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 who have followed these analyzes over the past 18+ years, nearly all will attest that the analyzes have been quite accurate in assessing the status of the current real estate market and in forecasting its near-term future prospects. Besides the market summary and forecast that follows, we also provide updates to individual market status indicators (current mortgage interest rates, market absorption rates, etc.) that you also may find of interest at the end of this blog.
MARKET SUMMARY & FORECAST: The DMC market has remained very hot and still appears to be holding so as we head into the summer market. MLS data for the real estate market in the DMC indicate that during the past month buyer activity increased again by 13.4% compared to the previous month while inventory levels increased by 18% during the same period. In turn, our analysis indicates that current inventory levels continued to remain approximately 50% of the normal levels for this time of year. Local pundits have stated that inventory levels locally are likely to continue below normal levels while expecting increased buyer activity to continue. With these conditions, one can expect that there will be continued buyer competition for the given inventory and that property prices will continue to appreciate. Sellers in some neighborhoods can expect to receive multiple contract offers for properties that are properly priced, conditioned and marketed and some of these properties may sell at or above their list prices. Overall, DMC property values have been appreciating at 1.4% per month for the past 90 days and our analyzes indicate that market appreciation should continue into the early summer market. Similar market conditions as these in the 2013 market resulted in 7% property appreciation for that year. We expect similar results for 2017.
Our most recent analyzes of market absorption rates support a continued sellers market. The market absorption rate for single family detached (SFD) homes indicates that we currently have 1.4 months of available inventory, while the townhouse market absorption rate indicates 0.7 months of available inventory and condo data indicate 1.6 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.
Based on U.S.. economy performance indicators, the Federal Reserve Board increased the prime interest rate again at its March meeting by another quarter point and Fed Chair Janet Yellen has stated that the current economic conditions likely support two more rate hikes this year. The 30-year fixed mortgage interest rate had increased by nearly 3/4 of a percent since last summer; however, contrary to expected results from the recent Fed rate hike, mortgage interest rates have declined throughout 2017 (in fact, this past week, the 30-year fixed-rate conventional mortgage rate dropped below 4.0% once again). However, if the Fed further increases the prime interest rate as is expected this year, most pundits believe such actions will eventually lead to higher mortgage interest rates.
With continued job growth in the Capital Region, relativity low inventory levels, continued good buyer activity and currently very attractive mortgage interest rates, we expect the DMC real estate market to continue to be very hot at least during the early summer market. Sellers should anticipate a good market response and price appreciation for their listed properties if they have been properly priced, conditioned and marketed. On the other hand, buyers can anticipate continued competition when making contract offers and may wish to make their purchases earlier rather than later based on upward pressures on property pricing and with anticipated mortgage interest rate increases.
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 provided below.
You can also review Real Estate Business Intelligence monthly updates for Northern Virginia and the Capital Region on our Team website at this link: Northern Virginia Market Watch.
(*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 18 years.)
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