Market in a Minute: February 2016
A Summary of Northern Virginia Market Conditions for January 2016
In Northern Virginia, contract activity in January 2016 was down 8.4% from January of 2015, and there were decreases in five of the six price categories. However, it’s clear that the blizzard from the 22nd — 24th was responsible for this decline — the first half of the month had seen an increase in the number of newly-ratified contracts. The average number of days on the market for homes receiving contracts increased modestly from 78 days in January 2015 to 80 days in January 2016.
The Urgency Index, simply the measure of the percentage of homes going under contract that were on the market 30 days or less, was down slightly in January compared to the year prior — also because of the snowstorm. During the past 12 years, the Index has been as high as 95% (April 2004) and as low as 25% (November 2007). In January 2016, the Urgency Index was 34.7%, down from 37.2% in January 2015.
The number of homes on the market at the end of January was up 6.0% from the end of January 2015, and was up in all but the top price category. The number of listings coming on the market compared to January 2015 was down 10.4%. The decrease in contract activity combined with the increase in inventory pushed overall supply to 2.6 months, up from 2.2 months at the end of January 2015.
Contrary to predictions, mortgage rates continue to fall — and while that’s good for the housing market short term, it signals broader challenges. They’re falling because investors are flooding the U.S. bond market. Mortgage rates follow the yield on bonds which loosely follow the 10-year Treasury. Investors are buying bonds as a safety play in a highly volatile and largely negative stock market. Signs of weakness in the U.S. economy, in addition to trouble in overseas markets, pushed the yield on the 10-year Treasury to its lowest level since 2012, and mortgage rates followed south. Rates at the end of January stood at 3.79%, almost a quarter point lower than the end of December.
The payment on a no-money-down, 30-year fixed mortgage for a median-priced home is 8.6% lower today than it was in January 2008, but is also 4.3% higher than January of last year. For the 33rd straight month, the mortgage payment for a median priced home ($2,141 in January) was higher than the median rented price ($2,050 in January).
DIRECTION OF THE MARKET
The blizzard negatively impacted the housing market — and all other aspects of the economy — throughout the region, so don’t read anything into the generally negative numbers in January. We haven’t seen anything that changes our belief that the Northern Virginia real estate market has really returned to a sense of normalcy, with relatively good balance between supply and demand. We don’t see anything on the horizon domestically that is likely to make 2016 much different than 2015, simply because there are so many conflicting signs regarding the health of the overall economy.