As interest rates rise, we’re getting more questions from buyers and sellers about the market in our region. Will interest rates impact my ability to sell my home for a fair price–or prevent me from buying my dream home? Why are houses sitting longer? Are we headed for a 2008-style crash? Will my home retain its value? As a top Northern Virginia real estate agent for decades, Yvonne Holland has some answers about the recent market shifts. The good news is that the regional picture is a lot brighter than the national media might lead you to think.
What Is The Current Real Estate Picture in Loudoun, Clarke, and Frederick, VA?
What we’re seeing right now isn’t a crash. It’s simply a normalization after a super hot seller’s market prompted by low-interest rates and the COVID-19 pandemic. Buyers were gung ho, resulting in a red-hot market where sellers could demand high prices and dictate almost all of the terms. The current normalization doesn’t mean a bad deal for sellers–just a dose of reality. And despite higher interest rates, it also has plenty of upsides for buyers. One advantage is that sellers are more flexible, returning to practices that used to be commonplace, including inspections, contingencies, and subsidies. We see sellers once again helping buyers with closing costs and other incentives. Remember, the Northern Virginia market, including Loudoun, Clarke and Frederick counties in Virginia, is insulated from some forces in other parts of the country. Our region offers a strong job market, excellent schools, and a high quality of life. We also provide more bang for your housing buck than in the closer-in DC suburbs, a win-win for buyers.
Is The Northern Virginia Housing Market In Trouble?
In Northern Virginia, our regional market is different from the national market. Because of high demand, our housing prices are stable and even rising. However, we are seeing a normalization in the market, with a return to “normal” practices like seller subsidies and home inspections, which had disappeared during the crazy seller’s market. One of the primary reasons for stable home prices is Northern Virginia’s robust job market and high income. Remember, our region supports the federal government directly and indirectly, and Ashburn is one of the country’s most important data center hubs.
Should I Reconsider Buying a Home Because of Rising Interest Rates?
Interest rates do change how buyers look at purchasing a home. However, they’re in no way a deal-breaker and should not prevent you from going after the house of your dreams. As Yvonne likes to say, “Date the rate. Marry the house.” Finding a home you love within your budget is absolutely doable in the current market. Interest rates will change and can be adjusted. As seller subsidies return, many buyers can use them to buy down their rate. We also see a return to long-term adjustable-rate mortgages. Adjustable rates allow buyers to refinance as rates come down. However, you may have to adjust your expectations. Home values in our region have remained steady even as rates rise, so higher rates may shift how much house you can afford.
How Should Sellers Shift Expectations in a Changing Market?
First of all, don’t worry. You can still get a terrific price for your home. However, it will likely be more in line with reality than the inflated prices folks were getting last year. You may not get the same price as your neighbor who sold in 2021. Some homes may linger on the market because sellers are overpricing and clinging to outdated expectations. We also see a return to contingencies for buyers, including home inspections and financial contingencies that give them time to find the right financing. However, if you’re smart and work with the right agent, you can still get a terrific price for your home. Buyers understand that desirable locations are still in demand. They want to capture the current pricing and appreciation before prices rise because of low supply. Home values in Loudoun, Clarke, and Frederick are still appreciating, just not at artificially high rates (We are currently seeing appreciation at a very healthy 7 percent rather than an inflated 18 percent).
Are We Heading for a 2008-Style Market Crash?
We occasionally hear comparisons or concerns about a 2008-style market crash. 2022 offers a different picture from the 2008 financial crisis. A significant factor in the 2008 housing crash was risky loans that allowed buyers to take on more than they could afford. Today we have tighter lending standards, so we see far fewer foreclosures. If you’re selling your home, you can remain confident that it should hold its value in the current market.
How Can I Navigate a Changing Market?
Whether you’re looking to buy or list your home, there’s no cause for alarm. There are still excellent opportunities for buyers and sellers alike in the strong Loudoun, Clarke, and Frederick, VA markets. However, achieving your goals may take a little more expertise and flexibility. Working with a seasoned, career agent like Yvonne Holland is a tremendous asset. For sellers, houses may no longer sell themselves, but Yvonne can help you get the best price for your home. For buyers, navigating interest rate changes requires knowledge and creativity. But Yvonne can help you find the best home for your budget in a highly desirable location. The market is changing, but opportunities still abound.
