-term lack of supply has done nothing to alleviate demand, and could lead to further inflation of prices as we head into the busy spring buying season. We can only hope that high home prices will entice more owners to sell and create more supply for the market in Springfield.
Let’s take a look at a few individual charts.
Market Activity
The story here really hasn’t changed much from the previous couple of months. Active Listings and New LIstings are virtual stagnant January 2016, but closings are up. That’s old news. The story here is what could be coming in January and February. Look at the sharp and rapid rise in All Pendings, Closed Sales, and New Listings last year in 2016. We could be facing a similar situation this coming Spring Season, in advance of upcoming Federal Reserve Meetings and expected mortgage interest rate hikes. The big question, is whether the sellers will come out to take advantage of the demand.
Pricing Trends
Springfield is in a unique situation in regard to pricing trends. As the chart above shows, Median List Prices and Median Sale Prices are tracking closely, as are Average Sale and Average List. The lines are almost on top of each other, which indicates that for the past year, homes have been selling at or very near their listing prices. This reflects the competition in the market, as buyers are finding it necessary to craft strong offers near or above asking prices, in order to win against other competitive offers.
This chart reflects the year-over-year percentage change in prices, which are still trending solidly in positive territory. This next chart shows how average prices have fluctuated over the last year:
While average prices are still off their peak in April/May 2016, December showed a strong uptick, reflecting pressure the short supply is putting on prices. There is nothing yet to indicate that the trend of higher prices won’t continue into Spring 2017, as long as interest rates continue to be comparatively low. A sudden influx of sellers into the market could stabilize prices, but as of now, sellers are still hanging on the sidelines.
The history of 2017 is yet to be written. We are all waiting to see how changes in Washington DC will impact local real estate and the economy as a whole. For now, the trends continue to point toward strengthening markets and modestly increasing prices. If the expected interest rate hike comes to fruition, we may see a different story by this time next year. If you have been thinking about making a move, doing so in early 2017 may be a good time to do so.
Click here for a one-page summary of key statistics in the Springfield market.
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.
