Home prices and, for the most part, sales, have continued to rise in the Northern Virginia market in the last year, even despite the pandemic, but the unanswered question is: what will happen in the future?
A consensus forecast report from the Center for Regional Analysis and George Mason University and the Northern Virginia Association of Realtors aims to answer that question and, in short, the upward trends will continue.
“This year’s forecast was especially challenging since the pandemic and its related disruptions presented highly unusual patterns of market activity,” said Terry Clower, director of the GMU-CRA and professor of public policy.
The forecast for 2021 focuses on federal monetary policy and stimulus programs, the continuation of work-from-home scenarios, the vaccination rate, the impact of lending practices and mortgage rates and the market changes observed during 2020. It focuses specifically on Fairfax and Arlington counties, and the City of Alexandria.
The forecast for Fairfax County is for continued high demand pushing prices up, with more multiple offers. The median price at the end of December is predicted to be $593,979, though the median price is predicted to in June at $644,991. The overall annual gain in home prices in Fairfax County will be 4.2%, with sales up 11.1% over 2020. The forecast notes growth could be higher, but decreasing affordability and rising mortgage rates will hold gains back.
In Arlington County, the report forecasts a December median price of $683,761, though prices are expected to peak in July at nearly $719,577. The 2021 gain in home values in Arlington County will be 9.4%, driven by demand for single-family homes. Sales in Arlington County are forecast to rise 14.1% this year, peaking in July. The good news for potential buyers in Arlington County is that the report predicts a 33.6% increase in inventory levels, but the county will still remain a seller’s market.
For Alexandria, the forecast calls for price volatility this year, though still continuing to rise. It cites the jump in condos for sale last fall, which will cause an overall rebalancing of the market. Prices will rise 2.9% in Alexandria by year’s end, with sales up 4.9% over 2020. Alexandria sellers will still likely see multiple offers, the report predicts.
“The impacts of the pandemic, the shape of our post-pandemic economic recovery and long-term effects of work-from-home conditions will shape the residential real estate markets for the next couple of years,” said NVAR chief executive Ryan McLaughlin. “Still, in the collective judgment of the NVAR/GMU team, this should be a strong year for Realtors and their clients.”