2018 was an interesting year. It started off on a high note, with lots of activity and anticipation that it would be busy. The first half of the year was just that. Driven by high demand and some of the lowest inventory levels in years it was a spring for the sellers.
Then things started to turn a bit. Inventory levels moved up, although not dramatically. Interest rates moved up as well. They started at 4.15%, jumped up to 4.85% by October, then settled to 4.55% in late December. For some historical perspective from 1971-2009 the average 30 year fixed rate mortgage never fell below 5%. Even during the run-up in home prices from 2000-2007 rates were in the 6-8% range.
Combine interest rate volatility with a mostly downhill roller coaster ride of the stock market starting in October, and by year’s end, most people had a case of whiplash. But if you take a step back, it was still a solid year for real estate in the DC metro area. The total number of properties sold was the second highest in the past five years; not too shabby. Let’s dig in and take a look at some of the numbers.
Regionally*– Inventory was up less than 1%, and pending contracts were up about 2%. The total number of units sold was off by 2.3% and prices were up by about 3.5%. That’s lower than the rate of price appreciation for 2017 but close to the historical average of 4.3%
So there was a change in the market, but not a dramatic one; more a change in tone than direction. In my mind that’s good news, we don’t need a repeat of 2007-2011. The market needed to cool off a bit, and it seems to be doing just that. As is always the case, the regional news only tells part of the story. Let’s take a look at some of the local jurisdictions to see how they fared.
Alexandria City seems to be one of the winners. Inventory was down by 53% year-over-year, and pending contracts were up by 16%. The total number of sales was up by 6% and prices moved up by 3.1%. Of all of the major northern Virginia jurisdictions, Alexandria had the highest increase in the number of total sales at 5.7 %. Three out of the other five showed a decrease in sales activity.
Next-door in Arlington the story was not quite so rosy. Inventory was down by 40%, and pending contracts were up by 20%, but prices had moved down by 2.6%. So out of the 4 NOVA jurisdictions in the list Arlington and one other showed price depreciation. The Arlington numbers seem counter-intuitive to me, given the pending and inventory numbers. Sometimes the real estate market, like the stock market, doesn’t seem to make sense.