A feeling of spring in the air in January and February matched the level of activity in the Northern Virginia housing market during those months.
“Across the board in every jurisdiction, we’re seeing unbelievably low inventory, even tighter than last year,” says David Howell, executive vice president and chief information officer for McEnearney Associates in McLean. “But because we didn’t really have a winter in January and February and because buyers are worried about mortgage rates rising, the spring market got an early start.”
The number of units sold, the dollar volume of sales and the median price of sold homes all rose in January and February 2017 compared to January and February 2016 in Northern Virginia, according to multiple-listing service Bright MLS (formerly MRIS) in Rockville. (Bright MLS defines Northern Virginia as Arlington, Alexandria, Fairfax and Falls Church and doesn’t include Loudoun and Prince William counties.)
The number of units sold rose 8.4 percent and the average number of days a property stays on the market decreased by 13 percent. The median home price rose to $464,900, up 2.2 percent in January and February 2017 compared to January and February 2016.
As always in Northern Virginia, the market varies from one area to another.
“There’s less price appreciation inside the Beltway, especially in Arlington, even though sales were up,” says Nela Richardson, chief economist of Redfin brokerage in Washington. “That tells you that the demand is there but not anything goes. People are sticking to their budgets and demand is moving toward more affordable housing in Fairfax, Loudoun and Prince William counties.”
Howell says some agents are seeing bidding wars in Prince William County because buyers are finding more affordable housing.
In Northern Virginia, the price range with the most listings for single-family houses is $1 million to $2.5 million, which highlights the limited availability of affordable single-family houses, says Jonathan Hill, vice president of marketing and communications for Bright MLS. For townhouses, the most listings are available in the $400,000 to $500,000 range, while the most condos are available in the $200,000 to $300,000 range.
The demand for housing in Northern Virginia and price appreciation could both be impacted by potential cuts in federal spending and federal government employment from the proposed Trump administration budget.
The sequester has already reduced price appreciation in the District and Northern Virginia to about 2 percent, which is low in comparison to years when the government was growing, says Elliot Eisenberg, chief economist for GraphsandLaughs, an economic consulting firm, and former senior economist with the National Association of Home Builders in Washington. If the budget cuts are enacted, he says, home price declines of 3 or 4 percent are possible. However, Eisenberg doesn’t anticipate a long-term impact on the region’s housing market.
“The chances of these draconian cuts happening is low,” Eisenberg says. “The price reductions are unlikely to be permanent as there will be immediate behavioral changes on the part of builders to reduce supply, as well as behavior changes on the part of future Congresses that try to undo these cuts.”
The Trump administration plans to increase military spending, which could have a mitigating impact on Northern Virginia even if other budget cuts reduce the federal government.
“One area that could see increased home prices is Northern Virginia, where a lot of the defense industry is centered,” Richardson says. “If the administration follows through on its plans to increase military spending, there may be more jobs and more people looking to live there.”
While the impact of the new administration remains to be seen, builders in Northern Virginia have increased development in the past year to meet rising demand, including a variety of price points and housing types.
Many large builders have turned to Stafford and Spotsylvania counties, which are not technically part of Northern Virginia, to meet the growing demand for more affordable single-family houses.
“There are seven builders in the planned community at Embrey Mill, including some single-family homes priced from the low $300,000s and townhouses priced in the $200,000s,” says Dan Fulton, senior vice president of John Burns Real Estate Consulting in Reston. “Lennar is building their ‘NextGen’ multigenerational homes there. Drees also has single-level living homes that appeal to empty-nesters.”
Fulton says sales at Embrey Mill doubled in 2016 compared to 2015.
In Prince William County, Toll Brothers recently opened a new “active-adult” community for people 55 and older, called Regency at Creekside, with single-family houses priced from the low to mid-$500,000s that include indoor-outdoor living spaces such as screened porches and covered decks.
Another large development is Willowsford in Loudoun County, a development of upscale single-family houses, where Fulton says more than 300 houses sold in 2016, almost double 2015 sales.
“Willowsford has a wide variety of housing styles, including K. Hovnanian’s ‘Line K’ homes, which are very modern and unique,” Fulton says. “They recently introduced a scaled-down version of those homes which are priced from the $900,000s instead of the $1.3 million price tag on the original versions.”
Fulton says a trend in several communities in Northern Virginia is urban-style condos and townhouses with rooftop terraces. These can be found at Crescent Place and Brambleton by Knutson Homes in Loudoun County and at One Loudoun by Stanley Martin Companies and Miller & Smith, among other locations.
In Fairfax County, most of the developments are relatively small and expensive communities of less than a dozen residences, including several by the Christopher Companies. Models are opening this spring at the Christopher Companies’ Corbett Manor community in Springfield, a cluster of seven Craftsman-style single-family houses priced from the upper $800,000s; at Kenilworth in Fairfax, where six home sites are available for Craftsman-style houses priced from the low $900,000s; and at Vienna Grove, where eight Craftsman-style houses will be built, priced from $1.295 million.
“When you see new construction at such high prices in places like Vienna and Arlington, it supports the decision of some builders to do tear-downs of older homes and replace them with a new house,” Fulton says.
Buyers looking for affordability and newer houses are likely to continue to need to move farther out from the inner suburbs, further exacerbating Northern Virginia’s notorious traffic woes, unless the threat of government budget cuts slows down demand for the region.