A lot can change in the local real estate market from season to season.
Typically, each spring the market heats up after winter puts a freeze on home sales.
While transactions typically slow in the winter months, a trend exacerbated this season by slower sales and higher inventory than past years, Realtors are expecting a quick thaw this spring.
Which is why, in the past three months, Realtors have had a reoccurring sales pitch: buy now before the hot spring market arrives.
“I’m very upbeat about the spring,” said Boofie O’Gorman, a Realtor with Long & Foster in Reston. “I think we are in a balanced market as opposed to a sellers market or a buyers market.”
IN RECENT YEARS, spring home sales in the area have not been so different than the spring fashion market — it’s hotter than any other time of year. Home appreciation gets a boost in the spring, and it usually takes less time for homes to sell.
David Howell, managing broker of McEnearney Associates in McLean, also has a sunny forecast for the spring.
Howell, who watches trends in the Northern Virginia market, expects sales will be about 3 percent to 5 percent lower than last spring. “But compared to the spring of 2005, which was as good a market as we’ve seen in years, that’s still humming along,” said Howell.
Agents are also realistic. O’Gorman pointed out that “the intensity of the spring market is usually fueled by a lack on inventory,” which won’t be the case this spring.
Inventory spiked last year with more than 7,000 active listings. For nine consecutive months in 2005, inventory in Northern Virginia increased compared to the previous year. The year ended with 5,659 active listings, 244 percent more homes on the market compared to December 2004.
DESPITE the high inventory, market experts have had good reason to be optimistic.
“The decline in sales the past couple of months, I think that’s an anomaly,” said Lawrence Yun, senior economist at the National Association of Realtors. “I anticipate that in the spring, sales will bounce back up and be closer to last year's figures. They may not exceed last year’s numbers, but they will be close.”
Yun said that job creation is as strong as ever in the area, which should help home sales recover in the spring.
Compared to the rest of the country, McEnearney’s Howell points out, the market is doing great. “Given jobs, given interest rates, given days on market, given the pace of sales, given the amount of inventory, it’s still a sellers market compared to the rest of the country,” said Howell. “And while a lot of people have talked about the bubble bursting, people will see that that’s really not going to happen.
Jill Landsman, director of communications and marketing for the Northern Virginia Association of Realtors, agrees. “This region is still highly in demand. It’s just the word ‘frenzy’ might drop off the radar screen,” said Landsman.
For many Realtors, the expectation is that the spring rebound will have a ripple effect. “Once people start seeing things selling, the confidence of the local buyer will return,” said O’Gorman.
EVEN WITH a strong spring market, homeowners will see a correction in home appreciation. “We can’t expect home appreciation of 20 to 25 percent,” said Howell.
Most experts have said that home appreciation in the region will be cut in half compared to last year’s 20-plus percentage increases.
While Yun projects home prices to increase 7 percent to 10 percent this year, he said there is a possibility the figure could be higher.
“The wild card is mortgage rates. We assume modest increases in mortgage rates, but they stay low, we could see higher home appreciation,” said Yun.
Last week, O’Gorman sold a Reston home in 10 days. “At full price,” she said. But as buyers return this spring, she cautioned sellers not to get too excited. “If sellers perceive they can add $10,000 to 20,000 to their prices, that’s not a fair perception,” said O’Gorman. Homes that are priced appropriately will do well, she said.