Ask McEnearney: How did the real estate market for the second half of 2021 compare with 2020?

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 second half of 2021 compare with 2022?

Answer: The City of Alexandria’s real estate market in the second half of 2021 looked a lot like the second half of 2020.

Condos constitute about 44% of all sales in the City, and there was an almost 2% increase in the number of units sold. This was the only property type with an increase in sales. However, those units took considerably longer to sell, with an average number of days on the market climbing to 38 from just 21 in the second half of 2020.

Unit sales of attached homes fell 5%, but they sold about three days more quickly than in 2020. The number of detaches homes fell by almost 10%, and those homes sold in an average of 24 days, a considerable improvement from 32 days in 2020.

Overall, the total number of homes sold in the City fell by 3%.

The reason for the relatively stagnant sales was the lack of inventory, especially as the year came to a close. In fact, the lack of inventory was stunning. There were half as many attached homes, only one third as many detached homes, and just 60 more condos on the market.

What’s Ahead for the First Half of 2022

We’re starting the year with a significant inventory deficit, and that won’t change quickly.

• Buyers are returning to the market more rapidly than sellers, so we expect to see the imbalance between supply and demand continue through the first quarter. And that imbalance will keep upward pressure on home prices early in the year — especially for attached and detached homes.
• However, most economists are projecting a gradual increase in mortgage interest rates, rising perhaps as much as a half point by midyear.
• Along with the national inflation rate at 7%, that will create a pinch on disposable income for would-be purchasers.
• Ultimately, those factors will serve to moderate the pace of home price appreciation as we get deeper into the year.
• The condo market in the City, while much healthier than the early days of the COVID pandemic, will still lag behind the performance of the attached and detached home markets.
• Based on our own projections and BrightMLS®’ forward-looking Home Demand Index, almost every area of the City will be in the “moderate demand” category.
• The area with the highest demand will likely be the West End, where home prices are a little more affordable.
• By price range, we will likely see sales for detached homes priced between $700,000 and $1,250,000 continue to be exceptionally strong. For attached homes, the hottest price range will be $500,000-$1,000,000. In both cases, these will be what we consider “extreme” sellers’ markets.
• For condos, the hottest part of the market will be for units priced between $300,000 and $600,000, but that price range will not be as strong as the market for attached and detached homes.

Read our full Market Report online for more data on Alexandria City, as well as Northern Virginia, Suburban Maryland, and Washington, D.C.

If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.

McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria