There is an interesting phenomenon occurring in the Northern Virginia Real Estate market today. We have seen inventory levels drop, sales activity increase, yet, prices continue to decrease or remain flat in most of our surrounding areas. Granted, there are areas where values have recently increased substantially in parts of Prince William and Loudoun Counties and there are areas in the City of Alexandria and Arlington County where prices have increased slightly but with inventory levels at 2005 levels and such strong demand, we would expect an increase in prices as a result of this shift.
For re-sale properties in Northern Virginia, over the past 42 weeks we have seen inventory levels reduce every week but two, the month’s supply of under contract homes is at 1.7 months and the month’s supply of homes for sold properties is at 3.5 months and the rental market has remained stable at a 2.5 month supply of homes. It is strange how the media isn’t reporting this information to the public.
So the question is, why would this be the happening? My theory is there is little movement up “The Real Estate Ladder”. We don’t see first time buyers purchasing condos from owners who buy the town house who then buy the single family house who then buy the more expensive single family house. We are seeing first time buyers and investors purchasing “distressed” properties – foreclosures and short sales – where the properties are vacant or soon to be vacant and there is no move “up” to a larger property because the owners can’t obtain financing to purchase another home.
It will happen again, it will just take time as we work our way through the vacant inventory and short sale supply. As a result of this situation, the rental market remains strong and makes now a great time to be a long time real estate investor.
RE/MAX Gateway
