Hop on folks and take a ride. Over the past nine months, the average contract price of all sold single family houses and condos priced under one million dollars in Northern Virginia (Fairfax, Loudoun and Prince William Counties) has made a complete round trip. So for all those brave souls who dipped their toes into the water and bought a house recently, you may have already started to build some equity courtesy of Mr. Market.
In August 2008 the average of all Solds was $319,656. Eight months later, after falling to a low of $270,341 in December 2008, the average is back up to $319,074 and rising fast.
Why? Supply and Demand. On May 1, 2009 there were 5,532 properties for sale in the three counties (Priced under One million). Yet in the month of April 2009 there were 3,634 properties sold. This means we have only a 46 day supply of houses for people to choose from. To give something to compare to, On September 1, 2008, there were 10,248 houses to choose from.
As a consequence, prices are being bid back up. This portends the beginning of a new real estate cycle. The same normal cycle we always see after a business contraction (recession), albeit this contraction was much more severe than we had seen in a while.
There is so much money being poured into the economy and the real estate market by the government’s various programs, that the market can really not do anything but go up from these ridiculously low levels in the DC area.
The really smart home buyers will be those who sell their current house and trade up while prices and interest rates are still quite reasonable. Doing so allows existing homeowners to take advantage of the rising equity on a larger house and to be able to do it before the higher price ranges get as hot as the lower price ranges. Most of the lower priced homes being sold are vacant. So a homeowner who sells to trade up will not currently find much competition when they go to buy the larger, more expensive property.
So hop on folks! This train is heading someplace; to a place called higher prices.
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