by Karen Briscoe
October 6, 2021
As Inventory Wanes, Sales Surge
Q1-Q3 2021 Compared to Same Time 2020 and 2011
McLean and Great Falls
By Karen Briscoe
The residential real estate market in McLean and Great Falls continues to experience the best year ever! The number of sales for the first three quarters of the year is up 22% over 2020 transaction levels. This surge in sales is occurring even while our market continues to experience low inventory levels. While some buyers took a pause from their home search during the summer to travel and the market experienced a seasonal breather in August, activity kicked back up with the start of the Fall market. The market is still competitive, especially for the best properties in the best locations, and we expect this to be the case for the foreseeable future.
The upper bracket segment ($1.25m+) experienced the greatest increase from 2020 to 2021 with 38% increase in transactions. The number of sales in the $2.0 - $3.0m category have nearly doubled from 2020 to 2021, with the Great Falls market leading the way. The ability to work from home, a trend toward multi-generational living, the desire for new experiences after being shut in from Covid lockdowns, and historically low interest rates are all driving demand for real estate with more space and more amenities.
Another key trend driving the upper bracket sales is the new build market. Buyers are willing to pay up for certainty and the ease of new. Most of McLean and much of Great Falls is in-fill building where an existing home is torn down to make way for a new home. Land scarcity and increased demand for land is driving prices higher. A third acre of land on average sold for $750,000 - $800,000 5 years ago. Today we are seeing third acre lots command $1,000,000 - $1,300,000 on average depending on the location. The cost of money is still cheap, but land, labor and materials has jumped, and the builders are passing the cost increase along to the consumer.
Digging deeper into the numbers we see that the lower bracket segment (<$1.25m) is up only 10% from last year. The inventory crunch is more pronounced in the lower brackets which means buyers are losing out on lower bracket properties with multiple offers and either must expand their geography, budget or both.
Our real estate market has dramatically changed from 10 years ago. In the first 3 quarters of 2011 when we were still pulling out of the 2008 market crash, only 689 homes sold in McLean and Great Falls. A whopping 64% more homes have sold in Q1-Q3 in 2021. Today’s lending guidelines are more rigorous and borrowers who qualify for financing have sound credit scores and financial profiles. This phenomenon provides stability and certainty in the lending market. The stock market continues to perform which gives borrows and cash buyers the confidence and resources to purchase a home. Rents are also rising which drives real estate investors to seek return and motivates first-time home buyers who see that their mortgage payment could be the same or less as a rent payment and that low rates translate into more purchasing power.
The good news is that the McLean/Great Falls real estate market continues to thrive. Supply is low and demand remains elevated thanks to current demographic trends. Millennials are forming households. Gen Xers are moving up to accommodate multi-generational households and work-at-home adults, and baby boomers are living in their homes longer. This confluence of factors is driving the housing shortage.
At the close of the first half of the year, supply for the overall McLean and Great Falls market was under 3 months. Today, supply is just under 2 months. While you may have heard rumblings that the market was slowing toward the end of the summer, the market is actually getting tighter, and we are experiencing even more of sellers market today vs. 3 months ago. This means that if you are thinking of selling, now is the best time to sell.
Thinking of Buying? Now is a good time too as anemic inventory can continue to lead to higher prices. Time is of the essence and waiting until next year could mean you end up paying more for a house.
Karen Briscoe, Lizzy Conroy, and Jenny McClintock with HBC Group at Keller Williams are active and experienced Realtors® in the Northern Virginia marketplace. They work with sellers, buyers, investors, and builders in all price ranges and are available to assist with your real estate needs! www.HBCGroupKW.com, 703-734-0192, Homes@HBCGroupKW.com.