“Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.” Peter Drucker
But we’re going to do it anyway!
At this time of year, our phone starts ringing off the hook looking for our CEO, Terry Belt, asking for his forecast of what this year in real estate will hold. And while his crystal ball may be as imperfect as everyone else’s, he has weathered 27 years in the Northern VA real estate market and done it uber successfully. This brings with it a good look in the rear view window, but at the same time an ability to spot & react to trends quickly.
Here are Terry Belt’s Top 3 Predictions For Northern VA Real Estate in 2014:
1. Buyers Will Continue To Compete For Homes
Last year Northern Virginia experienced a market where housing inventory was low year round. Inventory rose slightly during the Spring, but pent up demand meant that many of the homes were snapped up as they hit the market. I expect that to continue in 2014. Although we experienced a market where buyers were competing for homes back in the 90’s and again at the height of the market in 2006, this market is different in that the number of homes selling is much less. Homes sold quickly in those earlier markets, but new homes came on the market to replace them. Currently, we still have demand left over from the downturn, as well as new purchasers entering the market, and there are large numbers of buyers just sitting and waiting for homes to come on the market. Many of these buyers have been looking for months & months. The number of homes coming on the market just cannot keep up with the demand.
The question will be whether that will continue to drive up prices or whether rising interest rates will price some of these buyers out of the market. Keep in mind that a 1% rise in interest rates equals a 10% decrease in home price affordability. Stay tuned to see how that plays out. In the immediate short term, look for early Spring market conditions to be very similar to 2013.
2. More Northern VA Homeowners Will Emerge From Underwater
Home prices in Northern VA continued to rise last year and I believe this trend will continue in 2014. From 2011 to 2012, the median price rose 4.82%. And from 2012 to 2013, the median price rose 7.13%. This is good news for homeowners who were underwater. If you tried to sell unsuccessfully during the years 2008-2011, your golden ticket may just be cashed this year.
3. Interest Rates Will Rise, But Mortgages May Be More Accessible
For several years, we have had interest rates at historical lows. This will not last. In fact, we have already seen rates rising. While this may price some buyers out of the market, it actually may work in reverse for other buyers. The silver lining to rising interest rates is that means less refinancing business for lenders; and that may result in lenders loosening their standards in order to compete. Just this week, we were notified by several of our lenders of new programs they are offering that are more flexible than what we have seen over the past few years.
- If home prices continue upward and more sellers put their homes on the market, this could help alleviate the low inventory problem for buyers adding a little more balance to the market.
- The market will continue to do well if the local economy and jobs remain positive. Should this change it would have a slowing effect on housing.
My Advice To 2014 Buyers & Sellers:
If you’re thinking about buying or selling a home in 2014, the absolute most important thing you can do is to make sure you have the best Realtor representing & advocating for you. There’s a lot to navigate along the way – appraisals, surveys, legal disclosures, when to sell, how to price, how to stage, what to disclose, what not to disclose, mortgage financing, how to compete and more. Every market has its own ins & outs & idiosyncrasies.
According to NAR, 90% of homes are sold by 10% of the Realtors. So my advice to clients, whether they are buying here in Northern VA or across the country in California or even across the ocean in Europe – is to make sure you work with the best. You know they’re the best when they’re in that top echelon of performers. The more transactions a team does, the more prepared they are to be your advocate and help you navigate successfully.
Buying or selling a home is often one of the biggest, if not THE biggest, financial transactions of your lifetime – not to mention the emotional importance of your home and family. Do it right!