Northern VA Real Estate Market Updates

2021 Northern VA Real Estate Market

2020 was an economical paradox. COVID-19 changed the way we interact & work. The unemployment rate soared, there were lockdowns that resulted in many businesses closing for a time. Some closed permanently.

However, the government also intervened and on a big level with economic stimulus packages and dropping the fed rate close to zero.

For all the suffering that has happened in 2020, the real estate market was extremely strong. The biggest issue? Not enough homes for sale to meet the demand.

So what will happen in 2021?

This update will address some of the biggest questions in the upcoming year, and a recap of how we got here.

The Biggest Questions in 2021

When Will the Inventory Increase?

A graph representing the number of homes for sale in Northern VA from 2015 to the end of 2020.
Here you can see the inventory of homes for sale in Northern VA from 2015 to the end of 2020 from Bright MLS Data.

In the beginning of 2020, the number of active real estate listings on the market in Northern VA was near the 5 year low.

By the end of 2020, inventory decreased even more.

As you can see, home listings are seasonal. Springtime is generally the peak, and January is the low.

In 2020, the peak was in the summer because of spring stay at home orders. But the real story is the inventory overall.

Inventory has been by far below 10 years lows.

What does this mean? There is a shortage of homes for sale, and the good listings sell quickly.

It has been a great environment for sellers, and aside from good rates, a frustrating market for buyers.

So when will the inventory increase? To put it simply, when the demand decreases, supply will increase.

Right now record low mortgage interest rates mean if you are buying you can get more house, at a lower payment.

This has caused many buyers to be in the market at once.

Will 2021 see an increase in homes for sale? I would predict yes, modestly.

The tumultuous year and resulting economic conditions has kept the inventory low, and it is hard to picture 2021 being as chaotic.

There is also another factor that could cause an increase in listings. Let’s dive into that next.

Are There a Wave of Foreclosures & Short Sales Coming?

An opinion piece from economist Michael Strain on Bloomberg made the following prediction:

When these forbearance provisions expire in 2021, expect a wave of foreclosures to follow.

-Michael Strain

First of all, let’s review what he is referring to. When the coronavirus started, many homeowners in Northern VA, and all over the country, sought relief from mortgage payments via forbearance.

This meant that temporarily, owners did not have to pay their mortgage. The missed payments would be made up at a later date.

Restrictions were also put in place to delay lenders from starting the foreclosure process. The restrictions will, however, at some point expire.

So that means homeowners are potentially facing increased payments, or even a lump sum due because of forbearance (depending on the agreement with the loan servicer.) At the same time, they could face foreclosure if the payments cannot be made.

Foreclosure is a difficult thing for many families. However, foreclosed homes are a natural part of the real estate market.

Will the Northern VA real estate market see a wave of foreclosed homes in 2021? I think it will be less than many experts think.

The biggest reason is that home prices in the area have been on a sharp upward trajectory in many areas. This means that many homeowners have equity in their homes.

If owners are in a dire financial situation, many of them can simply sell their home and get into a more affordable situation.

So although foreclosures will increase because of the end of forbearance periods, the active seller’s market will allow many owners to sell rather than get foreclosed on.

This could, however, bring more listings to the market in a market that has a large amount of buyers and not enough homes.

Is There a Shift in Where People are Moving?

There is narrative that buyers are trying to move out of more populated areas, and heading out to more suburban areas with more land.

As mentioned in this article by Fortune, the stats do not really back up such a claim.

Finding stats to support this theory is not easy, unless there were a mass exodus of buyers going from densely populated areas to more rural.

Right now it looks like any supposed “mass exodus” is overstated.

However, being in the industry and helping buyers and sellers all over Northern VA I can tell you that some of the “farther out” areas have seen sharp increases in demand.

This demand has outpaced what is seen in towns that are closer to DC.

Will it continue into 2021? Possibly. But as things go back to somewhat normal, this sharp increase in demand for certain areas will likely balance out.

When Will Rates Rise?

A chart of mortgage rates survey, reflects a sharp decrease to historic lows in December 2020.
Freddie Mac’s mortgage rate survey over the last 5 years. 2020 has seen historic lows in rates, fueling home buying demand.

The chart above shows the sharp decline in interest rates starting in the beginning of 2019.

This was set in motion after the fed put the reserve interest rates near zero, and the uncertainty in the market caused the 10 year treasury note to drop. This caused the mortgage rates to go to historically low levels.

So what will the interest rates do in 2021? The fed has said that they are going to keep the rate low for the next few years, even if inflation goes above 2%, which previously has been the trigger for them to raise rates.

The interest rates are not directly tied to the fed’s rate. It is more closely connected to the treasury notes, here is a great article about that.

However, the consensus by Fannie Mae & Freddie Mac is that the mortgage rates will remain mostly unchanged in 2021.

Could they go up? Of course. But it seems that the economic conditions will keep them low into 2021, and possibly beyond.

Will the Coronavirus Still Affect the Market?

Yes, absolutely.

The pandemic that hit the globe will ripple through many sectors of the economy.

Real estate has been a bright spot, primarily because of two factors we discussed already: extremely low mortgage rates & extremely low inventory.

High demand & low supply means rising sale prices and increased equity.

The low inventory problem existed before the coronavirus, but afterward the situation much more pronounced.

For example, I wrote an offer on a home for sale in Manassas VA. It was well over list price (which was on the lower side of fair). We lost, and the total offer count was 45.

The rates were fairly low before the virus, but they hit all time lows after.

The pandemic’s effect on the Northern VA market are likely to outlive the actual pandemic, as monetary policy and home buyer behavior have both changed.

2021 will be a real estate market shaped by the environment the coronavirus has created.

Will Home Prices Go Up or Down?

A graph showing two lines, one representing average sales price in Northern VA, the other median sales price in Northern VA. Both are trending upward over 10 years.
This shows the average (green) and median (blue) sales prices over the last 10 years in Northern VA.

Home prices in our area over the last 10 years have gone up considerably.

You can see from the graph above, there was a sharp increase from 2011-2013, and another sharp increase this year.

2011 reflected a time of recovery from the financial crisis that started in the housing market.

And this year? Stop me if you have heard this, but low mortgage rates giving buyers more buying power coupled with low supply has powered this spike.

Predicting home values in the short term is difficult. In the long term, it is easier. Real estate has shown great appreciation over time in Northern VA.

When buying a home, unless you are a home flipper, it is a good idea to plan to own it as long as possible.

If you forced me to make a guess, I would say values will go up in 2021. It is hard to picture them going down considering the current situation we are in.

Even if that changed, there is enough demand to buy up any supply increase and keep values increasing.

Will There Be More New Construction Homes in Northern VA?

A graph of one green and one blue line. Green line reflects new construction listings per month, and the blue line shows the total number of new construction listings available. Both lines reflect a decrease in these numbers over 5 years.
The number of active new construction listings has plummeted in 2020. The number of listings per month of new homes in Northern VA is now half of what it was in 2015/2016.

What is the solution for a shortage of homes for sale? Part of the equation is new construction homes.

New homes in Loudoun County are bringing more homes in formerly rural areas.

Fairfax County developers are turning dilapidated properties into brand new homes, and often subdividing to put 2-3 homes where 1 once stood.

So will new construction solve the housing shortage? Unfortunately, builders had trouble completing there projects in 2020.

There have been multiple reasons. Lockdowns, problems with supply delays and trouble finding buildable land are all contributing factors.

The graph above shows just how drastically buyers went for new construction homes once resale homes supply was low.

Prices of new homes also shot up as inventory went down in 2020. Builders raised base prices rapidly in many new home communities.

Nationally, the Census Bureau reports that new construction permits have seen an increase in the latter half of 2020.

Will 2021 be better if you are looking to buy a new construction home? My guess is yes, but it will take time.

Some of the factors affecting home builders in 2020 should resolve in 2021. But remember, building a home is a process. I would look for an increase new homes available near the end of 2021.

What Areas are Included?

Northern VA is not a perfectly defined area.

Here are the counties/independent cities I used for the stats and include in the “Northern VA area”: Fairfax County, Loudoun County, Prince William County, Fairfax City, Manassas City, Manassas Park, Alexandria City, Arlington County and Falls Church City.

Homes For Sale

Here are some homes currently for sale in Northern VA.

New Listing - 2 hours online
$489,900
Townhouse For Sale
Active
3
BED
4
TOTAL BATHS
2,285
SQFT
42733 Montevista Square
Leesburg, VA 20176
SPRING LAKES Subdivision
New Listing - 2 hours online
$475,000
Condo For Sale
Active
1
BED
1
TOTAL BATHS
650
SQFT
The Hartford #109
1200 N Hartford Street 109
Arlington, VA 22201
New Listing - 2 hours online
$375,000
Condo For Sale
Active
2
BED
2
TOTAL BATHS
1,097
SQFT
Pointe At Park C #2222
3315 Wyndham Circle 2222
Alexandria, VA 22302
New Listing - 2 hours online
$234,900
Condo For Sale
Active
1
BED
1
TOTAL BATHS
870
SQFT
Four Winds At Oa #4-A5
3176 Summit Square Drive 4-A5
Oakton, VA 22124
Open House Sun, Jan 24, 1 PM UTC
$309,000
Condo For Sale
Active
2
BED
2
TOTAL BATHS
1,221
SQFT
Lakeshore Condo #301
44156 Natalie Terrace 301
Ashburn, VA 20147
New Listing - 2 hours online
$3,195,000
Single Family Home For Sale
Active
6
BED
8
TOTAL BATHS
9,857
SQFT
1176 Old Tolson Mill Road
Mclean, VA 22102
ASH GROVE Subdivision
New Listing - 2 hours online
$439,000
Townhouse For Sale
Active
3
BED
4
TOTAL BATHS
1,913
SQFT
45434 Baggett Terrace
Sterling, VA 20166
DOMINION STATION Subdivision
New Listing - 2 hours online
$565,000
Townhouse For Sale
Active
3
BED
4
TOTAL BATHS
2,019
SQFT
7311 Westmore Drive
Springfield, VA 22150
WESTHAVEN Subdivision
New Listing - 4 hours online
$1,899,000
Single Family Home For Sale
Active
5
BED
7
TOTAL BATHS
6,110
SQFT
208 Mchenry Street SE
Vienna, VA 22180
MCHENRY HEIGHTS Subdivision
Open House Sun, Jan 24, 2 PM UTC
$929,000
Single Family Home For Sale
Active
1
TOTAL BATHS
2,568
SQFT
1612 Stonebridge Road
Alexandria, VA 22304
KINGS HUNDRED Subdivision
New Listing - 4 hours online
$415,000
Townhouse For Sale
Active
3
BED
3
TOTAL BATHS
1,907
SQFT
21013 Coach House Square
Ashburn, VA 20147
ASHBURN FARM Subdivision
New Listing - 4 hours online
$1,575,000
Single Family Home For Sale
Active
2
BED
1
TOTAL BATHS
1,000
SQFT
36169 Loudoun Street
Round Hill, VA 20141
ROUND HILL Subdivision
Open House Sun, Jan 24, 1 PM UTC
$349,000
Condo For Sale
Active
2
BED
2
TOTAL BATHS
1,351
SQFT
Stratford Place #E
7501 Ashby Lane E
Alexandria, VA 22315
New Listing - 4 hours online
$269,900
Condo For Sale
Active
2
BED
1
TOTAL BATHS
793
SQFT
Belle View Condo #B2
1507 Belle View Boulevard B2
Alexandria, VA 22307
New Listing - 4 hours online
$539,900
Single Family Home For Sale
Active
3
BED
3
TOTAL BATHS
1,040
SQFT
10838 Split Oak Lane
Burke, VA 22015
BURKE CENTRE Subdivision
Open House Sun, Jan 24, 2 PM UTC
$2,750,000
Single Family Home For Sale
Active
4
BED
4
TOTAL BATHS
5,850
SQFT
903 Countryside Court
Mclean, VA 22101
COUNTRYSIDE Subdivision
New Listing - 5 hours online
$469,900
Condo For Sale
Active
2
BED
2
TOTAL BATHS
1,161
SQFT
Carlton Hoiuse #602
11800 Sunset Hills Road 602
Reston, VA 20190
Open House Sun, Jan 24, 1 PM UTC
$850,000
Single Family Home For Sale
Active
5
BED
4
TOTAL BATHS
4,831
SQFT
20357 River Bank Street
Sterling, VA 20165
RIVER CREST Subdivision
Open House Sun, Jan 24, 2 PM UTC
$950,000
Single Family Home For Sale
Active
4
BED
5
TOTAL BATHS
2,738
SQFT
5148 11th Street S
Arlington, VA 22204
COLUMBIA FOREST Subdivision
New Listing - 6 hours online
$480,000
Condo For Sale
Active
2
BED
2
TOTAL BATHS
1,215
SQFT
Savoy At Reston #151
12000 Market Street 151
Reston, VA 20190

Selling Your Home

Are you checking the market to sell real estate in Northern VA? I can help. Every town and neighborhood has its own micro market, so I would be glad to talk with you about yours.

Will Rodgers

Will is an award winning real estate agent, author and high tech marketing expert. Adopting a consultative approach he has helped hundreds of clients meet their real estate goals in the Northern VA real estate market.

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