There's no doubt about it, the real estate environment is in a different place today compared with a year ago, but is it a bad thing?
If we take a look back, the dreaded COVID years of 2020 and 2021 created an unexpected boom in our industry, to put it lightly. In early 2020, when masks and lockdowns and latex gloves and shoe covers were de rigueur, we all assumed that our businesses would come to a grinding halt, however, in Virginia, real estate brokers were deemed an essential service and we were allowed to continue to do business.
Gradually, but pretty quickly, we saw folks packing up and moving away from big cities in search of open space and fresh air. As a consequence, property prices began to escalate while mortgage rates tumbled to record lows in the 2.5% region.
It seemed that these increasing home prices did not deter buyers, in fact for two years, most properties listed at then realistic prices went under contract within days, and following multiple offers with increasingly escalating offer prices but with correspondingly fewer, if any, contingencies.
We have all witnessed the significant rise in inflation which has caused mortgage rates to more than double in just a few months, meaning that buyers' affordability has been dramatically reduced. So here we are, with a market which has corrected, yet prices are still far higher than they were two years ago, and inventory remains very low.
For buyers and their agents, respite is here because they are no longer fighting to win with their offers against multiple other offers, waiving important contingencies such as home inspections and well and septic.
The panel below, courtesy of the Dulles Area Association of REALTORS®, provides a nice snapshot as to the market position in Loudoun County as compared to one year ago, however it's particularly helpful to look back three years, to 2019 (second panel below), to get a more realistic comparison. What we see here is a drastically lower inventory (660 listings -v- 935 in September 2019), and a median price today of $639,995 compared with $495,000 in September 2019.
This lack of inventory in a market where there is a high demand for property is fuelling a continued healthy market, but with rates at around the 7% mark, we are seeing more negotiation, longer time on market and, happily, we are back to a position where buyers are able to properly do their due diligence with home inspections, well and septic inspections and retaining financing and appraisal contingencies.
Peter writes for his local magazine, Country Zest & Style, as its Wine Editor. He also enjoys writing blogs on interesting and pertinent real estate matters, so please follow!