I've been shopping for a new car recently. Maybe two, depending on how irresponsible I'm feeling.
As a result, most of my downtime lately has been spent doing a different kind of market research. That's also why this blog is a little later than usual and probably a little less polished than I'd like.
What surprised me is how much the experience reminds me of buying a home right now.
The particular vehicle I've been looking at has a huge spread between the base model and the highest trim package. The top trim costs nearly five times as much as the base version, yet when you look closely, they're fundamentally the same vehicle. The expensive one has more styling, more performance, more prestige, and a few features that make people feel good about owning it. Some of that value is real. Some of it is ego. Most buyers would probably admit it's a mix of both.
What's interesting is how differently the market treats them. The high-end versions are scarce, sell quickly, and hold their value remarkably well. You have to search nationwide. When one hits the market, you need to move fast. If you want an inspection, you risk someone else buying it while you're thinking about it. I've already lost a few that I thought were perfect.
Of course, every time that happens, another one shows up a week later that's just as good, if not better.
The more I've gone through the process, searching listings, comparing options, debating whether to move quickly or wait, the more I've realized it's basically the same experience many home buyers are having today.
The strange thing is while we are not selling as many homes as we typically do this time of year, we are selling more in volume in the form of hihger price points. Whereas the average price in a normal year is little under $1MIL, our average now is closer to $1.3MIL, maybe more.
Right now, Northern Virginia is experiencing a very real K-shaped housing market.
At the upper end, particularly between about $1 million and $1.5 million, demand remains surprisingly strong. Buyers are active, inventory is limited, and good homes continue to attract competition. We aren't seeing the six, eight, or ten offer bidding wars we have seen in the past but we're still seeing motivated buyers willing to pay market value for the right property.
This week alone, I helped two buyers go under contract in that price range.
In Oakton, a home listed under $1.4 million received two offers and ultimately sold for just over $1.5 million. My buyers were thrilled. In fact, they probably would have paid more given how little inventory they've seen that meets their needs. The difference was that there was only one other serious buyer at the table.
In Loudoun County, another property listed around $1.35 million received four offers and sold just under $1.45 million. Again, healthy demand. Competitive. But not crazy. In the meantime, I had folks ratify a lot where there was only one other offer and we ended up under asking price, and two buyers get condos at 2010 prices in Washington DC.
On the other hand, I'm seeing a very different reality for sellers of condos, starter homes, smaller townhomes, and investment properties on the wrong side of town.
The buyers for those homes are much more payment sensitive. The person who planned to move from a condo into a townhome is deciding to stay put. The family that wanted to move from a townhome into a single-family home is looking at today's monthly payment and deciding they can wait another year.
Higher rates, higher ownership costs, and economic uncertainty hit these buyers much harder than they hit buyers at the upper end of the market.
That's why one person can tell you the market is hot while another tells you it's dead.
They're both right.
The buyer shopping for a $1.4 million home in Oakton and the buyer shopping for a two-bedroom condo are experiencing completely different markets right now.
Just like the car market, the premium product continues to attract plenty of buyers, while the more affordable options are facing a much tougher environment. The challenge is that most headlines lump everything together and call it "the housing market."
What I'm seeing on the ground is much more nuanced than that.
