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: Where can I find reliable information on local real estate market activity?
Answer: Every month on our website we profile the most important market indicators — contract activity, interest rates, inventory, affordability, and the direction of the market — in an easy to read and digest summary followed by supporting charts and data. Then each quarter we take a look at submarkets in Northern Virginia and last month in this column we shared information on contract activity for the first half of the year in the City of Alexandria and South Alexandria.
This week, we are presenting our latest Market-in-a-Minute summary for Northern Virginia. Read the full StatPak report here.
Contract activity in July 2023 was down 10.4% from July 2022 and was down for four price categories. Through the first seven months of the year, contract activity is down 23.2%. The average number of days on the market for homes receiving contracts was 21 days in July 2022, down slightly from 22 days last July.
The Urgency Index, simply the percentage of homes going under contract that were on the market 30 days or less, was up in July compared to last July. During the past 19 years, the Index has been as high as 94.4% (April 2004) and as low as 22.9% (November 2006). In July 2023, the Urgency Index was 83.7%, up from 76.3% in July 2022.
The number of homes on the market at the end of July (1,340) was down 46.1% compared to the end of July 2022 and was down for five out of six price categories. The number of new listings coming on the market decreased 26.7% compared to July 2022. The decrease in contract activity was offset by a bigger decrease in inventory, lowering overall supply to 0.9 months from 1.5 months the end of July 2022. To provide some context, during the “Great Recession” in July 2008, supply was 4.2 months, the average days on market was 85, and there were 8,600 homes on the market.
30-year fixed mortgage interest rates at the end of July stood at 6.90%. Rates have remained frustratingly high this summer, but the Mortgage Bankers Association is forecasting rates to dip below 6% by the end of the year, and below 5% by the end of 2024. We hope they’re right.
The payment on a no-money-down, 30-year fixed mortgage for a median-priced home is 85% higher than it was a decade ago in July 2013, and the median price is up 41%. The payment is also 26% higher than last July because of higher interest rates and higher prices. The mortgage payment for a median priced home ($4,544) was much higher in July than the median rented price ($2,950).
Direction Of The Market
In July 2021 there were 2,300 new contracts and 30-year mortgage interest rates were 2.8%; last July there were roughly 1,700 contracts and rates were 5.3%. Just last month there were only 1,500 contracts and mortgage rates were almost 7%. The Northern Virginia real estate market has seen a steady decline in contract activity over the last two years as interest rates have risen, yet it is a tighter sellers’ market now than during those heady days with sub-3% mortgage rates. And it’s simply because the number of homes on the market has contracted even more than buyer activity.
There were almost 3,000 homes for sale at the end of July 2021, and that has dropped to a little over 1,300 now. With overall supply at less than a month, and the supply of homes priced less than $750,000 at just over two weeks, buyers just don’t have a lot of choices. That is keeping modest upward pressure on home prices and presents an incredible opportunity for homeowners who are in a position to sell.
As we have noted before, we expect this deficit of listings to continue until mortgage rates drop below 5.5% — or perhaps even lower.
Note: Data derived from BrightMLS and is deemed reliable, but not guaranteed. “Northern Virginia” is defined as Arlington and Fairfax counties and the cities of Alexandria, Falls Church and Fairfax.
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
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If you had a chance to enhance a child’s future with a time commitment of less than 2 hours a week, how would you respond? You have that opportunity right now to join over 200 Alexandrians as a reading tutor volunteer with the Alexandria Tutoring Consortium (ATC).
ATC tutors work with one child in kindergarten, first, or second grade in Alexandria public schools who need extra help with reading. Tutors meet with their Book Buddy 1-2 times each week for 30 minutes October-May at school, during school hours. Many struggling readers only receive one-on-one instruction through this program, and it makes all the difference. Last year, ATC served 195 children, of whom 82% ended the year reading on grade level and 96% made substantial reading gains. But the need is great, and we are still seeing learning lags from the pandemic.
This year, ATC plans to significantly increase the size of the program to reach over 250 students and to serve every elementary school in Alexandria. This is very exciting news, but we will only succeed if we can recruit more tutors. ATC trains you, matches you with a child, and provides ongoing lesson materials and support.
If you have been thinking about buying your first home or haven’t owned one in the last three years, THIS IS FOR YOU!
In the DMV area, it can be difficult to save the downpayment necessary for you to get into your own home. We have a solution. The Funder’s Summit!
We have assembled a summit with different municipalities to tell you how to access their funds for your home purchase.
Mark your calendars and join us for the Family Fun Fall Fest on Saturday, October 7, 2023, from 11am – 2pm!
This FREE in-person event will be held at the Shoppes at Foxchase, located at 4641 Duke St, Alexandria, VA