As the Northern Virginia real-estate market transitioned from winter to spring, a lack of inventory has led prospective purchasers and their agents to move fast.
“What Realtors are dealing with now are a lot of showings within the first 48 hours of listing,” said Thai-Hung Nguyen, secretary-treasurer of the Northern Virginia Association of Realtors (NVAR) and principal broker with Better Homes and Gardens Real Estate in Falls Church.
“I put a listing up at 8 a.m., and by 10 a.m. would have the first showing,” Nguyen noted in parsing the March home-sales figures, which showed that 71 percent of properties that went to closing during the month spent less than 10 days between initial listing and a ratified contract.
A total of 2,035 properties sold in March across the region, down 4.9 percent from a year before – but much of that shortfall is due to an ongoing lack of inventory on the market, coupled with the very strong, COVID-rebounding homes market of early 2021.
(Figures represent sales in Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church. For full data, see the Website at https://nvar.com/marketstats.)
While those looking for homes are feeling the pinch of a pro-seller environment, many are declining to jump on just any property.
“Buyers still prefer move-in-ready houses,” Nguyen said. “If any houses stay on the market for more than two weeks, that’s an obvious sign of being over-priced or in a condition that is not good enough for most buyers.”
Others, however, are throwing caution to the wind.
“We hear stories of buyers coming in with no contingencies, which could be risky, depending on their particular circumstances,” said Ryan McLaughlin, NVAR’s CEO.
There are signs that the inventory crunch of the past year is beginning to ease, at least up to a point. While the number of homes on the market in March was still down 22 percent from a year before, that’s not as steep a dropoff as had been recorded in preceding months. And there was a 37.8-percent jump month-over-month jump in supply in March compared to February, although that may simply be the market returning to normal seasonality after being derailed by COVID.
“One thing I noticed is there are more ‘Coming Soons’ in the MLS, which hopefully means more homes in the pipeline that will bring some relief to the inventory issue,” Nguyen said.
Individual results still vary; while the typical number of offers being seen for homes is averaging five to several, it can range from as few as one or two to as many as 25. Buyer interest remains high in Arlington, Alexandria and Fairfax County, according to the Bright MLS T3 Home Demand Index.
Multiple offers for a limited supply of homes pushed prices to a record high in March. The average sold price of a home in the NVAR region in March was $779,908, 12 percent above the March 2021 average of $696,318. The average price of a single-family detached home was $1,137,371, 11.6 percent higher than last year.
Homes continued to sell above list price in March, with an average sold price to original list price ratio of 103.4 percent.
Can that upward price spiral continue, particularly with buying power being nibbled at by rising inflation and interest rates?
As reported by Freddie Mac on April 7, mortgage rates have risen 1.5 percentage points over the last three months, the fastest quarterly rise since May 1994. This increase could impact affordability, keeping some buyers on the sidelines.
“With the Fed raising interest rates, which translates to higher mortgage rates, some buyers will likely be priced out of the market,” acknowledged McLaughlin. “While this, combined with rising inflation, may soften the rapid price increases we’ve seen over the past year, it’s unlikely that homes will lose value in our market.”
For March, year-over-year sales were down in all five localities of the NVAR index with the exception of Arlington, which was up slightly. Average sales prices were up in every jurisdiction; median sales prices were up in Arlington, Fairfax County and Falls Church; down in Alexandria; and effectively unchanged in the city