Year-over-year home prices continue to climb throughout the region, with healthy average price increases tallied in August over August 2020 everywhere from D.C. to the far reaches Prince Georges county.
Month-to-month is always a bit different, though. From July to August of this year, Montgomery and Prince Georges counties prices rose about 1 percent, while Arlington County dropped 6 percent, Alexandria dropped 9 percent, Fairfax City and Prince William Counties dropped 3 percent, and D.C. and Fairfax County dropped 2 percent.
With August traditionally a slightly slower month, these numbers are no cause for alarm, as month-to-month price swings often can be dramatic. More important, long-term trends continue to reveal a strong sellers’ market with inventory still quite low—but with likely COVID-influenced demand that continues to favor Prince William, Prince Georges, and Montgomery counties.
Average sale prices in August were 13.1 percent higher in Prince William than in August 2021. In Prince Georges County prices were up 10.4 percent, and in Montgomery County they were up 9.4 percent. Elsewhere in the region, D.C. prices were up 6.8 percent, and Fairfax County up 6.7 percent. Falls Church City average prices were up 33.8 percent over August 2020 (with big statistical swings often due to fewer home sales). Still, Alexandria City and Arlington County posted average sale prices 2.8 percent lower last month than in August 2020.
Demand trends in Prince William, Montgomery, and Prince Georges counties continued to influence days on market as well. While up slightly from the previous month, days on market were much lower in August 2021 than in August 2020. Prince William County average days on market dropped from 14 to 10, Montgomery County dropped from 24 to 16, and Prince Georges County dropped from 24 to 14.
Closer to the city, the numbers continued to head in the other direction. In Washington, D.C., days on market were up from 25 in August 2020 to 26 last month. Arlington County days on market climbed from 14 to 22, Alexandria City climbed from 15 to 20, and Fairfax County days on market increased from 16 to 17 days for the same period.
Even with the appearance of some leveling off as we head into the fall, the overall region real estate picture remains pretty steady with many more buyers out there than sellers.
It’s not a phenomenon reserved for this region either—and it’s not just simply because not enough people are putting their homes on the market. There’s a deeper inventory rut running throughout the country—and it’s one impacted by much more than the COVID-19.
Citing research from Realtor.com, CNBC reported Sept. 14 that the country is 5.2 million homes short of demand with builders unable to catch up. And it’s not simply a COVID effect. The report noted an increase of 12.3 million households over the past nine years, while single-family homes increased by just 7 million.
Though not cited in the CNBC report, land use regulations can limit housing supply as well, reducing the number of available units as households increase.
It it’s May 3 report, Legislative Exits from the Land Use Labyrinth, the Regulatory Transparency Project at The Federalist Society noted that housing restrictions are a heavy influence on housing availability as well. Lot size, parking restrictions, limits on multifamily units, and other restrictions not only keep housing scarce, they keep prices high.
“Limiting the amount of housing that can be built near the most productive labor markets restricts the number of people who can benefit from local employment and educational opportunities,” the report stated. “In turn, land use regulations limit economic output and income mobility.”
One big challenge, the report notes, is the courts have not been particularly friendly to landowners when it comes to the ways they might want to develop their land.
While each factor individually might not fully be responsible for the lack of inventory in the region, a collection of any of these datapoints can impact and exacerbate inventory availability.
Lastly, the market continues to tempt buyers with low interest rates, which have kept many home shoppers on the hunt. The jury is still out on how inflation will impact those rates moving forward. The inflation rate in August dropped to 5.3 percent from 5.4 percent in July; however, those numbers are exceedingly high above the 1.4 percent inflation rate the country enjoyed as recently as January.
Stay tuned as the months turn cooler and we emerge from a typically slower August to see how we finish the year in the fourth quarter.
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 offer comprehensive real estate services, including 4½% full-service listings, throughout the entire Washington, D.C. real estate market. Angela is licensed in Virginia, Washington, D.C., and Maryland. Christopher is licensed in Virginia and Washington, D.C. In addition, Christopher holds a broker license in North Carolina and is affiliated with McGary & Associates.
© 2021 DCRegionRealEstateNews.com
