Annandale REAL ESTATE: Three Factors to Consider
By: Scott Pearson, Pearson Realty
April 2019, ENDEAVOR News Magazine
There is no way to address real estate in this area without mentioning two, very important factors: Amazon’s progress in its creation of HQ2 and interest rates. However, there is now a third factor to consider, the planned Virginia Tech innovation campus in Alexandria. This three-way combination will continue its ripple effect throughout the entire area. So, let’s deal with each of them.
Let’s take the state of interest rates first. Month after month we have seen stability in interest rates that continue to hover around four percent. There is little indication from the Federal Reserve that rates will rise and, in fact, at this writing there is some suggestion that rates may fall to the 3.85% range. What this condition does is provide stability and greater certainty to the housing market. Although the woeful lack of inventory has persisted for at least three years causing a seller’s market to be evident, the stabilization of interest rates provides consumer confidence that is essential to a healthy market.
Contributing to the rosy future for Annandale has been Amazon’s HQ2 progress which appears to be ahead of schedule and the housing market is losing little time in responding to what is expected to be great demand from well-paid, future Amazon employees. Currently, home prices in Arlington are expected to rise over 17% instead of the 5% originally predicted prior to the Amazon deal.
Despite the good fortune for Arlington home sellers, we do not expect similar results in Annandale. However, since Arlington homes are already expensive and since not all Amazon employees will be able to (or want to) afford an $800,000 mortgage, one of the next logical places for those buyers to seek a home is in Annandale. Therefore, it is not unrealistic for Annandale to expect a bump in home values, particularly for property selling in the six-to-seven hundred thousand dollar range. Said another way, a house that would have sold for $600,000 might soon bring a purchase price of $640,000. Not dramatic but not bad.
That brings us to the Virginia Tech development. Anyone who has paid college tuition knows that professors make a decent amount of money and college professors who teach cutting edge technology (such as cyber-security) usually make more. That means that the bump in high-paying jobs in nearby Alexandria to produce future Amazon employees should also affect home sales. Although Amazon is talking about 25,000 employees, we can now add probably a couple of hundred other jobs that might increase interest in Annandale property.
The reaction to these factors is already affecting the market. The combination of low inventory and the future jobs market has already driven the time-to-market down to 27 days, whereas only a year ago that duration was over 50 days. That means homes are selling at higher prices and are being sold quickly
Unfortunately for those folks who wish that the inventory of available homes for sale would rise, all of this activity also could result in a greater number of homes for rent, as demand for housing might create an incentive to turn houses into cash flow, rather than sell in a rising market.
So you sellers can be happy about the effect of these developments and buyers...well...at least interest rates remain low and steady
Median Sales Price of Annandale Homes
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