By Carla Olivo, Director of Strategic Communications
Buying a house when you know the military could move you at any time can be a gamble. But thousands of military families roll the dice each year and come out with an excellent investment. Purchasing, given the right circumstances, can be a great alternative to basing housing or renting.
One of the keys to making a smart choice for your family is knowing the local market. Many service members stationed at the Pentagon, Fort Belvoir, Fort Myers, Andrews AFB, or Bolling AFB choose to live in Northern Virginia (NOVA). According to BISNOW.com, in rankings done by Amazon in their search for a home for a second headquarters, NOVA received high marks for “its above-state-average school scores and a very low crime rate compared to the national average.”
2018 Housing Market Northern Virginia
To look at the current housing market in Northern Virginia, we turned to two of the REALTORS® “A-Graded” by our community on PCSgrades, Karen Hall of @home real estate and Jennifer Hernandez of Century 21 New Millennium who both happen to be military spouses.
Is 2018 a good time to buy?
Both of our experts agree that while the current NOVA market is highly competitive, it is an excellent time to buy. Jennifer Hernandez says the benefits of home ownership long-term are worth it with sales prices about 4% higher than just a couple of years ago. “Mortgage interest rates, still at historic lows, should not exceed 5%, and may alleviate some anticipated affordability challenges,” she says.
Karen Hall says it’s important for potential buyers to “remain reasonable and responsible, meaning stick to including some of the important clauses and contingencies that protect you, such as appraisals and financing.”
Is it a buyer’s market or a seller’s market?
Both real estate professionals agree that it is currently a seller’s market. Hernandez says, “We have been in a seller’s market for a long time, and it is only getting hotter. It’s a very hot seller’s market under 500k in Fairfax County and Prince William County.”
Hall says, “When homes are priced well, and in good condition, we are seeing multiple offers quickly, with escalation clauses, and some buyers even waiving contingencies.” Adding to the frenzy, 2018 saw a historic low inventory of homes to choose from driving prices upward. Demand for houses started earlier than usual in the year. The mild winter weather resulted in a very robust buying season last January and February. Adds Hernandez, “Homeowners are staying in their homes longer as compared to years past.”
Status of inventory
Hernandez says it is the tight inventory that is keeping prices moving upward. “It has made for frustrated buyers. Some homeowners may feel the pinch because of the new cap of $750,000 in mortgage interest deduction (MID) and $10,000 in state and local taxes (SALT) that can be deducted under tax reform.”
Affordable Homes – Median Sale Prices
Depending on where you are PCSing from, you might have sticker shock when house hunting in NOVA. The average sales price in Fairfax County is $560,919; this is up 2.17 % from January of 2017.
As Hall points out, “Median sale prices completely vary throughout Northern Virginia, DC and even southern Maryland. We have such a hyper-local market with prices, relative to proximity to DC, metro stations, and schools. The average we see is $550,000 with the ‘typical’ buyers being made up in large part by military families who are trying to parallel their BAH with monthly payments.”
What is the Competition Like?
The market in Northern Virginia is currently hugely competitive, and it’s common for sellers to receive multiple bids. Hall says, “We had clients losing multiple bidding wars around Christmas time in Woodbridge, which is highly atypical.” She says she had a client who lost out on six different properties, despite significant escalation clauses.
Hernandez says homes in Fairfax County go fast and as rates continue to rise, “it’s highly likely that consumer loan products’ interest rates will also increase in time.”
Option for Renters
The availability of multifamily buildings for rent: apartments, townhouses or condominium communities, really depends on the area of NOVA you are looking. Some cities such as Old Town Alexandria have an abundance of apartment buildings. Also, the time of year you are looking plays a role in how easy or hard it is to find a single family home, townhome or condo for rent in Northern Virginia.
Lease Bargaining Power
When asked if renters have any lease bargaining power, Hall said, “For some reason, I find buyers always want to offer less than asking price, but renters do not often ask.” She says renters most often will ask if a landlord will accept a lower rent amount for a long-term lease. “They do tend to love military tenants though, and it never hurts to ask if rent is negotiable.”
Apartment buildings often run “rental specials” depending on their current occupancy rates. Hall says typical incentives she has seen include “waived processing fees, a free month of rent, or perhaps free parking space.”
Availability of New Construction
Nationally, home building levels have not recovered from the Great Recession – total housing starts (new residential construction) are at 50% of their 2006 levels which was the housing boom’s peak. Hernandez says, “Low supply of homes for sale provides an opportunity for the nation’s home builders, as they are currently not building enough modest houses to meet market needs.” She adds that relief may be in sight “as local builders realize favorable benefits in the tax code that should result in more homes being built, preferably at entry-level pricing.”
Specific areas around Northern Virginia host a lot of new construction. Hall says, “Places like Woodbridge and Dumfries are still building out entire huge communities such as Potomac Shores, while some smaller builders are finding small plots of land in rare locations in Fairfax County that they can put small enclaves of townhomes on.”
Advice for First-time Buyers
The basics for first-time buyers include, after determining how much house they can afford, checking their credit standing and saving for a down payment. Let your Realtor® walk you through the entire process and be sure to communicate clearly about what you are looking for. Getting pre-approved before you start your house hunt is also recommended. Hernandez suggests pausing any new credit activity and exploring your down payment options.
Hall says her smartest business advice is to “think more than twice about waiving an appraisal contingency, especially if you are also including an escalation clause.”
Is it easy to resell in a few years?
Hall says, “As long as you are reasonable and smart with your purchase financially, and your home is either already improved, or you are prepared to make smart improvements to it, you should have no problem re-selling in 2-3 years.”
Both of our experts recommend buyers write letters to go with their offer to sellers. “A lot of sellers want to see their home go to a family and not the investor who will tear down the home,“ says Hernandez. “When I represent sellers, they love to read the letters and hear about the family moving into the neighborhood. The letter can go a long way with the offer.” Hall agrees, but she points out that this approach is not as effective if the property is owned by an investor concerned with the bottom line.
A two or three-year tour in the National Capital Region can be an exciting assignment for many. While the cost of living is much higher than many other duty stations, with the right professional helping you, you can find an affordable, safe place to live in NOVA.
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Special thanks to Karen Hall of @home real estate and Jennifer Hernandez of Century 21 New Millennium two of the REALTORS® “A-Graded” by our community on PCSgrades.com.