Being a Realtor in the Northern Virginia area we do not need an icebreaker. Any event or place I attended or meet irrespective they are in the market to buy or sell a home; friends or a stranger wants to know what is going on with the Fairfax and Loudoun County real estate market in Northern Virginia.
Across the country many of the high profile real estate market like Seattle, Los Angles have slowed down. I am no expert for those regions but I can share what is going on in the Northern Virginia real estate market.
Bullish outlook of the Northern Virginia Housing Market:
1. Unemployment rate- Just like any other major metropolitan city DC metro area has a strong unemployment rate. This has been the trend for close to a decade and no sign of slowing down. Having Amazon in Northern Virginia may help but we are not solely relying on that employer to call it a home. From my recent attendance to the economic summit the Northern Virginia unemployment rate was at 2.4.
2. Income: My counter argument everytime someone says we have a bubble I say look around and we have high-income jobs are the area. With a strong income and low unemployment rate, Northern Virginia is a good marriage!
3. Best Place to live: We have all heard for a while Loudoun and Fairfax County are the richest counties in the country. Another feather to brag is recently Ashburn, Virginia was named as one of the best places to live. So my millennium buyers who are planning to have a work-life balance Northern Virginia may be for you!
4. Low-Interest rate: I know you may think I am kidding you with my spiel on the interest rate. I have family members with over 4 decades of homeownership and I have personally owned a home almost two decades seen the industry interest rates from the high and low end. Did you know 18.63% in 1981 and lowest we went was 3.31% in 2012? Now you can counter argue a 4.5%-5% isn't a normal market rate?
5. Tight Labor Market: Being a Realtor who meets people from all walks of life and career. Speaking with my clients, customers, friends, and strangers many have affirmed they cannot find the right people to fill a position. DC was ranked #5 in the top job market.
Bearish outlook of the Northern Virginia Housing Market:
1.College Debt: This is #1 reason why we read reports on millennium buyers putting off the home purchase decision. Many parents who have drawn money from the equity they have in the house to help the kids with college loans are stuck working for longers years and staying put in the house they own. For others who are not fortunate to have parents or grandparents to rescue them end up taking a large burden of student loans. This debt has impacted many first time home buyers decisions to buy a home or their affordability.
2. Political Environment: DC metro is sensitive to the political environment. We do get impacted in the year we have major local or national election. So 2018 and 2020 may have the reminiscence of the political anxiety.
3. Income growth: This may be counter-argument to my statement earlier made about high income in the Northern Virginia area. However, the income and cost of living in the area are high (not as high as West Coast or NY) our incomes have not risen in past few years. This may reduce the purchasing power of home buyers in the Fairfax and Loudoun County.
4. Tight Inventory: We all have heard housing crisis due to tight inventory especially during peak spring market. There are numerous reasons that lead to the tight inventory.
A. Homeowners have taken loans to help their kids pay student loans are staying put where they live.
B. New Construction due to the ever-increasing cost of land, material and tight labor market has slow down. Builders are not setting up the sales community at a rate they use a decade ago.
C. Homeowners who want to move up into a larger home cannot find a right home.
D. With the rise of interest rate or lack of inventory, many homeowners are deciding to stay put and improve their home rather than sell.
5. Local Issues: Northern Virginia is known for attracting labor force, however, being a Northern Virginia resident for over two decades I can personally say our infrastructure to schools cannot handle the fast growth. Many of my young families are frustrated with long commute hours, lack of public transportation, taxes and the high cost of living in the area. Many don't see Northern Virginia as their long-term place to live.
Bottom line: My personal and professional take about the Virginia real estate market is as always has been we are not expensive real estates markets like San Francios or Seattle or New York. Northern Virginia real estate market has all the conditions to grow and sustain the stable housing market in the years to come. Like any other investment let real estate be part your basket. At the end of the day, you will need a shelter. Whether you may in terms of mortgage or rent. Real estate has never been a fast cash out investment. It is an emotional and biggest investment of your lifetime. Built a nest and create memories.
Ritu Desai is an Associate Broker/Real Estate agent with over 14+ years of expirence in the Northern Virginia housing market serving Fairfax and Loudoun county areas.