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 should 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 pandemic. Besides the market summary and forecast that follows below, we also provide important recurring updates on key 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 AND OUTLOOK: Overall, it appears that with increased vaccinations and some continuing restrictions, the COVID-19 pandemic may be waning locally but DMC residential real estate spring market activity continues in full swing. This activity is being driven by low inventory levels, low mortgage interest rates, very robust buyer demand and, to a much lesser extent, impacts from COVID-19. Market data indicate that new residential housing listings in the DMC increased by 40% during the past 30 days while buyer contractual activity remained strong and constant compared to the previous month. Current DMC inventory levels still remain extremely low at only approximately 15-20% of normal expected levels for this time of year. During the past month, mortgage interest rates decreased slightly and held below 3.0% for 30-year fixed rate mortgage for the past 3 weeks (still near historically low levels) and buyer activity continued strong and steady with 1006 contracted transactions in the past 30 days versus 984 sales in the previous month. Low mortgage rates have served as a primary catalyst for the surge in buyer demand that we have experienced. Likewise, market absorption rate analyses clearly indicate that we have a continuing SELLERS MARKET and market data show that DMC property value appreciation has increased to +2.2% per month on average in the past 3 months. The data further provide very strong indications that property values should continue to appreciate as we proceed through the remainder of the spring market.
Mortgage interest rates increased slightly for the first 2 months of 2021 but have declined over the past 5 weeks and have held below 3.0% for the past 3 weeks...with an improving economy, this has been good for sellers, buyers and homeowners wanting to refinance. Freddie Mac weekly survey reporting indicated that the declining rates held again this past week (for the fifth week in a row) resulting in an average rate of 2.96% for a 30-year fixed rate mortgage. Freddie Mac also reports that while mortgage rates are expected to increase modestly during the remainder of 2021, the rates should still remain relatively low...the current rates are expected to support the continuing super-surge of homebuyer demand at least through the spring market. Housing has been a bright spot while our overall national economic recovery is now improving.
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 0.3 months of available inventory, while the townhouse (TH) market absorption rate indicates a supply of only 0.3 months of available inventory and condo data indicate only 0.4 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 that impacts from the COVID-19 pandemic will continue to wane, our MARKET OUTLOOK for the DMC is as follows: to return to continuing JOB GROWTH in the Capital Region; to continue to experience LOWER THAN NORMAL INVENTORY LEVELS for residential property; to continue enjoying ROBUST BUYER DEMAND and competitive contractual activity in 2021; to enjoy relatively LOW MORTGAGE INTEREST RATES for the remainder of 2021; to see a continuing SELLERS MARKET; and to have continuing APPRECIATING PROPERTY VALUES in 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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