The third quarter results are in for the Greater DC market and they can only be described as “staggering”. All three jurisdictions in which we operate reported significant increases in average home prices and unit sales – despite significant inventory shortages across the metro area. September volume in particular contributed significantly to all three jurisdictions with NOVA recording a whopping $1.5B in residential real estate sales – a 58% increase over the same period last year. NOVA average home price increases climbed to 13.5% YOY. Likewise in September, Wash DC and Montgomery County registered a 7.3% and a 15.7% average home price increase respectfully over the same period last year. The Q3 numbers benefitted greatly from the strong sales performance in each of these markets over the past quarter with NOVA posting an 11.7% average home price increase and a 20% increase in unit sales. Wash DC came in second with an 8.6% average home price increase and a 26% increase in unit sales. Montgomery County posted strong Q3 numbers as well coming in at a 7.3% average home price increase and a 13.7% increase in unit sales. Low interest rates continue to be a driving force in the demand for housing with rates dipping down below 3% and September interest rates according to some analysts being the lowest in recent history with no real substantive conversations about a rate increase for the foreseeable future. However, refi’s may start to slow due to a .50% fee increase Fannie Mae and Freddie Mac will impose on refi’s starting on Dec 1st. On a $250,000 refi loan this charge would be $1,250. This should not impact purchase loan rates but may provide some incentive to sellers to consider selling vs refinancing their homes. Moving forward into Q4, the housing market continues to be the bright spot for the economy. We are already seeing a “V” shaped recovery in regards to housing as builder confidence remains strong with buyer demand driving this confidence. The concept of “home” has taken on new importance and we may see a return to demand for larger homes to accommodate the added amenities & entertainment options homebuyers are requesting based on current environment conditions. New construction homebuyers should expect delays in product delivery based on shortfalls of material, labor and lot availability all of which are contributing to lengthening construction delivery times. In closing, the demand for housing will remain high and the short term outlook is bright as businesses continue to adjust to the Covid pandemic and people move on with their lives. The many factors impacting our industry leaves long-term predictability far from certain. Strong demand among millennials who now make up 1/3 of all homebuyers, job losses that continue to plague those job sectors where workers are primarily renters and uncertainty as to the impact of distressed homeowners all playing a part on the housing market. And the usual characters of low interest rates, pent up demand, cratered inventory levels and unemployment will continue to play their part in the direction of the Q4 and Q1 2021 housing market as well. It’s a brew of many different ingredients!
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