For six consecutive months, Northern Virginia has seen increases in housing inventory.
According to figures from Metropolitan Regional Information Systems, Inc., the region’s home listings have more than quadrupled since January, from 1,193 home listings to 5,005.
While summer inventory increases are common, the unusually acute rise may foreshadow a slowdown in the area’s housing appreciation that some economists have been predicting for some time now.
Economists with the National Association of Realtors are predicting that price appreciation will slow to a rate of 8 to 12 percent over the next year.
Yet despite these increases in inventory, the average home price in the region this year continues to climb steadily — over 20 percent increases each month compared to last year. In August, a month that saw inventory jump 47 percent since last year, the average home sold for $558,880, a 24 percent increase from last August’s average of $449,678.
“The 47 percent [increase in inventory] is a dramatic change over last year,” said Amy Ritsko-Warren, communications director of Northern Virginia Association of Realtors. “But in the grand scheme of inventory, we’re approaching normal levels.”
ACCORDING TO SOME economists, like Lawrence Yun, senior economist with the National Association of Realtors, inventory may continue to rise before home price appreciation levels drop.
“That [inventory] figure is certainly likely to show a lower appreciation rate down the road,” said Yun. “However, the fact that [price appreciation] is still high shows that there is no over supply in the market yet.”
Realtors, too, are noticing changes in the market. For David Meyers, broker with Meyers and McCabe Realtors in Burke, the market isn’t as one sided as it has been. “To me, it’s a fair market. It’s not a seller’s market and it’s not a buyer’s market,” he said. “Now, it’s turning more normal, and buyers are taking a more mature approach.”
In August, Meyers said he sold three homes, in Arlington, Burke and Clifton. Two homes sold for more than the asking price and one just below.
Meyers has noticed that more buyers are asking for and getting home inspections the past few months. “They are doing their due diligence,” he said. “Buyers were beat up a bit, so they’re a little more cautious.”
Buyers can afford to be a little more patient because homes are hanging around a little longer. In June and July, homes were on the market for an average of 15 and 16 days, respectively. In August, that average increased to 21 days.
“Part of that is seasonal,” said Ritsko-Warren. Last year in August, homes were on the market for an average of 18 days.
All of these indicators, some economists say, indicate that the market is correcting. “The market is restoring to more historical levels,” said Yun. “Over the next 12 to 24 months, it will be very difficult to reach another 20 percent price increase given that demand is weakening and at the same time supply is increasing.”
WHILE THE REGION reached the highest levels of inventory in years in August, sales continued to drop for the third consecutive month. According to figures from MRIS, sales in August fell by 8 percent compared to last year.
“I think the market is showing signs of a slowdown, which isn’t necessarily a bad thing,” said Ritsko-Warren. But no one is predicting that prices appreciation is going to bottom out, just slow down. “Instead of 20 percent increases next year, we might see 12 percent. It’s just not going to be as fast as it has been,” she said, adding that price is also linked closely to changes in interest rates.
“We’re getting to the point where the market is balancing,” said Ritsko-Warren, who predicts the region may see some price slowing this year.
With 30 years in real estate, Bill Jordan, a manager at Long & Foster in Alexandria, has seen plenty of ups and downs in the market. He agrees with economists that the market is making an adjustment.
“The general feel we have right now is that the market is still going to be good, it’s just not going to be quite as dramatic as the bidding wars we’ve been having,” he said. “What I’ve seen and what my Realtors are telling me is that prices have pretty much plateaued — I would say that — but we’re not seeing decreases,” said Jordan.
Another trend Jordan has noticed is that sellers have continued to have high expectations over the summer, sometimes higher than what the market will allow, which has caused some price reductions. “Now, I think [owners have] gotten the message, though,” he said.
But it all depends on the property, Jordan said. Condos continue to sell quickly, said Jordan, and also some properties still attract enough escalating offers to remind Realtors of last spring.