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Neighborhood Expert: Northern Virginia real estate market predictions for 2022

Laura Schwartz is a licensed Realtor in VA, D.C. and MD with McEnearney Associates in Vienna. You can follow Laura on Instagram at @LauraSchwartzRealtor or her Facebook page. Laura can be reached at 703-283-6120 or [email protected].

This week before the new year begins, always brings reflections for me. I’ve been thinking about personal stuff from the year — how hard the real estate market was this year, how thankful I am that I was able to sell 45 homes in 2021, how thankful I am that my kids (and my teacher husband) are back in person in school, and how important our health is. For all of those things I am grateful.

With reflection also comes thoughts on the future. This week is notoriously slow for real estate sales, but it is also the week where I start seeing phone calls and emails come in about 2022 plans to move. As I share with my clients, here are my predictions for the Northern Virginia real estate market in 2022:

Rates will increase by mid-year

I believe rates will continue to be in the low 3’s for the first half the year, but by the summer we’ll see it start to inch up. Want to see a practical application of this:

  • A $950,000 loan amount at 3.25% is $4,134 (just principal and interest) and at 3.75% it goes up to $4,399 — a $265/mo difference just based on the interest rate
  • A $1,250,000 loan at 3% is $5,270 (just principal and interest) and at 3.5% it jumps to $5,613 — a $340/mo difference
  • One other point, the Fannie Mae loan limit in the D.C. Metro area for 2022 was increased to $980,700, which means you could buy a $1,020,000 house with only 5% down and 1 loan. Gone are the days of requiring 20% down.

Inventory will continue to be a problem

Inventory has a problem for over a decade in Northern Virginia and it continues to prove it’s one of the greatest hurdles to buyers, and the greatest asset to sellers. If you remember your old supply and demand lesson — low inventory means higher prices for seller. I do think that will keep pricing levels high, probably not at the rate of appreciation we saw in 2020/2021 but they won’t go down. The National Association of Realtors estimates that Virginia home owners gained over $56,000 in value in 2021 due to increased pricing. For example, one of my clients bought a house in the fall of 2019 for $605,000. They sold that house in March 2021 for $755,000 and bought their forever house for roughly the same mortgage payment by capitalizing on that equity!

The market will still be robust and strong

I believe the demand is still strong for buyers to get into the market and sales will be strong.

Investors jumping into lower priced markets

I put my money where my mouth is and bought another rental property in October. I have several past clients who reached out to me about rental properties as well. With extra cash flowing from a strong stock market, savings from no travel and low interest rates, the market is perfect for investors to jump in. You may want to speak to your accountant for your personal situation, but real estate is the greatest hedge against inflation. If you’re looking to diversify your assets, please do yourself a favor and consider real estate investing.

New construction will continue to be slow

If you’re thinking of building next year, bring your patience. Bring your backup plan. Supply chain issues (I’m tired of that phrase too). There will be delays, whether it’s material, permits, or utility companies… there will be delays. If you’re selling your current property, make sure you have a solid plan to account for potential delays.

I’m entering my 14th year of selling real estate. About 350 sales later, I can help you develop a plan for success. I’ve also bought and sold 10 times personally in the past 20 years. I know the stress. With or without kids. With or without a long term plan. I can help if you have no idea where to start!

Wishing you a very Happy New Year! See you all in 2022!

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