• Home prices are dropping in every major market.
• The difference in today's market versus a few months ago.
• What sellers must do.
• Who today's buyers are.
• What the market could look like in the spring.
Home prices are down in every major city across the country, and Northern Virginia and Washington, DC are no exception.
Northern Virginia Market Update
Here is your October 2022 Northern Virginia Market update.
I want to start this update with a story that summarizes where we are today in the housing market.
Recently, I sold two Herndon, Virginia homes in the same neighborhood, four months apart.
In April 2022, we listed the first home for $830,000, which was an aggressive list price for that neighborhood.
We received multiple offers on this home. It ended up selling for $955,000, which was the highest selling price ever in that community.
Now, fast forward to the late summer of this year. We list an almost identical house in the same neighborhood for $850,000. The house was incredible; we staged it, painted it, and it looked fantastic.
We got nothing.
Yes, there were showings and some low offers. But we needed to get it under contract.
More houses, at lower sales prices, were coming on the market.
Eventually, we lowered the sales price to $800,000, which was in line with the market pre-2022. We ended up selling for the listing price with limited contingencies.
Almost identical homes in the same neighborhood - selling four months apart - saw over $150,000 difference in sales prices.
Today’s Market
This market can be confusing for some buyers and sellers; it can seem complex.
Right now, we are seeing higher interest rates and lower home prices.
In the story above, buyer number one paid more at a lower interest rate; if they live there for 10 to 15 years, those losses will be on paper.
For buyer number two, when they sell the home in the future, that is an actual $150,000 savings because they waited and took on a higher interest rate.
This anecdote sums up where the market is today.
Buyers and Sellers Today
If you are a seller, you must be realistic with your pricing. Correct pricing will get your home sold quickly and at top dollar.
Of course, there are outliers, communities where you can still price aggressively and get offers - but these are exceptions to the rule.
In the last 30 days, I have seen multiple offers on three properties. However, having multiple offers on a house does not necessarily mean a bidding war. But we are seeing a lot of activity.
Many buyers today are making offers based on what they can afford with higher interest rates - and with the understanding that prices will likely continue to decline.
Buyers today are well-qualified with stable jobs, live under their means, can deal with higher interest rates, and typically have a solid nest egg.
Buyers dropping out of the market are the ones that don’t need to buy. Their current housing situation is working, and they have no urgency to purchase.
If you are selling a house in today’s market, my saying to you, “As long as you price right and do everything correctly, you are going to sell,” is easier said than done.
The conversation agents have to have with home sellers is challenging. Many sellers are not ready to hear it, and only some agents are prepared to convey the message effectively.
Sometimes we have to go through the motions. Every situation is different, and we don’t get it right every time. The market is fast-paced, but we are still selling above pre-pandemic prices.
What Will Happen with the Market?
There are two main theories in the industry today.
One theory is that the market will crash; in the next three to six months, we will see a considerable drop in sales volume and a massive increase in inventory. For sellers to get those limited buyers remaining, home prices will have to be lowered drastically.
The other theory is there will be lower prices for the next three to six months as rates continue to rise. But once we hit the spring market, two things could happen. We can begin to receive some positive economic news - inflation goes down, employment stays strong, and/or interest rates drop. Once this happens, all the buyers on the sideline will return to the market, and activity will resume.
If you are considering selling or buying and would like more details on the market, please get in touch!
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