Annandale, VA: Real Estate in Annandale
A Little Buy, A Little Sell
By: Scott Pearson, Pearson Realty
As we view the new calendar year, one can’t help but look forward to the forces that will come into play affecting the local real estate market. Some will likely spur buyer activity and some will encourage sellers, but whether the combination creates, a vigorous market is always a matter of speculation.
Although we have seen an uptick in activity due to continuous low interest rates that encourage buying and a loosening of inventory due to gradually rising home prices, there continues to exist pull on the market activity that reduces or holds in-check more activity.
The effects of sequestration continues to affect activity in a negative way. It reduces the amount of money flowing into the local economy and creates economic uncertainty for those working for government contractors. Present homeowners are disinclined to move to more expensive housing and, therefore, market churn is reduced. Those moving up in the housing market fuels a material portion of the housing industry.
Conversely, the FHA has recently announced that it is reducing the minimum down payment for FHA loans from 5% to only 3%. This adjustment is significant as the greatest challenge for first time home buyers is often the down payment, particularly in areas like Annandale where single family homes often sell for well above $400,000. Therefore, persons who qualify for FHA financing will find it far easier to afford that first home.
Another likely event spurring buyers will be the anticipated rise in interest rates due to the Federal Reserve’s backing off of quantitative easing. The Fed’s policies over the last few years have held interest rates to near historical lows, but we expect that rates will rise approximately a half a point over the next six to nine months. People who want to get in on the bottom will be encouraged to act when the evidence of slowly rising home interest rate becomes more apparent.
In Annandale, the value of existing homes continues to rise and the prices for newly built homes look much as they did prior to the real estate collapse. This spurs both sellers and buyers to act. Meanwhile, the rising cost of renting is a mixed bag. On one hand it encourages qualified buyers to make the decision to own rather than rent. However, those same rents reduce some persons’ ability to save for the down payment necessary to purchase a home.
There are many other factors we could consider to part the clouds in our crystal ball, such as an aging Annandale populace that could result in increased home sales. However, at this time we are seeing promising signs for the new year with reasonable activity expected from both sellers and buyers.
Median Sales Price of Annandale Homes
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