Lack of Inventory Creates Record January Demand

Lack of Inventory Creates Record January Demand

Realtors see 9 percent increase in sales over same time last year.

While prices continue to rise and home values appreciate more than 20 percent in the past year, Northern Virginia January sales hit record highs throughout the area.

According to statistics from the Metropolitan Regional Information Systems (MRIS), more than $627 million in inventory was sold in January, up more than 32 percent from January 2004, which had sales totaling $473 million.

The average sale price was $475,995, up more than 21 percent from last year, which was $392,206. A total of 986 single-family homes and apartments changed hands in Northern Virginia.

“This is a continuation of the record year we had in 2004,” said Amy Ritsko-Warren, director of communications for the Northern Virginia Association of Realtors (NVAR).

She credits the mild winter as one possible factor in the fevered sales of January, a traditionally slow month for home sales.

“As crazy as it sounds, people don’t want to go out and look at houses or put their homes on the market when they have to shovel snow out of their driveways to get out,” she said.

However, she added that the market will have to cool down eventually, but it’s almost impossible to predict when that will occur.

“With increasing sales prices, it’s challenging” to put people into homes, she said. “It’s harder for first-time home buyers to get into the market,” she said.

One factor driving the hot market is that more people are looking to buy homes than the number of homes for sale.

“At some point, the market has got to slow down. It’s going to get to the point where there aren’t enough people with the money to pay for these houses,” she said. “But it depends on so many factors, when that time will come, that you can’t guess when that’s going to be. We aren’t going to see houses depreciate in value from 22 percent to negative 10 percent in the course of a year. It’ll be much more gradual than that.”

Comparing statistics from January 2005 to the same period in 2003 and 2004, the inventory has decreased considerably, she said, a factor that will continue to drive up prices.

“This has been incredible,” said Zinta Rodgers, a Realtor with ReMax Allegiance in Fairfax. “In January, I was averaging a sale a week, and for the first six weeks of the year I’ve got $3 million in the books. This is the best I’ve ever had.”

When talking with some potential sellers in November and December, Rodgers said she convinced them to wait until just after the holidays to put their homes on the market, anticipating a higher selling price as spring, a traditionally busy season for real estate, approached.

“In all cases where I priced the homes for the spring season, we sold the homes for $20,000 or more over what we were asking,” she said.

Most of her home-buying clients are single adults or young married couples, she said, but there has been an increase in parents buying townhouses or condos for their children as investment properties.

“Two of the five contracts I have on one townhome I have are parents attempting to buy for their children,” she said. “I haven’t come across that earlier but I’m seeing it a lot this year already.”

She also said that the lack of available housing on the market is not only driving up the prices of those that are for sale, but will continue to keep the market on an upswing for the time to come.

“With the threat of interest rates rising, people felt ready to act to get something before they’re priced out of the market,” Rodgers said. “It’s still so competitive out there and buyers need to be able to qualify for the low mortgage rates or have the cash ready to make up the difference in the offer they put on a home.”

An 18-year veteran in the home selling market, Tracy Pless of Long and Foster in Reston said that while sometimes January can be a busy month, “this year seemed to be very active.”

WITH AN UNEMPLOYMENT RATE at less than 2 percent, jobs are moving people into the area much faster than people are looking to leave, she said. “People are being transferred here all the time for various reasons and positions, but there aren’t very many people leaving which creates demand in the housing market because there are no homes available,” she said.

For a house on the market that has a listing price of $1 million or above, Pless said it’s common to get between four and 25 clients interested in purchasing the home, and the number jumps dramatically for homes under that price range.

“This is true demand,” she said. “People are not leaving the area like they used to. Rather than moving, a lot of people are putting additions on their homes so there’s less inventory available.”

The largest portion of her sales are in the $300,000 to $900,000 range, she said, and her clients vary from single people to older married couples, with or without children.

“Prices have gotten so high that it’s difficult to move up from an apartment into a house, or upgrade their home,” she said.

As an example, Pless said there are currently seven townhouses, 17 condos and 13 single-family homes available in Reston out of her office.

“If people are interested in selling their homes, this is the time,” she said.