This chart shows inventory vs median price for single family homes in Fairfax County for the past year. Inventory is continuing to fall in Northern Virginia, and in particular Fairfax County.
It’s easy to see on this graph that median price has closely correlated to level of inventory–that is, until recently. Has pricing hit bottom in our area? Certainly the combination of historically low rates and the first time buyer credit spurred purchase activity. But we’re down to just a few months’ of inventory for buyers to choose from (5 to 7 months is considered a balanced market), so unless something happens to bring it back in to balance we can expect rising prices.
So what can bring it back in to balance? If the much discussed “shadow inventory” appears, that would certainly add to the inventory, though it’s unclear which price points would benefit. The potential extension and expansion of the $8000 first time buyer credit, coupled with a potential “repeat buyer credit” could spur sellers to decide to go ahead and list their home for sale. And by limiting the credit to those who have owned for at least five years, chances are good that those sellers are not underwater on the homes and can afford to sell at today’s lower prices. (Though it may be painful for them to remember what their home was ‘worth’ just a few years ago.)
Sellers, if this credit passes, this could be a very unique opportunity for you:
- Prices are hovering above the historical correlation with inventory
- A potential extension of the first time buyer credit will create temporary demand, even in what is usually a slow time of year
- Interest rates are still at historical lows for your purchase
- Prices at upper end homes (above $500k) have taken a bigger hit than entry-level (which was supported by the previous first time buyer credits), so you might get more for your money than in a normal, fully recovered market
If you have owned your home more than five years and you believe it is priced under $800k, this is the time to consider selling!
Contact me to sign up for a market analysis of your home (no pressure, I swear), and discuss how the listing process works.