Northern Virginia Real Estate Market Update – 9 Tips for Home Buyers in 2023
The real estate market in Northern Virginia is currently in the midst of experiencing a significant shift. What are the nine most important considerations prospective homeowners need to keep in mind right now?
1. The Market is Undeniably Changing.
The pandemic broke out in the year 2020, which caused a slowdown in the real estate market in Northern Virginia, and a lot of people were curious about what was going to take place.
When the pandemic first started, there was a period of time when there was a lull because everyone was wondering whether or not county recording offices were going to close and whether or not real estate sales were going to temporarily stop. After a couple or three months had passed since the outbreak of the pandemic, the real estate market in Northern Virginia really started to build momentum (especially during that summer of 2020), and it took off like a rocket. It wasn’t until fairly recently that things began to slow down. During the boom in the real estate market that occurred from the latter half of 2020 to the beginning of 2022, bidding wars took on an entirely new dimension. You could easily expect to receive 15 or more offers on properties for virtually every single house and townhouse. The vast majority of the bids that were put in would not have any contingents attached to them (no home inspection, no contingency, no appraisal contingency, no financing contingency). The market was complete mayhem! That was the case up until a few months ago, when interest rates started sharply climbing again.
2. Contingencies for home buyers are actually becoming popular once more.
During the crazy boom in the real estate market in Northern Virginia that began in 2020, contingencies became very uncommon for buyers who were actually winning contracts. This trend continued until the early 2030s. Now, I’m observing a significant decrease in the number of competitive bidding situations, and among the competitive bidding situations that I am observing, a significant number of buyers are looking for regular contingencies once more while still winning contracts. That is a significant point! For a considerable amount of time, purchasers just could not have those items and yet win contracts at the same time. Now, we’re seeing situations in which a number of our clients are able to have regular financing contingencies, regular appraisal contingencies, and regular home inspection contingencies, and yet they’re still able to win contracts. This is a positive development for everyone involved, and we’re happy to report it.
3. The Real Estate Market in Northern Virginia Is Becoming More Normal
What exactly does that imply then? Simply put, what this indicates is that even if you are a buyer, there is no guarantee that you will be able to obtain a significant price reduction on any given property. Simply put, it indicates that prices for homes are beginning to level out and even fall little. There are certain homes that have been on the market for a little bit longer, and the offer circumstances for such homes are just not as competitive. The market appears to be returning to more typical levels. What ended up happening is that a significant number of sellers were living in the past, in the market from several months ago, and frequently continue to do so now. They are selling their properties at inflated prices, which is one of the primary reasons why there have been significant price reductions recently. That is a significant opportunity for a buyer of a home in Northern Virginia.
4. The Current Real Estate Market in Northern Virginia Is Something That Many Sellers Have Not Accepted Yet
As I alluded to before, a significant number of vendors remain stuck in the past. They moved into the Northern Virginia real estate market a few months ago and have been living there ever since. There are currently fewer purchasers competing for available homes as a result of the ongoing increase in interest rates. Smart sellers in the current market are setting their prices in a way that is competitive, and they are moving ahead of the shift that is occurring in the market by doing so (instead of still thinking they can get the prices from two or three months ago). What exactly does it mean for you as a buyer when there are several sellers who are still active in the market from a few months ago? Simply put, it indicates that there is a tug-of-war going on right now between home buyers and home sellers, and it may require a little bit more patience on your part during the course of your home search in order to find a property that meets your requirements at a price that is satisfactory to you. It is going to take some time for sellers in the Northern Virginia real estate market to continue to grasp that they are not in the driver’s seat like they were in the market only a few months ago. This realization is going to take some time.
5. The market is still full with competitive bidding
It is essential to have the knowledge necessary to manage the different forms of bidding wars that are now taking place. There are still competitive bidding situations, but there aren’t as many of them as there used to be. In the current real estate market in Northern Virginia, the segment of the market where bidding wars typically occur the most is the segment of the properties that have been upgraded the most that are on the market. These are the properties that are the nicest, have been renovated the most, and are the showpieces. These are the kinds of homes that draw the most attention from prospective purchasers. After purchasing a home, many people would prefer not to be required to make repairs or investments in improvements to the property themselves. Homes in Northern Virginia that have been updated to the point that they are ready to be moved into are now attracting the highest buyer interest in the region. If the asking prices for these properties are reasonable, the sellers can anticipate a lot of interest and the possibility of a competitive bidding process. Properties that are in need of some repairs and are priced incorrectly are the ones that are faring the worst in this competitive real estate market in Northern Virginia, which is in a constant state of flux. Even if a home needs significant renovations but is priced competitively, there will be significant interest in purchasing it. However, the issue is that a significant number of sellers are still overpricing their homes despite the fact that the homes require repairs or that they have not been significantly improved. These forms of real estate simply do not generate the same level of interest, and as a result, they typically remain on the market for a longer period of time.
6. The Condo Market in Northern Virginia
The condo market in Northern Virginia is still quite unstable right now, which presents potential purchasers with an advantageous buying opportunity. Condominiums did not have the same level of success during the boom that lasted from 2020 through the beginning of 2022 as single-family homes and townhomes did. One of the tendencies that began to emerge was that buyers just want more space in their homes. As a result of the growing number of workers who were choosing to work from home, consumers demanded amenities such as private entrances, patios, yards, additional and third bedrooms, and office space. Condominiums, despite their generally positive performance, did not benefit from the housing boom that occurred between 2020 and the beginning of 2022. They are still in the process of recuperating from the more volatile market that occurred over the past couple of years, and they continue to give prospective purchasers with an excellent opportunity.
In the current real estate market in Northern Virginia, fixer-uppers present buyers with an excellent opportunity because of the potential for the properties to be improved.
Fixer-upper properties that are in need of some renovations and upgrading are sitting longer on the market, while pricey properties are more likely to remain on the market for a longer period of time. This gives a fantastic opportunity for buyers who aren’t bothered by the idea of putting effort into a property and purchasing a location that isn’t entirely ready for immediate occupancy. There is one catch, and that is that ever since the year 2020, it has been challenging to nail down contractors on scheduling and to get workers in to do work. If you decide to purchase a home that needs some work done to it, you will likely need some patience in order to put together a reliable team of workers who are both available and capable of doing good job.
8. Interest Rates That Are Higher, Not the Highest in the Market
The current interest rates may be higher, but when seen in the context of history, they aren’t all that bad! The bottom line is that all of us have become spoiled as a result of these artificially low interest rates for a prolonged period of time. They were truly incredible. When it comes to the present interest rates, a lender that I know quite well has a great saying: “Marry the home, not the interest rate.” I find this to be very wise advice. It is important to bear in mind that if you buy a home right now, the interest rate that you are offered may be a little higher than you would prefer; nevertheless, you will always have the option to refinance your mortgage at a later time. Once you have purchased a home, the next thing on your agenda is to turn it into a place that you adore. Altering the interest rate at a later time is always an option. Your home is not able to, unless you decide to sell it and get another one at some point in the future. Put your attention right now on locating a house that truly appeals to you, and keep in mind that you will always have the option to change your interest rate at a later time.
9. The market is favorable for anyone who is interested in buying a new home while also selling their current one.
The era of home sale contingencies came to an end during the boom that began in 2020 and continued into the early years of 2022. Because of how insane the real estate market in Northern Virginia was, every single client I had who was trying to sell their home and then buy another house had to make a variety of different arrangements that really weren’t ideal for them. This was simply due to the fact that the market was so competitive. For example, they may have to sell their home first (and make a nice profit, which is fantastic), but then they may have to find other living quarters and store their stuff while they search for the ideal home. Now more than ever, more of our customers are successfully having their home sale contingencies honored by the sellers of their homes. They are writing offers on houses that have been listed for a little bit longer on the market, and at that time, the seller is more likely to accept something like a home sale contingency in the offer. That is a significant point! You will be able to sell your property and enjoy a great deal more freedom regarding the timing and the logistics of your relocation as a result of this.
