The total number of home sales in McLean and Great Falls is up in 2013 over 2012. Further every market segment is up year over year except for that in the under $750,000 category. The reason I believe that this segment fell short in terms of number of sales is due to lack of supply. Current inventory level is less than one month for homes to purchase for under $750,000 in McLean/Great Falls, which includes condos. Economists and other experts that analyze the real estate market typically consider a balanced market to be a 6-month supply, thus the current lower price market in McLean and Great Falls is in a seller’s market cycle. This is in line with market conditions experienced throughout 2013.
The move-up market segment of McLean and Great Falls is the $750,000 to $1.25 million. Year over year there was a 16.6 percent increase in number of homes sold in this market. The reason for this I believe is that many buyers who might have tried to purchase in the under $750,000 segment moved up their purchase criteria in order to be able to buy a home. This is a strong indicator that the market has recovered and that we could possibly experience price appreciation for some areas going forward. Currently there exists about 1.5 month supply of properties available to purchase. With supply running at generally one-quarter of last year’s demand, in many cases good homes priced correctly for the market will sell quickly for a strong price and terms.
The largest gain in number of sales year over year was found in the upper bracket market segment of properties that sold for greater than $1.25 million, with a total of 18.6 percent increase. The reason for this is along the same lines as that mentioned above. The distinction though is that in the upper brackets there is currently an over 7 month supply of inventory, more in each category relative to supply as the price of the home increases. There are obviously less potential buyers for homes over $1.25 million, so in some segments of the upper brackets the conditions are border line balanced to buyer’s market.
The peak of the real estate market in Northern Virginia was in 2005-2006. The market usually follows a 7-year cycle from peak to peak. My ongoing prediction that values would return to market peak for this area in some segments beginning in 2012 was right on track. The good news is that 2013 confirmed that trend. Thus 2013 proved to be a banner year for the McLean and Great Falls real estate market.
My prediction for 2014 is that good houses priced correctly for the market and in good condition will sell for strong prices and terms. As long as supply and demand stay at current levels and not exceed balanced market conditions, 2014 too should prove to be a very good year for real estate in McLean and Great Falls.
Karen Briscoe is Principal of the HBC Realty Group-Keller Williams. Contact her at: www.HBCRealtyGroup.com, 703-734-0192, Homes@HBCRealtyGroup.com.