After navigating the minefield that was 2020 in so many ways, we thought we’d do a minor post-mortem about the state of real estate as we move into 2021. We routinely take monthly snapshots of the market at DCRegionRealEstateNews.com, and putting them together over time provides a bit more definition than those trends month to month.
A rather interesting tidbit about this past year in local real estate is that, on paper, the year looked pretty good. It was quite friendly to sellers—and not all that objectionable to buyers either.
In every region that we chart, average sale prices were up over the totals from 2019—and some substantially. In Washington, D.C., average sale prices were up a 6.5 percent over 2019. Even with D.C sellers probably happy about the increase, this was on the low end compared to other parts of the area. In Alexandria City, average sale prices jumped 13.5 percent. In Arlington County, prices were up 11.6 percent. Prince Georges County came in with a 10.7 percent increase, and increases in the remaining regions were strong as well: Fairfax County (8.5 percent), Prince William County (9.3 percent), and Montgomery County (6.3 percent).
Low interest rates helped keep listings competitive among buyers, with rates as low as many of us have ever seen. According to bankrate.com, A 30-year fixed rate on a mortgage was 3.86 percent in early January 2020. On December 30, that rate had dropped to 2.96 percent, and as of Jan. 23, 2021, the rate had dropped a bit further to 2.96 percent. In late 2020, we took advantage of the low rates ourselves to refinance multiple properties. So, if you’ve got a higher interest loan, it might be a good idea to check into refinancing while rates are low.
What last year’s strong numbers mean for 2021 is anyone’s guess. But we can always look at trends and often see what’s on the horizon.
U.S. News & World Report notes that while interest rates will likely stay low, they may creep up a bit as we move into 2021. With buyers motivated by these rates, it could signal a continuation of the low inventory situation we’ve seen for years.
One trend we reported on repeatedly in 2020 was how demand—while very high throughout the D.C. area—was showing signs of shifting a bit from D.C. and close-in suburbs to a little farther out, particularly Prince William and Prince Georges counties. Not only were prices appealing, the desire for more space—particularly home office space for telecommuters—likely contributed to this shift.
As an aside, it’ll be interesting to see what happens if and when businesses shift away from telecommuting and people return to the office. Related to that is the question of choices individual businesses will make moving forward. How many discovered during the pandemic that large office spaces might not be necessary, and that certain employees may not need to be in the office, so long as they’re productive during working hours at home?
As dramatic as the shift in work and commuting was in the D.C. region, it was much more pronounced elsewhere. New York City saw people leaving in droves, spurred by the pandemic, serious lockdown restrictions, as well some civil unrest that took to the streets in 2020.
The New York Post reported in the fall that more than 300,000 left the city last year. “City residents filed 295,103 change of address requests from March 1 through Oct. 31,” the paper reported.
And that’s just the city. On New Year’s Day, WLNY, a New York CBS affiliate, reported that more people are leaving the state of New York than are leaving any other state. Along with this migration of people is a migration of dollars. In mid-December, Reuters reported that the city saw $34 billion in lost income. One example they gave was Tribeca, where residents who left this rather wealthy neighborhood averaged $140,000 in income, while the people who replaced those leaving earned about $84,000 on average.
Of course, New York isn’t alone. Chicago, Los Angeles, San Francisco, all were seeing similar patterns.
Now, for buyers wishing to move to the New Yorks, Chicagos, and San Franciscos, this could be a positive, but keep in mind, we’re still talking some of the most expensive real estate in the country.
The past year was one of new patterns, work situations, and overall ways of life that weren’t even thought of in January 2020. These real estate undulations over the past year—and what they mean for 2021—are decidedly shaped by lifestyles that were undeniably altered, possibly for quite a long time. Even as people get back to “normal,” (whatever that is), they’re doing so with experiences that have impacted everything from decisions about houses and schools to office life—things that most recently all take place right in the home.
Stay tuned to DCRegionRealEstateNews.com as we dive into the adventure that is sure to be 2021, with monthly market updates, feature stories, how-tos, and whatever else we can come up with to help you shape your future real estate decisions.
Christopher Prawdzik and his wife Angela Logomasini are licensed Realtors® with Samson Properties in Alexandria and are members of the Northern Virginia Association of Realtors® Top Producer’s Club. Operating as D.C. Region Real Estate, they serve the Virginia, Washington, D.C., and Maryland real estate market and offer comprehensive real estate services, including 4½% full-service listings.
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