STATPAK
NORTHERN VIRGINIA MARCH 2017
McEnearney.com
MARKET IN A MINUTE A SUMMARY OF MARKET CONDITIONS FOR FEBRUARY 2017
CONTRACTS Contract activity in February 2017 was up 4.0% from February 2016, and there were increases in four of the six price categories. The average number of days on the market for homes receiving contracts was 48 days in February 2017, down significantly from 67 days in February of last year.
URGENCY INDEX The Urgency Index, simply the percentage of homes going under contract that were on the market 30 days or less, was up in February compared to last February. During the past 12 years, the Index has been as high as 95% (April 2004) and as low as 25% (November 2007), and the average for February is 53.2%. In February 2017, the Urgency Index was 68.6%, up significantly from 54.4% in February 2016.
INVENTORY The number of homes on the market at the end of February was down 12.2% compared to the end of February 2016, but it was up in the three highest price categories. In fact, the inventory of homes priced less than $500,000 is down almost 30%. However, there was a 5.8% increase in the number of new listings coming on the market compared to February 2016. The increase in contract activity combined with the decrease in available inventory dropped overall supply to 1.7 months, down from 2.0 months at the end of February 2016.
INTEREST RATES The rate for a 30-year fixed mortgage ended February at 4.10%. That’s slightly lower than the 4.19% rate at the end of January, but is a half point higher than it was this time last year. Rates have edged a bit higher as we have moved into March, and the Federal Reserve raised its benchmark rate for the second time in three months. While that does not have a direct impact on mortgage rates, the Fed’s move is certainly a sign of its confidence in the economy – and we can expect mortgage rates to rise modestly through the year.
AFFORDABILITY The payment on a no-money-down, 30-year fixed mortgage for a median-priced home is 17.7% lower today than it was a decade ago in February 2007, but is 9.0% higher than February of last year, thanks to the increase in interest rates. The mortgage payment for a median priced home ($2,255) was higher in February than the median rented price ($2,150).
DIRECTION OF THE MARKET Virtually every key indicator is positive for the Northern Virginia real estate market, mirroring the metro DC region as a whole. The spike in interest rates has brought buyers into the market out of concern that rising rates may price them out of the market if they don’t act, and an extremely mild winter has helped as well. The number of contracts is up, homes are selling in less time, and inventory is very low. Absorption rates above 30% are indicative of a seller’s market, and rates are higher than that for every property type – condo, attached and detached homes – in almost every price range under $1,000,000. It’s a good time to be a seller and perhaps a frustrating time for buyers who are faced with fewer choices and more competition for that limited inventory.
Unless otherwise noted, data derived from Metropolitan Regional Information Systems, Inc. (MRIS®). “Northern Virginia” is defined as Arlington and Fairfax counties and the cities of Alexandria, Falls Church & Fairfax. Copyright © 2017 – McEnearney Associates
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