The Northern Virginia real estate market is in the middle of a substantial shift. What are the top nine things for home buyers to keep in mind right now?
Tip #1: The Market is Definitely Shifting
After the pandemic started in 2020, the Northern Virginia real estate market slowed down, and a lot of people were wondering what was going to happen.
Everyone was wondering if recording offices were going to close in counties, and whether real estate sales would stop temporarily, so there was a lull that happened for a while when the pandemic started. About two or three months after the pandemic began, the Northern Virginia real estate market really started to build momentum (especially that summer of 2020), and it took off like a rocket. It didn’t start to slow down until recently. During that real estate market boom (later in 2020 through early 2022), bidding wars took on a whole new dimension. You’d have easily 15 plus offers on properties on almost every single home and townhome. Most of the offers that would be submitted would have 0 contingencies (no home inspection, no contingency, no appraisal contingency, no financing contingency). It was a crazy market! That's what happened up until several months ago, when interest rates started rising sharply.
Tip #2: Contingencies For Home Buyers Are Actually Becoming a Thing Again
Contingencies became very uncommon for buyers that were actually winning contracts during this crazy Northern Virginia real estate market boom that started in 2020. Now, I'm seeing a lot fewer bidding wars, and in the bidding wars that I’m seeing, a lot of buyers are seeking regular contingencies again and still winning contracts. That's a big deal! For a long time, buyers just were not able to have those things and still win contracts. Now, we're seeing situations where a lot of our clients are able to have regular negotiable home inspection contingencies again, where they’re able to have regular financing contingencies, regular appraisal contingencies, and still win contracts.
Tip #3: The Northern Virginia Real Estate Market is Normalizing
So what does that mean? It just means that as a buyer, it is not necessarily like you're able to get a huge discount on every single property. It just means that home prices are starting to stabilize and come down some. Some properties are sitting on the market a little longer and offer situations are just not as competitive. The market is looking a lot more normal. What's happened is that a lot of sellers were, and often still are, living in the past, in the market from several months ago. They're overpricing their properties, which is why a lot of properties are experiencing price reductions. That's a big opportunity for a Northern Virginia home buyer.
Tip #4: Many Sellers Have Not Come to Terms With The Current Northern Virginia Real Estate Market
As I mentioned, a lot of sellers are still living in the past. They've been living in the Northern Virginia real estate market from a few months ago. Because the interest rates are going up, there are fewer buyers in the game right now. The sellers who are smart right now are pricing competitively and they're getting out ahead of the shift that's happening in the market (instead of still thinking they can get the prices from two or three months ago). What does that mean to you as a buyer when you have lots of sellers that are still living in the market from a few months ago? It just means that there's a tug-of-war right now between home buyers and home sellers, and it might take a little bit of extra patience in your home search to find a property that you want at the price that you want. It's going to take a while for sellers to continue to realize that they're not in the driver's seat like they were in the Northern Virginia real estate market as recently as a few months ago.
Tip #5: There Are Still Bidding Wars in This Market
It's important to know how to navigate the types of bidding wars that are happening right now. Even though they're still bidding wars, there are just not as many of them. The segment of the current Northern Virginia real estate market where bidding wars typically happen the most is the most upgraded properties that are on the market: the nicest ones, the most renovated ones, the showpieces. These are the properties that get the most interest from buyers. A lot of home buyers don't want to have to do work and pay for upgrades after they buy a property. The homes in Northern Virginia that are getting the most action right now are the most upgraded move-in-ready properties. If these properties are priced well, they will get a lot of action and could very well have a bidding war on their hands. Properties that are not doing quite as well in this shifting Northern Virginia real estate market are properties that need some work and are not priced well. If a property is a fixer upper and is priced pretty well, it'll still get a lot of interest. But, the problem is a lot of sellers are still overpricing their properties even though they need work or even though they're not particularly upgraded. Those kinds of properties are just not getting as much interest and they're usually sitting on the market longer.
Tip #6: Northern Virginia Condo Market
The condo market in Northern Virginia is still fairly erratic right now and can be a good opportunity for buyers. During the boom from 2020 into early 2022, condos were not benefiting as much from that boom as single family homes and townhomes. One of the trends that started happening was that buyers just needed more space. A lot of people were working from home, they wanted private entrances, patios, yards, second and third bedrooms, office space. While condos did fine in many situations, they weren't benefiting from that crazy Bonkers Boom from 2020 to early 2022. They’re still recovering from that more erratic kind of market from the past couple of years, and they still represent a really good opportunity for buyers.
Tip #7: Fixer-Uppers Are a Really Good Opportunity For Buyers in This Current Northern Virginia Real Estate Market
Right now, any property that is overpriced will likely sit longer on the market, but fixer-uppers that need some renovations and updating are sitting longer. That represents a great opportunity for buyers who don't mind putting work into a property and buying a place that's not completely move-in ready. The caveat is that ever since 2020, it's been hard to nail down contractors on scheduling and getting people in to do work. If you buy a fixer-upper, you might need some patience in terms of getting together a good crew of people that are available and can do good work.
Tip #8: Higher Interest Rates, Not Highest
Interest rates are higher right now, but, compared to history, they're not that bad! Bottom line is that we all got spoiled for a long time with these artificially low interest rates. They were amazing. A lender that I know really well has a good saying when it comes to the current interest rates - “Marry the home, not the interest rate.” I think it's good to keep in mind that when you buy right now, you're getting an interest rate that might be a little higher than you'd like, but you can always refinance in the future. Once you buy your home, that’s where you want to get into the place that you love. Interest rates can always be changed later. Your home can't - unless you sell and buy another one in the future. Focus on finding a home that you really like right now and knowing that you can always refinance your interest rate later.
Tip #9: Good Market for Anyone Wanting to Sell Their Home and Buy Another Home at The Same Time
During the boom from 2020 on into early 2022, home sale contingencies just became a thing of the past. Every single client I had who was trying to sell their home and then buy another house had to make all kinds of different arrangements that really were not ideal for them, just because of how crazy the Northern Virginia real estate market was. For instance, selling their property first (and making a pretty penny on it which is great), but having to look into temporary living arrangements and put their belongings in storage while they found the right property. Now, we actually have a lot of clients who are getting home sale contingencies accepted by sellers again. They're writing offers on properties that have been on the market a little bit longer, and the seller is more willing at that point to consider something like a home sale contingency. That's a big deal! It allows you to sell your property and have a lot more flexibility with the timeline and the logistics of your move.
Thinking of buying a home in Northern Virginia? Call me at 703-462-0700 or email me at darren@darrenrobertsonhomes.com. I’d love to connect with you and find out how I could help!