2017 In Review
2017 was an excellent year for Sellers. The average sold price increased 4.08% ($579,694 up from $556 944) after being relatively flat the last two years ( -0.04% in 2016 and 0.96% in 2015). Detached single-family homes increase 4.89% on their own with attached (re Townhomes and Condos) rose 2.55%. The increases are primarily due to overall stability in the local economies, coupled with low inventory and low-interest rates creating a perfect storm for bidding wars on properties.
We nearly saw a 10% year over year increase in cash offerings in Northern Virginia. Average days on the market decreased -13.75% from 51 days to 44 days with over 55% (12,510) of all homes sold in 2016 sold in the first 20 days.
Inventory, Inventory, Inventory!
The chart above shows the percent change year over year in both Active listings (green line) and closed sales (blue line). What these lines indicate is that for the past two years’ worth of quarters Northern Virginia has been adding fewer and fewer new listings. In fact, the area as a whole has been closing more sales than they have had listings meaning we are burning through inventory.
Prices on the Rise!
Here we see the direct effect of low inventory as both Detached single family and Townhomes flirt with 5% year over year price increases. And Condos showing strong price increases as well. With expected low inventory expect to see prices to increase like an unstoppable force.
Mortgage Rates Starting to Climb
Unstoppable force meet the Immovable object. Well, that’s not true, because Mortgage rates are moving. They are moving up, and we will soon see a head-on collision between increasing rates and increasing prices. Which looks scary and may put some buyers on the sidelines at first thinking that the higher rates may put pressure on the sales prices, but this shouldn’t as we get past the early jump scare of rates and look at these increases from a more historical outlook of the past ten years.
And we see that rates are still relatively low and will affect new buyers purchasing power way before it affects the asking prices. And we can continue to play this game just ask anyone who looked for a home in the 1980's when rates were in the double digits.
What does this mean for me?
I know what you are thinking. Thanks a lot for this vital information but how does this help me and how does this affect me? Well, let me break it down for you.
Sellers – If you have thought about possibly selling or never thought you could CONTACT ADVON REAL ESTATE today and let's get you a home evaluation, because your home may be worth more than you think and more importantly more than what Zillow believes.
Buyers – Call today and let us put you in touch with great mortgage professionals. Think about this regarding purchase power. 1% increase in mortgages can equate to $35,000 in purchasing power meaning that if you were looking at a home for $500,000 in July of last year when rates were about 3.41% and waited until this July when rates may hit 4.41%, then you are now qualified for a $465,000 home.
