Whether looking to get a new office building or a new home, the real estate market in Northern Virginia is alive and well, according to local commercial and residential Realtors.
"It's a hot market here," said Amy Ritsko-Warren, spokesperson for the Northern Virginia Association of Realtors [NVAR].
Prices on residential properties rose an average of 22 percent from July 2003 to July 2004, she said, "a trend in Northern Virginia that's continuing to escalate."
Ritsko-Warren pointed to several reasons for the rush to purchase a home.
"Mortgage rates are still low, so it's still a seller's market," she said, adding that it hasn't been unusual for a seller to have multiple offers on the same house.
In addition, the unemployment rate remains at 2 percent in Fairfax County. "More people are looking to buy a home before they normally would," said Ritsko-Warren. "Plus, people are finding work here and are moving to the area," at a fast pace which is taking properties off the market quicker than usual.
A side effect of that, however, is that prices on homes are rising due to a higher demand and a lower amount of space available. "There are not a lot of homes for sale compared to the number of buyers out there," she said.
The average sale price on a home in 1990, for example, was around $238,000 Ritsko-Warren said. The average price in 2003 for a home was $365,000 and the most recent numbers available for July show an average price of around $454,000, she said.
Her advice for those looking to buy a home? "Get a good Realtor. There are waiting lists for new homes. All buyers are struggling to make themselves the most attractive prospects," she said.
TRISH SZEGO, chairman of the board of NVAR as well as a real estate broker, said that the demand for homes has fallen a bit, but it's still normal to expect a seller to receive three or four offers on a home.
"The highest amount of offers I've seen on a home was 42," Szego said.
When the competition was that fierce, prospective buyers were willing to forego independent appraisals and inspections in order to make themselves more attractive to the sellers.
"More people are wanting the appraisals and inspections now," she said.
Szego added that sales in July and August have been low, "which is typical in every market." Typically, the late summer months are usually a little slower because parents want to have their children settled into a new neighborhood and home before starting school. "It'll be interesting to see what happens in September, when sales tend to increase a bit," she said.
When asked how long this upswing in demand is going to last, Ritsko-Warren said that it's anyone's guess. "They always say it's going to be slow next year, but it isn't. This trend isn't going to come tumbling down. A lot of it depends on interest rates."
Projected mortgage rates for 2005 are currently between 7 and 7.5 percent, which is an increase from the current rate of around 6 to 6.5 percent.
THE MARKET FOR CONDOMINIUMS "has gotten hot," Ritsko-Warren said, noting that condos used to have a reputation of "not being a great investment."
"They're seen as the new starter home, as compared with the ranch-style with the picket fence from years ago," she said. "It's a great investment now, but they're selling fast and there's not a lot of availability."
As for the commercial real estate market, Ritsko-Warren said that the market varies from area to area, but the area is recovering well from the dot-com bust of three years ago.
"Commercial real estate locations were empty, particularly in Reston, there were huge vacancies," she said. "They're starting to fill back up; a lot of space is being absorbed right now."
Brendan Cassidy, senior vice president at Cassidy & Pinkard in Washington, D.C., said that the commercial real estate market is a reflection of the economy.
"When businesses are growing and the economy is strong, the real estate market is healthy," he said.
Although the commercial market is still feeling the effect of the most recent recession, the Northern Virginia market in particular is rebounding steadily.
"Northern Virginia peaked at more than 20 millions square feet of vacant business space" a few years ago, Cassidy said. Starting in 2003, however, with the incorporation and expansion of the Department of Homeland Security, that vacant space has decreased.
"The vacancy rate in the region now is at 14.4 percent," said Edwin Gotico, assistant director of research at Cassidy & Pinkard. "That represents 19.6 million square feet of vacant space, but there is a total of 136 million square feet of office space in the region."
Overall, the market in the region is in good shape, Cassidy said.
"The supply [of empty space] is still good enough that tenants can get attractive leasing terms. If I'm an owner, I'm pleased to see the demand return, but still concerned to see vacant space," he said.