The real estate market in Northern Virginia has rapidly expanded this spring with most areas selling about twice as many homes in April as were sold in February. This is partly due to the spring selling season that happens annually, but it was a larger jump in sales this year than we see most years. This was mainly due to the combination of the April 30 tax credit deadline that many buyers were trying to meet and the low interest rates that were available.
I believe we would have had a strong spring without the tax credits. I’ll be watching when the May numbers when they come out to see how much the tax credits were effecting the number of sales. May numbers almost surely will not be as high as April. There were clearly some buyers that would have taken there time and wrote offers in May that hurriedly went under contract at the end of April. But I also think there were buyers in May that did not qualify for the tax credit (or thought the market was overpriced due to it) that waited until the deadline had passed before negotiating their purchases. June will be a much more accurate read of our “normal” market as the government incentives to purchase fade into people’s memories and out of their decision making.
Average prices also rose in April. It’s interesting to note that the break even mark for sellers is about a year and a half behind us. People who have bought in the last year and a half are above water and people who bought the several years before that have lost money on their homes. As prices rise and time passes, more and more owners will have the ability to sell without losing money, which will encourage more inventory on the market. Currently, most owners who bought or cashed out on a refinance from 2004-2008 and want to sell now, either need the cash to cover their losses or are short selling their houses. Many people see neither of those as good options, so are staying in their homes to wait out the market.
The monthly numbers:
Written by Jeff Royce of Frankly Real Estate, Inc. Fairfax, VA, 703-585-5663