Best Ever Real Estate Market
First Half 2021 Compared to Same Period during 2020 and 2011
Reston Real Estate
Reston residential real estate experienced a strong first half of 2021, topping its healthy performance in 2020 and recording double digit growth of a whopping 30% over last year measured by the number of closed sales. Clearly the best year ever!
After the 2020 real estate market experienced a slowdown mid-March to mid-June due to the pandemic and stay at home orders, sales bounced back in the later part of last year, finishing with 3% growth in total sales over 2019. But sales during the first half of 2021 exceeded all expectations with an unprecedented increase in total number of Reston homes sold in all price brackets combined. The jump is attributed to many of the now familiar factors that emerged last year during the pandemic: an influx of first-time homebuyers to the market, exodus from cities, the need for more indoor and outdoor personal space, the ability to choose home as a work location, and families moving in together seeking larger homes.
Add to that unusually low inventory and the effect is that homes for sale are snapped up quickly. A balanced market is one where there is a six months’ supply of home inventory in the pipeline, The term “months' supply” refers to the number of months it would take for the current inventory of homes on the market to sell, given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and where sellers and buyers are perceived to have equal leverage in the home sale transaction. Lower levels of “months' supply”, as is currently the case, tend to push prices up more rapidly. According to Realtor.com, housing supply of inventory sits at 2.5 months nationally as of the end of May. In Reston, that number is currently 1.1 months’ supply, creating a hyper seller’s market.
In 2021 first half, the most significant impact in home sales as a percentage occurred in the $750,000-$999,999 price range. Whereas a total of 28 homes sold in this bracket in 2011, 51 sold in 2020 and 117 in 2021, an increase of 127% over the first half of 2020. These numbers indicate that home prices are appreciating which is good news for Reston homeowners. This increase is in part fueled by continued historically low interest rates but more so the unprecedented ‘bidding wars ’that drove sold prices up 5% to 15% over list price!
Reator.com notes that mortgage rates are expected to fluctuate near historic lows through the summer before beginning to climb this fall. Those who haven’t yet taken advantage of low rates to buy a home or refinance still have the opportunity to do so this summer. With prices high, affordability is tied even more strongly to mortgage rates, so potential buyers starting to hunt for a home should consider what changes in mortgage rates mean for their home shopping budget.
Looking back, there is historical precedence for high home sales in the three Reston zip codes, where the five year period beginning in 2001 exceeded 2021 sales annually, peaking in 2005 at 938 homes sold. The sales cycle returned to more normal levels in 2006 and 2007 with 696 and 708 in sales, respectively. The financial and real estate markets corrected significantly with lower sales of 473 in 2008 and 526 in 2009. The 589 sales in 2010 marked the beginning of the turn toward recovery in the market, and the number of total sales has been on the rise ever since. Notably, 2021 numbers have topped annual sales every year since 2006.
Looking forward, there is still considerable demand for buyers throughout all of Reston. Properties selling quickly at or above asking price is enticing for sellers who are considering a move now or in the future. The good news for buyers is those low interest rates, and additional appreciation if the market continues to rise as expected. With such a strong market showing in the first half of 2021, all indications point to an equally robust second half of the year. Stay tuned!
Jenny McClintock and Sue Bender are with HBC Group at Keller Williams and are active and experienced Realtors® living in Reston. Jenny, alongside her business partners Karen Briscoe and Lizzy Conroy, work with sellers, buyers, investors and builders throughout Northern Virginia in all price ranges. www.HBCGroupKW.com, 703-731-2412, firstname.lastname@example.org