Happy New Year! I would like to take this opportunity to thank everyone we have done business with and everyone who referred us business in 2013. It was a record year for us, and we helped 69 families buy, sell, or rent a home. We could not do this without all of the wonderful referrals we receive from current and past clients, as well as people that know our business and work ethics! THANK YOU!! I hope everyone has a prosperous 2014!
I am often asked what I think is going to happen in the real estate market. My usual answer is that if I had a crystal ball, I would be retired and living on a beach somewhere by now! Having said that, I can usually give a pretty realistic picture of where things are going. The good news is 2014 looks like it will be a good year for the NOVA real estate market! And I say that with facts to back it up.
I recently attended a meeting where Dr. Stephen Fuller spoke. Among other things, Dr. Fuller is the Director of the Center for Regional Analysis for George Mason University. He had some very interesting information to share with us, and since the housing market often goes the way of the economy, we need to look at that first.
Beginning at the national level, we see a predicted Gross Domestic Product ranging from 2% to 4% for 2014 and 2015, which on average is higher than we have seen the last 3 years. We also see good job growth in all major employment categories from Oct 2012 to Oct 2013 except for the Federal Government, which shrunk. We have seen unemployment claims steadily fall as well, to 7.3% in Oct 2013. This is predicted to fall to 6.4% in 2015.
Interest rates are predicted to remain somewhat steady for 2014, with small increases, but are predicted to be over 5% in 2015 (30 year fixed rate). They are predicted to increase to more normal rates in 2016 and 2017, which would be in the 6% range (Still low, historically speaking).
Housing sales (New starts plus existing sales) are predicted to be 6.56 million in 2014 and 7.2 million in 2015. For reference, we ended 2013 with just over 6 million units (estimated). 2012 had 5.44 million units sold.
What most affects our area, however, are the Washington area statistics. Northern Virginia continually outperforms the region. We have the lowest unemployment, at 4.4%. For job growth over the next few years, NOVA is also predicted to outperform MD by almost twice, and DC by about 4 times. NOVA continues to have a disproportionate share of the Gross Regional Product, at about 47.2%. (This is NOVA, DC (23.8%)and Suburban MD (28.6%).)
Several things struck me regarding the job information I studied. The first thing is that the federal government is contracting and losing jobs. I know that is hard to believe. Some job loss is due to retirements, and the jobs are not being replaced. And some jobs are becoming contractors.
The second thing that struck me, more importantly, was the jobs by income classification. The classifications are lower wage, mid-wage and higher wage jobs. During the recession of 2008-2009, a little over 20,000 lower wage jobs were lost. Since 2010, just over 60,000 of these jobs have been created for a great net effect.
Mid-wage lost almost 45,000 jobs during the recession, but have had just under 20,000 created since 2010. This is not good.
Interestingly, higher wage jobs increased by just over 20,000 during the recession, and have since added over 40,000 more.
What I think this all means for the real estate market is that NOVA will probably have another year of low inventory. I think we will have a number of buyers taking advantage of the interest rates before they go higher. While this is all positive, I think that we will see micromarkets continue outperform or underperform the market. This means that some zip codes, and even neighborhoods, may lose value, while others may soar. I believe that overall prices will increase, although there may be some lulls throughout the year. Overall, I believe we will be in for another strong market.
Conversely, with houses selling and renters becoming homebuyers, I see the rental market softening a bit. I have been seeing, and believe we will continue to see, homes taking longer to rent, with prices softening in some areas, but not all.
If you would like to learn more about your specific neighborhood or discuss your real estate needs, please feel free to give me a call at 703-599-7127, or visit me at TomConner.com. We are here to help in any way we can.
Tom Conner is an Associate Broker with RE/MAX Gateway, licensed in Virginia, and President of Kartobon Property Management, LLC. He has been in the real estate business for over 20 years as a top performer in any role he has been in. He began his career in New Home Sales, becoming Sales Representative of the Year for his division selling new homes. He advanced his way into management until he became Vice President of Sales and Marketing. In 2001, he began his career in the resale market, quickly becoming a top producer again. He was offered a position as Executive Vice President of a real estate firm in 2006, and he assumed a management role again. Tom realized he loves working for himself and working one on one with clients, and has again returned to sales. He helps his clients with all of their real estate needs in the Northern Virginia area, from buying, selling, and renting homes to professional property management. His office is RE/MAX Gateway at 7521 Virginia Oaks Drive, Suite 100 Gainesville, VA 20155. Tom can be reached at 703-599-7127 or by email at Tom@tomconner.com, or visit him on the web at www.tomconner.com.