Question: What are you currently seeing in the Northern VA housing market?
Answer: Before I jump into some trend comparisons of the Northern VA and Arlington housing markets, I want to remind you that it’s normal for the market to slow down this time of year and it’s easy to be lulled into thinking the seasonal slowdown is indicative of a larger market turn, but like clockwork the market usually snaps back into form by mid/late January (see this article for details).
With that said, this week I’d like to look at some multi-month trends that I’m watching in Northern VA and compare the overall Northern VA market to the much smaller Arlington market.
Northern VA Months of Supply Trending Up
Months of Supply (MoS) is a great measure of supply and demand. Lower MoS means a stronger market for sellers. Northern VA and Arlington had similar rock-bottom MoS in 2022, particularly for detached homes, but after interest rates spiked, Arlington quickly hit 1.5-2 MoS and has mostly stabilized in that range.
Northern VA has taken a more gradual path to increasing MoS, but has seen more rapid increases to MoS in recent months, which means buyers have gotten modest relief. Arlington and Northern VA are now seeing similar MoS levels, but Northern VA is trending up at a faster rate and I’ll be watching closely in early 2025 to see if Northern VA MoS starts to exceed Arlington’s (I think it will).
Supply Up in Northern VA, Down in Arlington
Supply (homes listed for sale) is up for seven straight months in Northern VA, which is slightly good news for buyers, but still a long way to go before we get back to pre-pandemic levels (currently about half of where we were).
The Arlington market experienced four straight months of increasing supply (May-August), but hopeful buyers have been disappointed the last two months as that trend reversed highlighted by a ~20% year-over-year drop in active supply in October. Those four months of supply increases in Arlington were mostly driven by the condo market too, the detached market continued to lose inventory on a year-over-year basis during all but one month this year.
Bad Signs for New Listings in Arlington
The metric I’m really focused on is new listing activity. So much of our current and future housing problems are due to a massive drop in the number of homes being listed for sale. While we have seen some positive signs in Northern VA in 2024, the Arlington new listing numbers are pretty devastating for buyers due to a continuation of double-digit year-over-year decreases in new listing inventory (condo and detached).
Even if the year-over-year numbers start to improve in Arlington/Northern VA next year, we have an extraordinarily long way to go to get back to pre-pandemic listing volume. We are currently seeing roughly 30-40% of the monthly new listing volume buyers saw pre-pandemic. Unfortunately, I don’t see that changing much any time soon.
Uncommon Price Reduction Activity in Arlington
Courtesy of Altos Research, we see some highly irregular price reduction data in Arlington right now. Normally this time of year we are seeing the percentage of properties with a price reduction reaching or at their peak levels for the year, with sharp increases in price reductions usually running from early summer through the end of the year.
This year, we saw the percentage of homes on the market with a price reduction increase (like usual) from early summer through mid-August, then surprisingly decrease after mid-August. This indicates a surprisingly strong seller’s market in Arlington through the fall which can be explained by the supply/new listing charts shared above.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
