Is The Real Estate Market Slowing Down?

I am a licensed realtor with The K Group of Samson Properties practicing in the northern Virginia area. The opinions expressed here are my own. Please consult your local realtor regarding your local real estate market as every market is slightly different.

Is the real estate market slowing down?

That’s a question a lot of people are asking right now. The real estate market in northern Virginia was so hot in the first half of the year that many listings received 10+ offers. In my opinion, yes, the market does seem to be slowing down a little. But let’s take a closer look.

Many city dwellers looked to the suburbs for more space in the first half of 2021. Because of COVID and the rise of remote work, many city dwellers looked to the suburbs for more space. Home offices, spacious yards, and pools were in high demand, resulting in bidding wars on larger, single family homes (SFHs). Buyers that couldn’t afford SFHs looked to townhomes (THs) for extra space. Even the condo market in the suburbs was competitive as a large, 2BR condo in the suburbs was much cheaper than a small, 1BR condo in the city.

Even in the hot market, demand for condos in the city was relatively low. Just because the real estate market was generally very strong, it doesn’t mean it was a seller’s market everywhere. Many of the smaller condos in the city sat on the market for weeks and even months as workers began to work remotely and became more location-independent. Some investors looked to capitalize on weak demand by snatching up these condos at lower prices, hoping to profit from the eventual recovery.

The market does seem to be slowing down a little bit in northern Virginia. It does seem that we are seeing a slowdown in activity. At a recent sales meeting with many top producers in attendance, many agents stated that they were seeing an increase in listings staying active for more than a week. Listings that would have received 10+ offers just a few months ago were now only receiving maybe 2-4 offers now. Price reductions have also become a lot more common.

Why the slowdown in the real estate market? There could be many factors for this slowdown. Here are some of my thoughts.
1. The increase in prices month over month was unsustainable and eventually had to slow down.
2. With COVID worries dying down temporarily and kids being out of school, many people took this opportunity to travel and take family vacations.
3. Demand in the real estate market is typically seasonal. The spring market is typically the peak, but supply was so low relative to demand that the peak extended into the early summer. Now, increasing supply is catching up with decreasing demand, and prices are adjusting to the changing market.

With that being said, the market is still favorable for sellers, just not as much as before. The market is shifting from a super strong seller’s market (multiple offers on most listings with all contingencies waived) to just a strong seller’s market. Homes that are priced well and show well still receive multiple offers. However, buyer’s agents are beginning to introduce contingencies into their offers again to protect buyers.

If you’re thinking about buying or selling, don’t try to time the market. You don’t know if the market will go up or down next year. Anyone making predictions has a 50% chance of being right. That doesn’t mean they’ll always be right. Buy if you are ready to buy and sell if you need to sell. I’ve heard stories of buyers that said they were going to wait a year for prices to come down watch prices increase by 10+% in their market.

If you’re looking to buy or sell in northern Virginia (or just have any general real estate questions), feel free to contact me at realtordannylee@gmail.com.