We are well into the Spring season in 2015, and even tough we had an extended cold spell well into March, the real estate market in Fairfax County is warming up nicely.
The median sold price is up to $461,000
According to our local MLS, the median house price at the end of March of 2015 is $461K, up from $448.5K last March. This represents an increase of 2.8% in the median sold price* for homes in Fairfax County.
But remember that these numbers represent the prices at which homes went under contract sometime earlier in the year (typically about 30-45 days earlier).
This means that buyers were willing to pay these prices in about mid to end of February 2015, when prices are usually still somewhat lower due to the the typical market cycle.
If prices are already up, what will happen for the rest of the year?
What can we expect for the rest of 2015?
Without my crystal ball, one of the things that I can use to try to estimate what might happen in the next few months is the following trend graph:
On this graph, we can see closed sales (bars), and the median sold price (line) plotted from 2013 to 2015.
From this graph, we can see the usual rise and fall of the yearly cycle where prices and number of closed transactions are highest each June (remember that the graph is delayed by about a month, so May is when most homes go under contract for the highest prices).
Prices are going up
Based on this info, I predict that we’re going to have a couple more months of appreciation along with more market activity. We might break $500,000 for the Median Sold Price… we’ll see.
Once August comes, we’ll be back at about where we are now, and then we’ll taper off for the rest of the year to the quietest and most affordable month (December), where I estimate we’ll have a Median Sold Price of about $450K.
This is, of course, assuming that we have steady inventory
One interesting facet of this year’s market is that our inventory is high compared to the average of the last five years.
Usually, prices rise in the Spring as a result of buyer demand. But this year we have a relatively high level of supply of homes (shown in the following graphic as “Months of Supply”).
To me, this means that buyers are being highly selective and are willing to pay higher prices for the nicest homes, while the “ok” homes are sitting on the market for over 2 months.
If buyers are willing to pay more for the nicest homes, this presents an opportunity for well informed to-be buyers and sellers (that’s you!):
Sellers could get Top Dollar for an updated home
If you are looking to sell a home this Spring, you may be able to get top dollar for your home if it’s in a great location, it’s nicely updated, and in wonderful condition.
And if you’re buying…
Buyers might find the best deal in homes yet to be updated
If you are a buyer, you may be able to get a better deal on a home that isn’t recently updated or that is in need of minor cosmetic work (do make sure that it has been well maintained).
In other words, try not too get too dazzled by granite countertops in the kitchen and brand-new bathrooms. There is stiff competition for homes with those highly-desired features.
Consider buying a home with “good bones” (i.e. nicely-sized rooms, a newer roof, a good maintenance record) and updating it to your liking after the purchase.
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* The median sold price is the one in the middle of all of the prices, which can be different than the average price. We use the median as opposed to the average because the average can be affected significantly by a few outliers, such as a couple of multi million dollar mansions that could have skewed the average price up.
+ Graphics and data from RBIntel.