Northern VA Schools are officially out for the summer and the economy is working through the challenges associated with COVID 19. Many are wondering what impact the economic slowdown will have and is having on home prices in Northern VA. Looking at the big picture, supply and demand will give us the clearest idea of what the hosing market will look like in the near future.

We are almost halfway through the month of June and entering the second half of the year, we still face an undersupply of homes on the market. As my normal disclaimer, please keep in mind, this undersupply is going to vary neighborhood to neighborhood and by price point. Below is a graph of the current supply of listings in Northern VA which is at historic lows with only 1.1 month of home supply on the market. (As reported by Bright MLS, the MLS for Northern VA.

According to the National Association of Realtors (NAR), nationally we currently have a 4.1 months supply of homes on the market. Keep in mind, 6 months supply is considered a balanced market. Anything over 6 months is a buyer’s market, meaning prices will depreciate. Anything below 6 months is a seller’s market, where prices appreciate. The graph below shows inventory across the country since 2010 in months supply of homes for sale.

Robert Dietz, Chief Economist for the National Home Builders Association (NAHB) says:

“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt. Estimates vary, but based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”

With the undersupply of homes on the market in Northern VA today, there is upward pressure on prices. Looking at simple economics, when there is less of an item for sale and the demand is high, consumers are willing to pay more for that item. The undersupply is also prompting bidding wars in some price ranges, which can drive price points higher in the home sale process. According to a recent MarketWatch article:

 “As buyers return to the market as the country rebounds from the pandemic, a limited inventory of homes for sale could fuel bidding wars and push prices higher.”

In addition, experts forecasting home prices have updated their projections given the impact of the pandemic. The major institutions expect home prices to appreciate through 2022. The chart below, updated as of earlier this week, notes these forecasts. As the year progresses, we may see these projections revised in a continued upward trend, given the lack of homes on the market. This could drive home prices even higher.

Bottom Line

Many in Northern VA may think home prices will depreciate due to the economic slowdown from the coronavirus, but I would disagree. As we approach the second half of this year, we may actually see home prices rise even higher given the lack of homes for sale. Is it time for you to make a move, contact us today.

All Current Listings in Northern VA by Price

$200,000 to $300,000 Northern Va Listings

$300,000 to $400,000 Northern Va Listings

$400,000 to $500,000 Northern Va Listings

$500,000 to $600,000 Northern Va Listings

$600,000 to $700,000 Northern Va Listings

$700,000 to $800,000 Northern Va Listings

$800,000 to $900,000 Northern Va Listings

$900,000 to $1,000,000 Northern Va Listings

$1,000,000 to $1,250,000 Northern Va Listings

$1,250,000 to $1,500,000 Northern Va Listings

$1,500,000 to $1,750,000 Northern Va Listings

$1,750,000 to $2,000,000 Northern Va Listings

$2,000,000 to $2,500,000 Northern Va Listings

$2,500,000 to $3,000,000 Northern Va Listings

$3,000,000 and Higher Northern Va Listings