The Market is Springing Forward
By: Scott Pearson, Pearson Realty
Although the Fairfax County real estate market isn’t heating up to 2006 levels (thank heavens), the signs of a strong spring and summer are readily apparent. Already we are seeing an increase of 6-7% over last year’s asking price for homes. We are also witnessing an active market in February, which is a strong indicator of a very active spring.
What is driving some portion of the market is a lack of adequate inventory to meet demand. Despite the fact that many homes that were underwater and over financed are now, after five years, seeing rising values that have cured that problem. There are however, still too few sellers to accommodate buyers. February 2014 had fewer listings than February 2013, so it appears right now that the inventory of homes available on the market will remain low.
Because inventory is low, it’s putting upward pressure on pricing, and we are seeing more instances of bidding wars for premium property. Although the average time on the market is higher than last year (60 vs. 52 days), there is a material number of homes that were on the market for less than 10 days. Of 789 homes sold in February, 255 were sold within ten days. That’s nearly 30%.
Sales to investors continue to be robust. One of the best indicators of investor activity is the number of cash sales. In February, 16% of the home sales were for cash. Although some of that activity can be explained by persons downsizing, that is a rather high amount of cash sales.
The average price for a detached single family home sold in February was $677,199 in Fairfax County. Average attached home prices were $352,384. That represents an increase of 7.4% for detached and 6.93% for attached over prices in February 2013.
So what can we predict for the coming year? As I gaze into my tea leaves what seems most likely is a continued sluggishness on the seller side, with inadequate inventory of available homes on the market. I see continued enthusiasm on the buyer side as persons recognize that the slow creep upward of interest rates for conventional loans will likely continue. And I see increasing activity by investors and builders that continue to see the substantial upside in Fairfax County property.
The County has weathered sequestration, the bursting bubble of housing values, and the market has pretty much stabilized. Is it a good time to sell? Yes, you can realize a fair price for your property in this market. Is it a good time to buy? Yes, because interest rates are still low, and since credit facilities have digested the new regulations, they are more willing to lend.
Unfortunately, we cannot report the same strength in the commercial property market. It continues to lag and vacancy rates are too high. But that too will likely improve, it’s just going to take a few years longer.
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