Are We There YET A Short Story About Our Local Housing Market

Dated: 10/08/2014

Views: 405

Have you ever been on one of those long car rides where someone in the car keeps asking, “are we there yet” or “how much longer”? Those of us in the real estate industry have been asking ourselves very similar questions. Just when we think we are coming out of the housing bust with a roar, as indicated by April and May results, we hit a slowdown, as we are facing now. So, are we there yet? Has the housing market normalized or are we oversold? Let’s try and tackle each of these questions one at a time. 

Is the real estate mess behind us? I say “YES” and here’s why; 
  1. If we look at the long-term housing graph below you will see that in 2000 the average increase in housing prices for the year was 5%. If we look at the graph below starting in 2011 you’ll noticed that with the exception of two months, seasonal buying and selling months, we stayed in the 4%-5% growth range with only two months in 2011 where we dipped down and homes lost value.
  2. Inventory, Inventory, Inventory! Finally the word has gone out and sellers are starting to put their homes on the market. Builders are also very slowly increasing the number of homes they are building. Many builders in Fairfax and Loudoun counties cannot deliver newly constructed homes for six to eight months! They are also requiring very large security deposits. This is an ideal time for current owners and resellers.
  3. Interest rates in many cases are still hovering around 4% for fixed rate. What does this mean for buyers? Let’s say you want to buy a $400,000 home. At 4% your monthly payments would be $2,545, at 5% you are looking at $2,779 and at 6% you will be paying $3,026 per month! Here’s the calculator.
  4. Lastly, location, location, location! Those of us in Fairfax, Loudoun, and Price William counties have continued to see a very strong job market with unemployment rates in the 4.3% to 4.5% range (Graph). This is well below the national average!
 
So, yes we are there! My prediction is that we will be in the exciting world of 3% to 5% real estate growth in the foreseeable future. If you have a wonderful home in a great neighborhood you will see a higher return than those that own homes that need a little work. Expect prices and real estate activity to be higher in the spring and summer. If you are buying a home expect some real bargains in the off season (i.e. October-January). For great real estate service, any season, contact myself or one of my experienced agents, we will be happy to assist with all of your real estate needs. 
Btw, I’m not the only one bullish on the housing market. Here is Warren Buffets take on the real estate market(CLICK HERE) 

~Chuck 
Serving all of your Ashburn, Brambleton, Reston, Fairfax, Leesburg, Mclean and Loudoun County area Real Estate needs
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Chuck Rifae

Chuck Rifae has been a leading Northern Virginia Realtor since 2002. Chuck holds the advanced designation of Broker of Real Estate for both Maryland and Virginia. When Chuck is not working with buyer....

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