Have a Wonderful and Safe Holiday Season!!!
We wish you and yours the very best during this Holiday Season and beyond. Whether staying at home or joining family and friends, please enjoy yourselves and please stay safe!
Dulles Market Corridor Residential Real Estate Activity Continues to be Historically Robust!!!
As owner of The R&R Team and as a graduate economist/research analyst, I take great pleasure in completing monthly analyzes of the Dulles Market Corridor (DMC)* (defined below) residential real estate market and in providing the results of these analyzes to our clients. Our analyzes and market forecasts have proven to be consistently accurate over the past 22+ years...we believe that you may find the results of our most recent analysis and forecast for the DMC real estate market to be of interest in the midst of the ongoing COVID-19 coronavirus pandemic.
Overall, in spite of the continuing COVID-19 coronavirus pandemic, the DMC residential real estate market is quite robust and is driven by low inventory levels, historically low mortgage interest rates, surging buyer demand and, to a lesser extent, impacts from the COVID-19 coronavirus pandemic. Market data indicate that residential housing inventory levels of DMC residential housing dropped by 40% in the past 30 days. (NOTE: Inventory levels generally drop during November-December as sellers elect to withdraw properties during the holiday season...market data indicate this same seasonal pattern also appears to be occurring this year). Even considering holiday seasonal impacts, current inventory levels remain at approximately 10% of normal expected levels for this time of year. In the past month, mortgage interest rates remained at or near historically low levels. At the same time, buyer activity has dropped by 17% in the past month but, compared to seasonal norms, has been generally quite robust in the DMC with 585 newly contracted properties in the DMC in the past month versus 707 contracted properties the previous month. Also, even with continued COVID-19 face mask/social distancing restrictions, the continuing high level of fall market activity has never been seen in the DMC market in at least the past 20+ years. Likewise, current market data clearly show that market absorption rates provide for a continuing SELLERS MARKET. Further, the data show that DMC property values continued to appreciate (+0.8% per month on average) in the past 3 months and that property values should continue to appreciate going into 2021 with expected buyer activity to continue to surge higher than normal for a winter DMC market. DMC property values overall have appreciated by 7.2% in 2020 versus 4.0% in 2019 (the National Association of Realtors recently reported that real estate property values nationally have risen 10.2% overall in 2020).
Mortgage interest rates continue to be great news for both home sellers and buyers. The 30-year mortgage interest rates have declined 13 times in the past year and the current mortgage interest rates are holding at or near all-time historical lows (since tracking started in 1971). Freddie Mac weekly survey reporting indicated an average rate of 2.67% this past week for a 30-year fixed rate mortgage. Freddie Mac also reports that while mortgage rates remain at these record lows, homebuyer sentiment and purchase demand show no real signs of waning as we head into the new year...the housing market continues to surge while other elements in our national economic recovery appear to have stagnated recently.
Based on our most recent analyzes of DMC inventory levels and competitive buyer contractual activity, market absorption rates indicate that we continue to have a SELLERS MARKET in the DMC. Market absorption rate represents the number of months needed to sell off existing inventory for a particular property type based on recent buyer activity. The market absorption rate for single family detached (SFD) homes indicates that we currently have only 0.4 months of available inventory, while the townhouse (TH) market absorption rate indicates a supply of only 0.2 months of available inventory and condo data indicate only 0.6 months of available inventory. FYI: Real estate pundits nationally and regionally indicate that market forces typically need to stabilize home inventory levels at a 3-to-4 month-supply-level to constitute a normal or balanced market (a market situation where economists say that supply and demand are in equilibrium). A market absorption rate that falls below this norm indicates a sellers market, while a rate that is above this range indicates a buyers market.
In summary, based on our recent analysis of available market data and assuming that ongoing efforts to recover from the COVID-19 pandemic will succeed, our MARKET OUTLOOK for the DMC is as follows: to return to continuing JOB GROWTH in the Capital Region; to experience continuing LOWER THAN NORMAL INVENTORY LEVELS for residential property; to continue enjoying SURGING BUYER DEMAND and competitive contractual activity going into 2021; to have continued historically LOW MORTGAGE INTEREST RATES in 2021; to see no change from a continuing SELLERS MARKET; and to enjoy continued APPRECIATING PROPERTY VALUES going into 2021.
(*NOTE: The Dulles Market Corridor (DMC) encompasses the large market area of Herndon/Oak Hill, Reston, Sterling/Potomac Falls/Dulles, Ashburn/ Broadlands/ Brambleton, Leesburg/Lansdowne, South Riding/ Chantilly (Loudoun County), Stone Ridge, Aldie/ Arcola and Chantilly (Fairfax County). The R&R Team has been tracking market data closely in the *DMC for the past 22+ years.)
For more in-depth data and details from our analysis, please go to The R&R Team website at this link.
Have questions or comments? If so, please send us an email or call us at 703-625-5586.