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December 2020


Brought to you by Ron Layton/The R&R Team


 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 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


Home Improvement Decisions You Will Never Regret


When it comes to home remodeling, there are very few design decisions you can make that are sure to stand the test of time. While it can be tempting to opt for trendy renovations (open shelving anyone?), there's no guarantee that they next buyer - or your future self - will share the same preference. We're all painfully aware that the future is tough to predict, but there are a handful of decisions you can make on home improvements that won't keep you up at night, regardless of market forces.


When it comes to remodeling, there are fewer sure-fire bets than investing in a home's infrastructure. Investing in updated electrical and HVAC systems, siding, plumbing, insulation, and windows can yield tremendous ROI for homeowners whether they're staying or selling. These systems are often hidden behind walls and under floors, so they're easy to ignore. However, neglecting your home's infrastructure can lead to inconvenient and costly repairs and can be hazardous to your family's health and safety. There's a reason home inspectors spend most of their time in attics and crawlspaces – the overall health of your home has less to do with aesthetics and more to do with what's behind the scenes.


Storage is a consideration that can be easily overlooked when you're imagining your dream living space, which is almost by design - practical and efficient storage is meant to be out of sight, out of mind. Whether you plan to stay in your home or sell in the near future, sacrificing storage space is a decision you'll likely regret. If your remodel demands eliminating a hall closet, make sure you have a plan to reorganize and add that you'll likely regret. If your remodel demands eliminating a hall closet, make sure you have a plan to reorganize and add that storage back elsewhere. It's impossible to predict what life changes your home might need to accommodate in the future, and if you plan to sell, ample storage will be a plus for practically any prospective buyer.


It can be tempting to see lighting as an afterthought, but in actuality lighting should be a starting point, as it impacts every detail in a room. Take time to research and create a lighting plan that best accentuates the features of your home, taking into account natural light and ways to implement accent lighting. When the time comes to implement your plan, you can't go wrong with a licensed electrician who can ensure all changes are up to code. 


Running the Numbers on Refinancing


Deciding whether or not to refinance an existing mortgage typically means running some numbers. You can do this on your own, but it’s helpful to get the professional assistance of a loan officer. It mostly boils down to how much you’ll save each month, but there are other considerations.

First, the change in rate isn’t everything. Old school rules say that it’s a good idea to refinance if current market rates are 1% or 2% lower than what you currently have, but the rate is only a part of it. The other component is the amount being financed. For larger loan amounts, a reduction of only 0.5% might make sense. For smaller loan amounts, 2% may not be enough.

Instead, calculate the monthly savings and then divide that amount into the closing costs associated with the mortgage. The result is how many months it will take to ‘recover’ the closing costs in the form of monthly savings. Pay less attention to the actual rate but instead how long it will take to get your closing costs back.

Take a loan amount of $300,000 over 30 years with a rate of 4.50%. The principal and interest payment works out to $1,520 per month. If current market rates are at 3.5%, the new payment would be $1,347 for a savings of $173 per month. If closing costs were $3,000, then it would take just over 17 months to recover the associated fees. Not bad. If the loan amount were $100,000 under the same scenario, the monthly savings would be $57 and recovered in 52 months, or more than four years. Probably not a good idea in that situation.

There are other considerations outside of month-to-month savings. Let’s say you’re less concerned about lowering your monthly payments, and you’re more interested in paying off your house faster. In this scenario, it may make sense to refinance at an even lower interest rate on a 15-year mortgage. You’ll pay more per month, but you can potentially save tens of thousands of dollars over the life of your loan.

If you’re wondering whether a refi makes sense for you, reach out to a mortgage professional to help crunch the numbers. We on the R&R Team maintain a list of proven mortgage lenders that are available on our website at this link.


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