This week’s Q&A column is written by David Howell, Executive Vice President and Chief Information Officer, of McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article and relevant market news, contact David at 703-738-9513 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: How did the real estate market for the first half of 2020 compare to 2019 in the City of Alexandria?
Answer: As was true across the globe, the COVID-19 pandemic had significant impact on Alexandria’s real estate market. From January 1 to March 15 of this year when the COVID-induced shut down orders began, total new contract activity in Alexandria was almost identical to that of the equivalent time period of 2019. The market was off to a solid start and would have been even stronger had there been a greater inventory of available homes. More on that in just a moment.
Beginning in mid-March it became more challenging to physically show homes, and consumers were correctly concerned about going out. The chart below shows the significant drop in showing activity (2020’s activity is the green line) that reached the bottom of the trough in mid-April and began to reach “normal” levels by mid-May as phased re-openings began.
In June, reflecting the pent-up demand, showing activity eclipsed last year’s activity. And contract activity unsurprisingly reflected the drop in showing activity. From mid-March through the end of June, there was a 13% drop in the number of newly ratified contracts in Alexandria. Condos — almost half of Alexandria’s market — were hit a little harder with a 14% drop, while attached and detached homes were off 11%.
The other big story in Alexandria is the shortage of inventory. In the first half of 2017, there was an average of 412 available homes on the market at the end of the month. In the first half of 2018 that had dropped to 378 and after the Amazon HQ2 announcement inventory plummeted to an average of just 178.
Inventory has not rebounded, as the average month-end inventory is now just 173. That means the market has essentially half of “normal” inventory levels, and buyers are returning to the market more rapidly than sellers.
Despite the market contraction brought on by COVID-19, we expect to see very tight supply for the foreseeable future, which is great for sellers and a bit challenging for buyers. That tight supply will keep upward pressure on home prices.
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