Be patient if your house is on the market, because the Northern Virginia real estate market is in “recovery mode.”
That’s how the Northern Virginia Association of Realtors (NVAR) described the region’s real estate market in its annual report to regional real estate reporters last week at the National Press Club.
“It’s in better shape than most local markets although still in transition,” said Margaret Ireland, NVAR’s chairman of the board.
The area added 65,000 jobs last year, mostly in the business and professional sectors. Federal spending always contributes to the area’s stable economy, especially in the last decade where Federal procurement spending was up, at least through 2004.
Although November home sales for the Greater Northern Virginia area were 29% behind last year, active listings were up 32%. This year to date 32,648 homes have been sold compared to 49,592 last year. The current average sale price is $503,797, ahead of last year’s average of $495,927.
The area has been experiencing a correction, which explains the 30% slower pace of sales over the previous year. Rising mortgage rates contribute to this change as well as soaring gas prices after Hurricane Katrina. Homeowners felt the extra pinch. As home prices increase, the higher inventory lessens the pressure on prices.
With more new listings, buyers have more choices, more time to consider those choices, more bargaining power, and more time for appraisals and inspections.
Last month, the average house in Northern Virginia was on the market for 85 days. More sellers are offering concessions on closing costs, as well as even large screen TVs or cars. But the buyers market may be leveling off.
The 2007 outlook in this area shows a strong job market, healthy economy and lower gas prices. According to Ireland: “That sustains a strong demand for housing in Northern Virginia.”
She projects that home prices in this region will increase three to five percent in the next year. That’s still below the long-term average of seven percent.
Washington, D.C. has not built enough housing to provide for workers. “We have a deficit housing supply in D.C. to meet the long-term average growth of 55,000 jobs a year,” said John McClain, Sr., a fellow at George Mason University’s Center for Regional Analysis. Many of those workers are buying homes in Virginia.
When it comes to commercial real estate in the private sector, fluctuations drive the market and push up rental rates. People want “trophy space,” said Marty Almquist, the president of the Greater Washington Commercial Association of Realtors. “We can expect minimal demand from the Federal Government, but when rates go up in the District of Columbia, the residents move to Northern Virginia.”
As for new construction, there’s much higher pre-leasing in markets closer in than out by Dulles, according to Almquist. Tech companies are expanding and there is an increase in federal and defense spending — all of which help the Virginia real estate market.
“Tysons Corner is gridlock now, and there’s more development to come, which signals tremendous escalation in prices,” Almquist said. “This will be especially true if the much-discussed tunnel is constructed. ”
Loudoun County has many new houses so prices are down. Ireland advises, “As the market changes, the help of a realtor comes in handy.”
Experts agree that real estate is still a good investment. Homes in this region appreciate seven percent in value each year, and double in value every 11 years.
“If your house sits on the market for 90 days, it doesn’t have the stigma that it did,” Ireland said. “Wait it out. It will sell, but it will take longer.”