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 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 pandemic restrictions, DMC residential real estate market activity remains quite robust and is driven by low inventory levels, historically low mortgage interest rates, surging buyer demand and, to a lesser extent, impacts from COVID-19 impacts. Market data indicate that residential housing inventory levels of DMC residential housing dropped by 11% in the past 30 days while buyer contractual activity increased by 55%. While we normally anticipate that the number of listings coming to market would increase in the new year, the actual number of properties listed did increase after the turn-of the-year...however, surging buyer demand out-stripped the increase in new listings and current inventory levels remain at approximately only 5% of normal expected levels for this time of year. In the past month, mortgage interest rates stayed at historically low levels and this served as a primary contributor to the surge in buyer demand. Overall, there were 611 newly contracted properties in the DMC in the past month versus 394 contracted properties the previous month. Also, market absorption rates clearly indicate that we have a continuing SELLERS MARKET. Further, the market data show that DMC property values continued to appreciate at +1.0% per month on average in the past 3 months…and indications are that property values should continue to appreciate as we head into the spring market.
Mortgage interest rates continue to be great news for both home sellers and buyers. The 30-year mortgage interest rates are holding steady at or near all-time historical lows (since tracking started in 1971). Freddie Mac weekly survey reporting indicated a slight jump this past week with an average rate of 2.81% for a 30-year fixed rate mortgage. Freddie Mac also reports that while mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity. It appears that the housing market will continue to a bright spot 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 0.2 months of available inventory, while the townhouse (TH) market absorption rate indicates a supply of only 0.1 months of available inventory and condo data indicate only 0.3 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 in 2021; to have continued LOW MORTGAGE INTEREST RATES in 2021; to see no change from a continuing SELLERS MARKET; and to enjoy continued 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.
Have a question or a comment? Please send us an email or call us at 703-625-5586.