Herndon’s Real Estate Market

Real estate is local. You’ve heard this time and time again and it has never been truer than it is today.  While commentators and analysts spew out numbers left and right about the condition of today’s housing market, you should view their prognostications with caution. The national housing market is not like the Washington Metropolitan market. And the Washington Metropolitan housing market is not like the Northern Virginia market and the Northern Virginia housing market is not like Fairfax County’s market and Fairfax County is not like Herndon. And even in Herndon, individual neighborhoods are not the same. Like I said, real estate is local.


Fairfax County 

In Fairfax County, the number of SFD homes sold during the first three quarters of 2012 was 5,567.  This represents a 9.5% increase over the SFD homes sold in the first three quarters of 2011. Herndon (20170) represented only a small fraction of those numbers, yet we outperformed the county in rate of price appreciation 2.76% vs. 9.2% and increase in the number of SFD homes sold 9.5% vs. 26%.  Both numbers illustrate that the Herndon real estate market is not the same as the Fairfax County market.


Mortgage Rates

Rates began to climb slowly from their lows on Oct. 5th after the U.S. Department of Labor released its monthly jobs report, which showed the unemployment rate unexpectedly fell to 7.8 percent in September. Investors, who like to keep their fingers on the pulse of the economy, closely watch the report. When investors feel more confident about the economy, they seek riskier investments, and mortgage rates tend to rise.

“There’s a lot of controversy over the (unemployment) number, but it’s still a headline-grabbing number, and headlines move markets,” says Michael Becker, a mortgage Banker at WCS Funding in Baltimore. (Bankrate.com 10/11/12)


Herndon Single Family Detached Market

The Single Family Detached (SFD) market continues to improve in Herndon (20170).  There were 291 SFD homes listed during the first 9 months of 2012 compared to 259 listed during the same period in 2011, a 13% increase in inventory.  At the same time, the number of homes sold has increased from 158 in 2011 to 199 in 2012, a 26% increase.  The Chart below illustrates month by month the increase in homes sold over the past two years.



For sellers, the good news is not only are more homes selling, but that the median price of SFD homes sold In Herndon has risen from $405,000 in 2011 to $442,500 in 2012, a 9.2% increase.  This restores overall SFD home prices to their 2004 levels with some variation by neighborhood.   The Chart below compares the monthly median sold prices over the last two years.



The number of unsold homes has also declined in both real numbers and relative percentage of listed homes.  The number of unsold SFD homes decreased from 24% of listed properties in 2011 to only 11.3% in 2012, further evidence of a recovering housing market, albeit slowly.


Impact on the Future

No one can predict the price of houses and the recent 9.2% increase in the median price should not be looked upon as an indicator of future appreciation. Rather, in my opinion, it a price correction after the horrific decline in prices from 2007-2010. 

Today, prices appear stable and interest rates remain low.  But as owners/potential sellers become aware of the recent increase in their home’s value more of them can be expected to come down off the fence on the side of selling.  The limited inventory that has helped boost sales prices could grow, and without a corresponding increase in the number of buyers the market playing field would tilt further to the buyer’s advantage.

The demand for homes remains weak despite historically low mortgage rates.  Even these rates have not been able to attract enough buyers to restore the housing market to its “normal” sales levels.   As the perception that the economy is improving continues, the mortgage rates will begin to rise.   There are many variables that affect the interest rates on mortgages. Even a small increase of ½-1 percent will squeeze out potential buyers from an already limited pool of purchasers.  This drop in demand would further benefit remaining buyers.

Today’s situation offers a homeowner the opportunity to take advantage of the low inventory and low interest rates to get the best price for their home.  At the same time, they can benefit further and take advantage of these historically low interest rates if they decide to purchase when they relocate.  Both conditions could change if the current balance of homes for sale and qualified buyers is disrupted.

If you would like information on your home’s value or your neighborhood’s appreciation curve relative to competing Herndon neighborhoods call or email me.