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) residential real estate market and in providing the results of these analyzes to our clients in this blog. We strive to ensure that the analyzes are consistently accurate by using only highly reliable data. For those of you who have followed these analyzes for the past 20+ years, we believe that you will attest that the analyzes have been quite accurate in providing real-time assessments and forecasts of the local real estate market. Besides the market summary and forecast that follows below, we also provide important recurring updates to individual market status indicators (current mortgage interest rates, etc.) that you also may find of interest at the bottom of this blog.
MARKET SUMMARY & FORECAST: THE EARLY-ON 2019 DMC RESIDENTIAL REAL ESTATE MARKET HAS BEEN DRIVEN BY LOW PROPERTY INVENTORY LEVELS, GOOD BUYER DEMAND AND LOWER MORTGAGE INTEREST RATES. Current resale property inventory levels are only approximately 40% of normal levels for this time of year compared to the same time periods in past years. While inventory levels increased by nearly a third in the past month, buyer contractual activity nearly doubled during the same period...and we do not see this scenario changing as we continue through the spring market, albeit, the data indicate that we will continue to have very good buyer activity in the 2019 spring market that will result in the quick buy-up of increasing but still relatively low inventory levels and, in turn, will result in appreciating DMC home values (prices).
Developments on mortgage interest front represent great news for both home sellers and home buyers and should also contribute to a very robust 2019 spring market. After 30-year fixed-loan mortgage rates rose to their highest levels in 7 years to nearly 5.0% in 2018, the rates have been declining since the start of 2019 to the lowest levels in over a year. Freddie Mac weekly survey reporting indicated an average rate of 4.12% this past week. Also, the Federal Reserve Board recently indicated that they do not anticipate any further increases in the prime rate until possibly 2020.
Based on our most recent analyzes of market absorption rates, we continue to have a SELLERS MARKET in the DMC. The market absorption rate for single family detached (SFD) homes indicates that we currently have only 0.9 months of available inventory, while the townhouse market absorption rate indicates only 0.4 months of available inventory and condo data indicate only 0.8 months of available inventory. FYI: Market absorption rate represents the number of months needed to sell off existing inventory for a particular property type based on recent buyer activity. 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 (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 indicates a buyers market.
Our current MARKET PROSPECTUS for 2019 is to expect continued JOB GROWTH in the Capital Region, to have continuing LOWER THAN NORMAL INVENTORY LEVELS for residential property, to continue to have STRONG BUYER DEMAND and contractual activity, to have ATTRACTIVE MORTGAGE INTEREST RATES and to have APPRECIATING PROPERTY VALUES particularly during the spring market. Overall, we should continue to have a HEALTHY DMC REAL ESTATE MARKET in the foreseeable future.
For sellers and buyers who are already in the market or planning to enter the market in the near term, we highly recommend that you also monitor on a continuing basis the latest detailed data for each of the individual market status indicators that are provided below.
(*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 20 years.)
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