Wishing everyone a happy early Thanksgiving! I am so thankful for past clients, friends, and family that continue to support my real estate business, refer their loved-ones, and cheer me on along the way.
Given all of the hype in the news surrounding the real estate market recently, I thought it would be a good time to pull up some statistics and give you real data on what our local market is looking like at this point given current interest rates.
One quick note on rates before diving into the below chart. Interest rates are not tied to the Fed rate, but more directly resemble inflation trends. This gives me hope that rates will decrease next year as the Federal Reserve works to reduce inflation. While I don’t believe rates will get back down to COVID-era numbers, many experts are predicting we may be in the 5% range in 2023. I have a really great video to share if anyone wants to spend an hour learning about the nuts and bolts of this – just send me a text or email!
To begin, let me explain what is included in this chart. This is active listing data from the last four years in Fairfax County. The red line represents single family homes, the green line represents townhomes, and the yellow line represents condominiums and cooperatives.
The media has really hyped up that listings are on the rise and the housing market is on the brink of a “bubble,” which isn’t accurate. Talk to any Realtor who’s been doing this for a while, and they would tell you the market in 2017, 2018, and 2019 were good years in real estate. The market we saw between spring 2020 and spring 2022 was amazing for sellers and the rates were wonderful for buyers, but the pace and competitive nature of the market were really an anomaly. Most agents are looking back to 2019 statistics, and pointing sellers and buyers alike to that year to give them an idea of what to expect in a more “normal” market.
Why do I mention all of this? Because the numbers really do speak for themselves. If you look at the chart above, listings are not up. Yes, they are up from last year specifically, but looking at single family home data they are far below what we saw in October of 2018 and inventory levels are similar to October 2019 and 2020. Cyclically, we almost ALWAYS see an uptick in inventory in the late fall and holidays seasons, as the busiest times of year follow the school calendar. Focusing specifically on townhomes, inventory levels are similar to what we saw in both 2019 and 2021.
Interestingly enough, condos and coops are finally back down to pre-pandemic inventory levels. This portion of the market was hardest hit by the pandemic (many moving further out and less demand to be closer for commuting purposes), and inventory levels are finally down about 40% from this time last year and just about the same as October 2019. Take away from this is that those who purchased a condo over the last couple of years really did have a golden opportunity with higher inventory levels and more negotiation power than we normally see.
I want to finish up with some other reasons why what we are seeing now is not similar to 2008. Aside from inventory levels being super low (which was not the case then), loan requirements continue to be more regulated than ever, the rate at which builders are putting up new houses is FAR lower than what we were seeing during the lead-up to 2008, and home values mostly exceed or are equal to the value they were recently purchased for so we aren’t seeing a ton of bank owned properties or foreclosures.
One final thought – for those considering purchasing, this could be a really great opportunity for you given the right circumstances. Though we aren’t seeing a huge surge in listings, there are currently less buyers out, giving those on the hunt a rare opportunity for price and contingency negotiations. Remember: Date the rate, but marry the house. If you can afford to purchase a home at today’s rates, you have the opportunity to purchase your dream home with much less competition and refinance later. Also, ask your lender about adjustable rate mortgage options, which could be a great fit for you at a lower initial rate.
I anticipate a busy spring next year (especially if rates come back down earlier rather than later), so buckle up for a much more competitive experience as a buyer if you plan to wait until that time.
Have any feedback or questions? Don’t hesitate to email or call.
Alli Collier 