Crunching Numbers, Reading Tea Leaves
By: Scott Pearson, Pearson Realty
July 2016, ENDEAVOR News Magazine
When you are in the real estate business, you look at economic indicators to see both the present and the future. Mind you, the wind can always shift and blow your data out the window, but if you keep an eye on things you usually are not caught unaware.
What we see in the Annandale region is a slight increase in home values over last year. Although nationally the value of homes has risen over five percent in the past year, here in Annandale it’s closer to 1.5%. Why?
Housing prices throughout the Country continue to bounce back against the recessionary forces of 2008-9. But in Annandale we have fully recovered from those bleak years, therefore, housing prices in our area are only creeping up based on minimal inflationary pressure.
Unemployment remains well below the national average at around 3.5%. When combined with the rising rate of Fairfax County sales tax receipts, and a recent bump in consumer confidence numbers, our real estate market appears steady and strong.
We do not make much of the fact that the average time on market for houses has increased to around 69 days. Spring came late this year as did buyers entering the market (yes, weather matters). Therefore, this is seen as an indicator of nature rather than a valid test of market strength.
However, what continues to be a headwind is inventory. Despite historically low interest rates, the FHA dropping its minimum down payment to 3% for first time home buyers, and other factors that would encourage the housing market, the lack of sufficient inventory for sale continues to bedevil the market.
That is not to suggest that the inventory situation is not improving. It is. March listings, a key indicator, showed a 15% increase in homes listed for sale in our area. This is a real improvement, but still not quite what we would like to see since that nearly anemic inventory of a year before.
Meanwhile, among the new jobs created locally over 30% were in the professional and business sector which tends to produce higher wage positions. This suggests that some of the worst effects of sequestration are behind us and that recovery from that economic tsunami has commenced in earnest.
So, what do we make of this information? Based on the foregoing it is clear that the uptick in consumer confidence numbers are based on a realistic overview of the market. Locally, buyers are feeling more secure in their situation and believe they can plan with confidence, and accept the debt associated with a home purchase. This acceptance is key to advancing the housing market.
For the residents of Annandale it is mainly good news. Prices are steady, credit is available and cheap, inventory is greater, and Spring finally came to the housing market. The only negative element is the recent increase in real property taxes but we have never had a deal fall out because of property taxes.
We would truly like to see a more invigorated commercial property market which continues to lag behind the residential market. Outside of Tyson’s Corner and Merrifield, there isn’t much to write about. But hope is in the air at Bailey’s Crossroads and other pockets of commercial activity. Maybe that spirit will drift to Annandale.
Median Sales Price of Annandale Homes
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