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Why Northern VA Home Prices are Still Increasing

Northern Va home prices continue to increase on average at a steady pace.  This has continued since 2009 leaving many homebuyers to ask the question, Why Northern VA Home Prices are Still Increasing?  As my standard disclaimer, real estate is local and can be different even from neighborhood to neighborhood and price range as I mention in this article, Oversupply in Premium and Luxury Inventory.

There are many unsubstantiated theories as to why home values in NOVA are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart 1).

The Real Reason Home Prices are Increasing | Simplifying The Market

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last four years (see chart 2).

The Real Reason Home Prices are Increasing | Simplifying The Market

Bottom Line

If buyer demand in Northern Va outpaces the current supply of existing homes for sale, prices will continue to appreciate. Nothing out of the ordinary is taking place. It is simply the theory of supply & demand working as it should.

Buying or selling a home give me a call.  I specialize in selling starter homes, trade up homes, premium homes, Green Homes, and luxury real estate in Northern VA. Selling homes since 2003 to first time home buyers, relocating clients, first time home sellers, luxury clientele, downsizing, and trade up clientele. Helping home sellers sell quickly and profit more with a carrier average days on market of 39 days.  I have experience in  Ashburn, Burke, Centreville, Chantilly, Dunn Loring, City of Fairfax, Falls Church, Great Falls, Herndon, McLean, Oakton, Reston, Sterling, Tysons Corner, Vienna, or anywhere in Northern VA.

 

Article originally posted on my KCM blog, here.

 If you are thinking of selling or buying a home in Northern VA —

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