Ask McEnearney: How was the first half of the 2022 real estate market?

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 703-855-5089 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.

Question: How was the real estate market in the City of Alexandria for the first half of 2022?

Answer: At the end of June, we like to take an in-depth look at contract activity in the City of Alexandria for the first half of the year compared to the same months of the previous year. To put contract activity into context for the first half of 2022, we will first look at month-end inventory and the number of new listings coming on the market year-to-date.

• At the end of June, there were 0% fewer homes on the market in the City of Alexandria compared to last June. Overall, for Northern Virginia that number is 8.1% fewer homes, so inventory for the City is tighter than the region overall.
• With the exception of March, so far this year the number of new listings coming on the market each month was down. Year-to-date, the number of new listings has decreased 9.2%.

The next set of charts break down contract activity for the first six months of 2021 and 2022 by price and by property type. Alexandria has seen decreases across all property types (condos, attached and detached homes), and the only price category with an increase was for homes priced $300,000-$499,000.

• Contract activity in the City of Alexandria decreased 8.7% in the 1st half of 2022 compared to the 1st half of 2021.
• The number of detached homes, the smallest part of the Alexandria City market, going under contract in the 1st half of 2022 decreased 16.5% compared to 2021.
• Contract activity in the condo market decreased 2.0% and attached homes activity decreased 16.4%.

As we head into the summer months, we’ll be paying close attention to two key market indicators: mortgage interest rates and inventory. Currently, mortgage rates are more than two full percentage points higher than they were a year ago, and that has already impacted affordability. We fully expect that there will be fewer transactions in the second half of the year as buyers adjust to a tougher financing environment — but for those who can afford to purchase there will be more opportunities to negotiate home inspection and other contingencies that were almost impossible in the overheated market of the last two years.

How much leverage those buyers have will depend on inventory. Despite the drop in contract activity, there still aren’t enough homes on the market to meet demand, and that will keep some upward pressure on home prices in the City. But sellers are going to be adapting to the new realities of a softer market with fewer multiple offers and more modest price appreciation.

Note: Data derived from BrightMLS and is deemed reliable, but not guaranteed.

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