Despite sales numbers slightly lower than January, the real estate market in Fairfax County continues to be more profitable than in past years, as suggested in the February sales statistics posted Thursday.
The average sale price for a home in the county was $487,539 this year, an increase of more than $110,000 from last February’s average of $377,374, according to statistics from the Metropolitan Regional Information Systems (MRIS).
A total of 946 homes, ranging from less than two bedrooms to more than four, were sold last month, bringing in a total of $621,612,541 to the Fairfax County economy.
However, a total of 986 homes were sold in January, statistics show, and a total of 1,636 homes sold in December. Traditionally, sales slow down during the winter months and begin to increase in mid-to-late spring.
“Business right now is tight,” said Gary Lange, a broker with Century 21 New Millennium of McLean. “We have buyers. What we need is to find the inventory.”
With interest rates remaining low, even with gradual increases that are expected to reach 6 percent by the end of the year, prices continue to creep upward as demand increases. People who decide to sell their homes are finding it harder to buy into a larger or more luxurious one, Lange said.
“Maybe we’re running out of homes. We don’t have people moving out of the area like they used to, but more people are continuing to move in. Where do you move,” he said. “If people are living in a $500,000 to $600,000 home, they can’t afford to move up much higher than that” and remain in Fairfax County.
“I THINK THE SPRING market is starting to hit already, especially in Northern Virginia” said Keith Hartke, broker and owner of National Realty in Reston. “With all the growth going on, Fairfax County is on top of the market for job growth in the region. There’s an increase of business coming our way.”
As prices continue to rise due to a diminished inventory, bank appraisals are becoming a buyer’s security net, he said.
“Appraisals control what kind of a price you can put on a house, but if you’re paying cash for the house, you can do anything,” he said. A bank will not grant a mortgage if the condition of the house does not merit the price, he said.
“For the foreseeable future, we’ll see more people moving into the area, but those selling will not be moving out to other locations,” Hartke said. “That’s why we have clauses in our contracts that guarantee the seller is not left without a home.”
Economists are calling for 2005 to be “the banner year of a banner decade,” he said. “People in the area are really excited about that, it’s a good time to sell a home, especially if you’re moving out of the area.”
The market will not slow down or begin to decline, where prices are concerned, until “the prices get so high that people will not be able to pay them,” Hartke said. “The time will come when renters will not be able to move into a home of their own.”
ESPECIALLY ATTRACTIVE to prospective buyers are homes listed for under $500,000, said Jim McGrath, principal broker for Herndon Realty and McGrath Real Estate Services.
“I recently had 19 contracts on one house; there’s a lot of competition,” he said, adding that he expects inventory to increase every week.
Pricing on a house, he said, has become an interesting aspect of the market to watch from a seller’s perspective.
“The market makes it impossible to under-price a home, but you can’t over-price it either,” he said. “In a feeding frenzy, things like appraisals get pushed out of the way, but as a buyer, you really need to be careful not to get all caught up in the frenzy.”
Referring to the current market situations as “instantaneous,” he said that every time he puts a listing up on the Internet, he receives phone calls almost immediately.
The availability of low interest-rate mortgages and interest-only loans may not be the best thing for home buyers, McGrath said, but the access to financing is keeping the market open to buyers who may not have had this flexibility in the past.
“You can get loans now like never before, but this can’t continue on like this forever,” he said. “It’s an interesting environment to work in, but definitely not for the faint of heart.”
INVENTORY WILL most likely take a predicted increase in April and May, said Tracy Pless, chair of the Northern Virginia Association of Realtors and a Realtor with Long and Foster in Reston. “People want to show their homes when the flowers bloom, they think the homes look prettier,” she said.
However, even with increased inventory, the demand will still be there and the homes available will still be taken quickly, she said.
“The growth and employment rates in Northern Virginia are expected to be even stronger in the foreseeable future than during the dot-com era,” she said, which means there’s no relief in sight for homebuyers.
“Everyone keeps talking about the ‘bubble’ here, but this is not a bubble. This is the state of our economy and employment security in the area,” she said.
Although Realtors are enjoying their booming business, it is not without its drawbacks, she said.
“We often have to draw up several contracts for a single person, which gets discouraging after a while,” Pless said. “If buyers don’t immediately get a home, they start to wonder what’s wrong with them. It’s frustrating, it makes it difficult for us.”