The government shutdown and a volatile stock market may be weighing down real estate sales but the continuing boost from the Amazon HQ2 decision is helping keep Northern Virginia home sales on an even keel, experts say.
“Contracts in the pipeline and home sales are up in our NVAR footprint despite stock market swings and a continuing federal government shutdown,” said Northern Virginia Association of Realtors CEO Ryan Conrad. “Even with these factors, our housing market is holding steady. We know that people want to live in Northern Virginia.
“In 2018, Realtors in Northern Virginia conducted transactions at a pace almost identical to 2017, which was the highest since 2005,” Conrad said. “The NVAR region’s 22,140 home sales in 2018 totaled $13,075,494,842, closely matching the 22,555 homes sold in 2017 for a $13,074,994,902 volume.”
Strong job growth, low unemployment and a positive economic outlook resulting from federal tax reform created a solid year for real estate in Northern Virginia, explained NVAR President Christine Richardson. “We expect a similar market in 2019,” she said.
Solid growth forecast
Speaking to a group of regional real estate leaders on Jan. 10, National Association of Realtors® Chief Economist Lawrence Yun touted Northern Virginia’s status as a tech hub to reinforce his long-term solid growth forecast for the area’s housing. But in the near-term, Yun said, tax reform, lagging consumer confidence, the government shutdown and economic uncertainty are keeping home sales flat nationwide. That said, year-end total 2018 home sales in the NVAR region were just 2 percent below 2017 total sales.
However, home sales rose by 5.43 percent in December 2018 compared to December 2017, buoyed by 28 percent year-over-year increases in both Arlington and Alexandria – perhaps due to investor speculation in the wake of Amazon’s adjacent National Landing HQ2 announcement.
“The buzz HQ2 has created will definitely impact our market for years,” said NVAR Board Member Reggie Copeland, C.R. Copeland Real Estate in Fairfax.
Contracts also skyrocketed in December. New “Under Contracts,” which may include contingencies, were up 73.75 percent compared to December 2017. New “Pendings,” those contracts ready to close, were up 16.51 percent over 2017.
“While mortgage interest rates may inch up, the Fed in December lowered its 2019 projection to two increases of the federal funds rate. But the potential for rising interest rates, combined with the Amazon announcement, has spurred many buyers into action. We’ve seen first-time buyers, who were sitting on the sidelines waiting for the right time to act, jump in to the market,” said Richardson.
Shutdown effect uncertain
It’s too soon to tell what impact, if any, the federal government shutdown will have on the NVAR region’s housing market. National Association of Realtors federal government shutdown survey data shows 11 percent of surveyed Realtors® reporting an impact on current clients and potential clients. The largest number of respondents cited general economic uncertainty as the reason for a consumer’s decision not to buy.
Inventory remains a challenge for the NVAR region, with active listings falling by 20 percent in December compared with 2017.
“The difference is felt when you’re showing properties and you’re only able to show them one or two homes per showing – and they don’t have a lot of time to think about it!” said Copeland.
However, the inventory levels are not causing skyrocketing prices, explained Richardson. “Buyers – and their Realtors – are extremely well educated about market values and are not willing to overpay for a property just to win the right to buy it.”