More sales and ever-upwardly spiraling prices are expected to continue throughout 2021 in the Northern Virginia real-estate market, despite a number of potential headwinds.
The Northern Virginia Association of Realtors (NVAR) and the Center for Regional Analysis at George Mason University on March 25 came out with their 2021 market forecast, which anticipates continued growth in most Northern Virginia jurisdictions.
“Home buyers and sellers view the housing market from different perspectives, but with one common question: where is the market in this region headed?” notes Derrick Swaak, partner and managing broker with TTR Sotheby’s International Realty in McLean and 2021 NVAR president.
A corps of key experts from differing sectors of the real-estate industry was convened to review preliminary forecasts developed by GMU-CRA economists and offer their insights into current and near-future market conditions.
“This year’s forecast was especially challenging, since the pandemic and its related disruptions presented highly unusual patterns of market activity,” acknowledged Terry Clower, director of the Center for Regional Analysis.
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The forecasting team zeroed in on factors that included federal monetary policy, the direction of mortgage rates, changes in public-health conditions and the likelihood, or not, of ongoing work-from-home options.
“The impacts of the pandemic, the shape of our post-pandemic economic recovery, and long-term effects of work-from-home conditions will shape residential real estate markets for the next couple of years. Still, in the collective judgment of [the analysts], this should be a strong year for Realtors and their clients,” says NVAR CEO Ryan McLaughlin.
And what do those with crystal balls see? The general consensus, by jurisdiction:
FAIRFAX COUNTY: Continuing high demand is expected to push prices upward through competitive bidding, with the median sales price at the end of December predicted to be $593,979. Prices are predicted to peak in June, at $644,991. Year-over-year price growth at the end of December is forecast at 4.2 percent. Demand-driven price increases could be even higher, but overall affordability levels and the chance of rising mortgage rates should hold price increases within the forecasted range.
The spring and summer markets will rebound, assuming available inventory, leading to a positive year for sales growth, with total annual sales crossing the 18,000 threshold to 18,192, an 11.1-percent increase over 2020, which despite the pandemic turned out to be a good year for residential sales. The peak of activity is expected during summer.
This positive outlook will depend entirely on sellers. If there is hesitancy among sellers to enter the market because of limited move up or downsizing options, then sales will underperform expectations.
ARLINGTON COUNTY: Steady year-over-year price increases are expected in Arlington, with a median sales price in December being $683,761. Peak sales price is forecast in July at $719,577. Year-over-year price appreciation of 9.4 percent is expected, which reflects strong demand for single-family properties.
Reflecting, in part, continuing demand shifts related to work-from-home conditions, substantial year-over-year unit sales increases are predicted. Total annual sales are projected to rise 14.1 percent to 3,126 units by year’s end. Sales are predicted to peak in July, at 291.
Comparatively high inventories are expected to remain through most of this year as market preferences shift in a year still marked by pandemic conditions. The sum of the month-end inventory levels will be 33.6-percent higher in 2021 compared to 2020, but still below long-term trends. Those who want to sell will continue to see strong interest from buyers looking past the pandemic to a strong local jobs market.
ALEXANDRIA: Median sales prices in Alexandria will continue to rise, though the forecast shows price volatility. Because of notable jumps in condominium inventory last fall, a slight market rebalancing is expected, offsetting very strong price gains in recent years. The Alexandria market should come out ahead by the end of the year with price appreciation in December 2021 reflecting a 2.9-percent rise.
Total annual units sold are expected to reach 2,824 in 2021 vs. 2,691 in 2020, a respectable 4.9-percent increase. Late spring through mid-summer will be steady, if not booming.
The shift in demand dynamics for multi-family properties will drive inventories 24-percent higher, but will remain substantially below long-run trends.