Has the earlier Seller's Market this year turned to a Buyer's Market? Here are some points to consider
"How's the Market?" It's a question our Team gets asked by just about everyone that we interact with. As always, we are quick to note that the answer really depends on what part of 'the Market' you are referring to, as the Northern Virginia real estate market is truly the sum of many, many hyper-sensitive 'sub markets'.
Nonetheless, we started off 2018 the way that most years begin - - with an early beginning to our 'Spring Market' (will sales activity starting in January and February) with robust sales activity in all price points throughout the 1st and 2nd Quarters. This was particularly fueled this year by 'low inventory', a lower-than-average number of homes available for sale, often with multiple Buyers showing up - - especially in the lower- and mid-range price points.
"The Same Thing Happens Every Year"
So, as we've progressed through the year, this low inventory condition has caused some homes, typically those that are well appointed, highly updated and well maintained, and/or homes or home sites with unique and sought-after features, to sell quickly, sometimes for even more than their initial List Price.
But not all homes saw 'bidding wars' or even sold as quickly as the other homes around them did. Some Sellers this Spring, perhaps tempted by the perception that we were in a strong 'Seller's Market', pushed their asking prices above the point where the buying public felt there was value. Those properties sat until the reality of the home's true market value was realized, either via proactive price reduction(s) or simply by agreeing to sell at a lesser amount after an extended period of time on the market.
It seems that we see this pattern every year: As home sales are strong and home values increase in the first half of the year, there is inevitably a tipping point around the May/June time frame where the marketplace evens out. Sellers who price their homes based upon the recent increases obtained by Sellers a few months prior often struggle to obtain these prices as the market takes a breather and the urgency of the first few months of sales activity wanes.
Days On Market (DOM) - the first indicator
One simple and easy factor to gauge is the "Days On Market" or "DOM". This number represents how long a property has been For Sale, actively seeking a Buyer, until it goes Under Contract. In the Spring, in any given 'sub-market' in Northern Virginia, DOM in the single digits was not uncommon and were usually less in total when compared to the same period last year.
As the Market continued into and past the Early Summer, DOM inevitably increased across the board, effecting the higher prices ranges sooner and more definitively than the lower pricing points. Simply put, the urgency and momentum of the early months of 2018 stalled, leaving many Sellers scratching their heads.
The elongated Days On Market caused many Sellers to consider a reduction in their asking prices in order to reinvigorate interest in their property.
As Agents, we see the increased communication of price reductions in our email Inboxes like a sudden outbreak of Summer weeds. Where we may not have seen a single such message in the first half of the year, we are suddenly inundated with "Price Reduced", "Price Improvement", and "Motivated Seller" emails throughout the Late Summer and Early Fall as Sellers of unsold listings (and their Agents) adjusted their expectations and tried to align themselves with the reality of the slowdown in activity compared to just a few months ago.
What is in store for the rest of 2018?
If 2018 behaves like most years, our local real estate marketplace will shake off these Summer doldrums and rally over the coming weeks leading up to the end of the year and the Holiday Season.
This is expected in part as there is no singular factor that should be putting particular downward pressure on sales activity: Interest Rates remain favorable, having even bubbled downward somewhat over recent weeks. Certainly these rates are not preventing people from buying homes at this time nor are they expected to jump significantly in the near term or even projecting outward for several months. That is good news for Buyers and Sellers alike.
Couple this with the more balanced number of homes presently available (typically more choice than the very low inventory of the Spring), and the affordability of housing in our area remains relatively strong.
Outlook for 2019 and Beyond
At this time, there is nothing looming on the horizon that indicates anything but a typical year again for Northern Virginia real estate sales, with potential continued increases in home values, but at a slower and more sustainable growth rate.
Who knows? Maybe the direction that we're heading is for a much more balanced marketplace for home sales (neither a strong Buyer's Market nor a strong Seller's Market) - - which would be quite the departure from what we always seems to experience - - a frenzied, one-sided atmosphere that favors either buying or selling.
A Balanced Market for Northern Virginia? Well, we'll just have to wait and see.
Have questions about the Home Buying or Home Selling process? We are here to help, just as we have guided and assisted hundreds of Northern Virginia buyers and sellers!
Remember, we help our SELLERS to get "The Most Money For Their Home", and our BUYERS to get "The Most Home For Their Money" - - and we can do the same for YOU!
"We Sell Homes From A Fresh Perspective...YOURS!"
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The Art of Rel Estate, LLC
CENTURY 21 New Millennium
4315 Walney Road, Suite B, Chantilly, VA 20151
Licensed in Virginia