Northern Virginia homeowners are hanging onto their homes, perhaps in hopes of still higher prices to come. Median sale prices saw a slight increase in May. Statewide, the median sales price rose to $309,900, a 5% boost since May 2018.
Most of the Northern Virginia region saw only a slight increase in median sale prices for homes in May, according to the Long & Foster Real Estate Market Minute report. The only exception was Alexandria City, which saw a decrease of 8%. The rest of the region saw a modest uptick, with Arlington County showcasing the highest increase with a 9% rise.
Inventory continued to fall throughout the region. Alexandria City saw the biggest fall with a 59% decrease, followed by Arlington County with a 51% drop. The number of homes sold also fell in most of the region besides Prince William County which saw a 10% rise.
“Inventory continues to shrink everywhere, especially in the Northern Virginia area,” said Larry “Boomer” Foster, president of Long & Foster Real Estate. “Even though inventory keeps falling, you don’t see huge price appreciations – there is low-single-digit to flat median sale price increases.”
Despite the slow start to the year, the real estate market has been solid and steady, especially considering how the markets tend to slow down after Mother’s Day, according to Foster. “It seems we’re experiencing a later spring market than normal, so we can possibly expect a higher June and July for new contracts,” Foster said.
Foster said the market remains strong, thanks to the high competition and low 30-year fixed mortgage rates. In fact, mortgage rates are the lowest they’ve been in two years, so affordability is quite strong at the moment, he said.
Addressing the recent resurgence in home flipping, Foster said, “Home flipping is an attractive option for people to make quick money. As long as home prices continue to appreciate it’s going to continue to be a trend.”
Something that has caused home flipping to increase is the popularity of iBuyers – real estate companies that buy homes directly from the seller. They allow a homeowner to sell their property quickly without the need to make modifications or get it show ready. While this is a model where they can make significant margins, Foster cautions that they normally offer 9% to 20% less than the market value of a home.
Mortgage closing scams
Foster also spoke about the rise of mortgage closing scams where criminals contact homebuyers by email in an effort to have them wire their funds for closing costs and down payment to a fraudulent account. “It’s about awareness for consumers,” he said.
“If they receive an email asking them to wire closing costs, they should always double-check with their real estate agent or someone at their financial institution by phone or in person before taking any action.” The Consumer Financial Protection Bureau has more information about protecting yourself.
Home prices up statewide
According to the May 2019 Home Sales Report released by the Virginia Realtors, home prices continue to rise in all regional markets across the state. In May, the median sales price in Virginia rose to $309,900, a 5% leap since May 2018, again partly because of tight inventory.
All markets had higher median sales prices than a year ago, a trend primarily being driven by a declining supply of active listings. As prices continue to rise, affordability is becoming more of a challenge for many buyers. The biggest price appreciation occurred in the Eastern, Southside, and Southwest regions.
Virginia’s supply of active listings has been shrinking for several years, though there were signs of stabilization in 2018; however, inventory of homes listed for sale has declined every month so far in 2019. At the end of May, there were 55,090 active listings across Virginia. This is about 5,800 less than May 2018, a reduction of 10%.
Sales activity is back on the rise in Virginia after a sluggish fall/winter. There were 13,101 sales across the Commonwealth in May, which is 380 more sales than this time last year, representing a 3% gain. Prior to this increase, sales activity had been flat or declining for eight consecutive months.
Shenandoah Valley uptick
Virginia’s uptick in May sales was driven largely by strong sales growth in in several regions. The largest surge occurred in the Shenandoah Valley region, where there were 17% more sales than this time last year. Additionally, sales in the Hampton Roads region increased 7% from a year ago, and the Central Virginia region saw an increase of 4%.
The Virginia Home Sales Report is published by the Virginia REALTORS®. Click here to view the full May 2019 Home Sales Report. Current and past reports are available to members, media, and real estate related-industries through the organization’s website.