The end of 2020 is approaching and the world is still working through the challenges this year has brought. Many Northern VA homeowners and buyers wonder what impact continued economic uncertainty could have on home prices. Looking at the big picture and the basic rules of supply and demand give us the clearest idea of what is to come in the Northern VA real estate market.

Due to the continued  low inventory of homes on the market today, there’s upward pressure on prices. Here are the simple economics: when there is high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s Northern VA real estate market. The housing supply shortage is also resulting in some bidding wars in starter home market, which will also drive price points higher in the home sale process.

There’s no evidence that buyer demand will wane anytime soon. As a result, other experts project price appreciation will continue over the next twelve months nation wide. Here’s a graph of the major forecasts released in the last 60 days:

Will foreclosures might be coming to the market soon?

Some are concerned that homeowners who entered a mortgage forbearance plan over the last 8 months might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low.

Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, was very firm in a podcast last week:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

With demand high, supply low, and little risk of a foreclosure crisis, Northern VA home prices will continue to appreciate.

Bottom Line

Originally, many thought home prices would depreciate in 2020 due to the economic slowdown from the coronavirus. Instead, prices appreciated substantially. Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale.