In Northern Virginia, the final months of 2017 may provide buyers with their last opportunity to purchase the home they want before predicted price and interest rate increases kick in. Here are a few factors at play:
Decreasing Real Estate Inventory
It’s a simple matter of supply and demand: buyer interest is increasing as the supply of homes decreases. The National Association of Realtors (NAR) reports a 9% decrease in active listings across the nation over the past year. And in Northern Virginia alone, active listings have decreased 12% from last year.
Multi-family units figure into the mix, too. A recent NAR forecast predicts that 2018 will see a decline in available multi-family units, adding even more pressure to an already tight housing market. This decline in multi-family units could result in higher rent prices and drive even more potential buyers into competition for available homes. With fewer homes for sale and more people looking to buy, and buy quickly, prices will continue to rise.
Increased Demand for Homes
As the number of active listings fall, potential buyers are making offers much quicker. These motivated buyers tend to make more competitive offers, often meeting or exceeding sellers’ asking prices. Better offers mean that homes spend less days on the market. In July of this year, the average number of days on market for a home in Northern Virginia was 36 days—a 12% decrease from last year. And according to a recent Washington Post article, Reston, Arlington, and Alexandria are experiencing less than a two-month supply of homes. All of this activity creates a “perfect storm” for buyers where selection is limited, prices are rising, and available homes spend fewer and fewer days on the market.
Homebuying Costs Will Continue to Rise
NAR reports show that in June 2017, median single family home prices in the U. S. increased 3.2% since the previous year, a new peak quarterly sales price. And in Northern Virginia, July home prices were almost 5% higher than the previous year, with the largest increase being the price of single family homes.
Mortgage rates are following suit. NAR research shows that mortgage interest rates have been increasing since 2016 and will continue this trend throughout 2018. Forecasters at Freddie Mac believe mortgage rates above 4% are here to stay.
When is the right time to buy a home?
Market factors are definitely influencing consumer-purchasing choices; 12% of all buyers said they might have to delay purchasing a home due to increasing rates, while 7% say their desire to lock in the lowest rates has sped up their buying process.
Even with the increase in competition amongst buyers for a shrinking pool of available homes, there is good news. There are homes available. Interest rates can be locked in. And housing prices in Northern Virginia are the lowest they will be for the foreseeable future.
It’s up to you to decide whether or not it’s the right time for you to buy, given your current circumstances. The shrinking supply of homes, the increase in home prices, and rising mortgage rates, all provide good reasons why buying a home now makes sense. If you are in the market to buy a home, get a team of experts on your side who can walk you through the entire process from start to finish—like the caring professionals at Van Metre Homes.
Stop by a Van Metre sales center to check out a variety of move-in ready homes or scroll through the site to see all the ways we can help you find, finance, design and purchase a home of your very own.