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 economic reopening efforts from the ongoing COVID-19 coronavirus pandemic. Besides the market summary and forecast that follows below, we also provide important recurring updates to individual market status indicators (current mortgage interest rates and other market data) that you also may find of interest at the bottom of this blog.
MARKET SUMMARY & OUTLOOK: Overall, in spite of the continuing COVID-19 coronavirus pandemic, the DMC residential real estate market continues to be driven by low inventory levels, historically low mortgage interest rates, continuing robust buyer demand and, to a lesser extent, impacts of the COVID-19 coronavirus pandemic. Market data indicates that residential housing inventory levels of DMC residential housing remained steady in the past 30 days. During the same period, mortgage interest rates remained at or near historically low levels and buyer activity continued at quite robust levels in the DMC. At present, overall current inventory levels remain at approximately 20-25% of normal expected levels for this time of year. With continued COVID-19 face mask/social distancing restrictions and historically low mortgage interest rates, buyer contractual activity remained quite robust with 834 contracted properties in the DMC in the past month versus 850 newly contracted properties the previous month. This high level of fall market activity has never been seen in the DMC market in at least the past 20 years. With the continuing low inventory levels, low mortgage rates and continuing robust buyer contractual activity, market absorption rates indicate a continuing SELLERS MARKET. Also, market data shows that DMC property values continued with increased appreciation (+0.8% per month on average) in the past 3 months and that property values will continue to appreciate for the remainder of the fall DMC market due to expected continued robust buyer activity that is much higher than normal for a fall DMC market.
Mortgage interest rates continue to be great news for both home sellers and buyers. The 30-year mortgage interest rates have declined 11 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 2.80% this past week for a 30-year fixed rate mortgage. The outlook is for mortgage rates to remain relatively low into 2021 and for the real estate market to serve again as a core contributor in our local, state and national economic recovery.
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 0.5 months of available inventory, while the townhouse (TH) market absorption rate indicates a supply of only 0.4 months of available inventory and condo data indicate only 0.9 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 considering that successful economic reopening efforts from the COVID-19 pandemic will continue, 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 enjoy ROBUST BUYER DEMAND and competitive contractual activity for the remainder of 2020 and into 2021; to continue enjoying historically LOW MORTGAGE INTEREST RATES into 2021; to see no change from a continuing SELLERS MARKET; and to enjoy APPRECIATING PROPERTY VALUES during the remainder of 2020 and 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.)
Again, for sellers and buyers who are already active in the real estate market or planning to enter the marketplace in the near term, we highly recommend that you monitor our continuing blog updates on the local market and to review the latest detailed data for each of the important market status indicators on our Team website at this link: R&R Team Blog: Local Real Estate Market Status. We attempt to update this market status blog on a weekly basis or more often if needed.
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