Predictions for the NOVA Real Estate Market in 2020

What to Expect This Year as a Buyer and Seller in Northern Virginia

If you’ve had your eye on the NOVA real estate market in recent years, you know 2017 and 2018 were times of frenzied home value growth. The year after, 2019, saw a bit of a slowdown and, for many, a return to relative normalcy. While predictions are just that—educated guesses that could be blown off course by unforeseen circumstances—here are the top predictions for what 2020 will bring the real estate market in Northern Virginia.

• Welcome Millennials!One of the biggest influencing factors in 2020 will be the maturing of Millennials into home-buying age. Across the nation, Millennials are set to take out more mortgages in 2020 than either baby boomers or Gen Xers. The oldest Millennials are now just approaching forty, and the bulk are turning thirty this coming year. Because they fall into prime house-buying age, Millennials are predicted to comprise over half of all mortgage purchases this year. 
• Home Sizes Will ShrinkBaby boomers were noted for their love of sprawling suburban homes, but that real estate model is increasingly becoming a thing of the past. Millennials (who, again, now represent the majority of realty-related buying power) are opting for smaller homes that are easier and cheaper to maintain. For the fourth time in five years, the median square footage of newly constructed single-family homes is set to go down. Since 2015, an average US home has shrunk by approximately 80 square feet.Rather than prizing the size of the home, Millennials covet lots of amenities within walking distance, which means urban properties (and walkable suburban areas) look to be highly desirable in 2020.

• That Looming Recession Might Not Hit After AllWith extreme trade volatility and continued warnings of a stock market retreat, many experts were pegging 2020 for a recession. The US economy, though, has remained surprisingly resilient, even in the face of this uncertainty. Spending, overall, is on the rise, and since October 2018, wage growth has stayed at or exceeded 3 percent. This economic growth, as well as increasing home values, are largely predicted to continue all the way into 2021.There are three important caveats here, though. One, growth is expected to be slower than it has been in these last few years; two, the housing market is largely expected to weather the storm, even if some effects of a recession hit; and three, the only certain thing is uncertainty. At any moment, an unexpected event could drastically change the economy’s trajectory and, in turn, affect the housing market.
• Mortgage Rates Don’t Look to SkyrocketIn 2019, potential home buyers rejoiced as mortgage rates fell. (The beginning of 2019 saw average thirty-year mortgage rates of 4.68 percent, falling to 3.93 percent by the year’s end.) For the majority of 2020, experts are expecting those rates to stay favorable for home buyers. That being said, in areas like Northern Virginia, where homes can be quite expensive (especially compared to the national average), even extremely favorable lending terms can’t always overcome high down payment burdens and hefty mortgages. Buyers, therefore, are expected to expand their search fields to outlying areas that provide more affordable housing. 



• Inventory Might Be Low, but That Doesn’t Mean Sales Are DownAnyone looking to buy in the NOVA area has probably already realized something pretty striking about the real estate market here: inventory seems to be at nearly historic lows. That lack of inventory, however, isn’t just a deficit of homes hitting the market; rather, it’s an indication of just how quickly buyers are snatching up properties as they become available.This can be extremely frustrating for those looking to enter the real estate market, and it’s doubly difficult for those going it alone. In this climate, it’s imperative you have an experienced, savvy real estate agent who can lend his or her expertise and advance knowledge about properties about to go live. 



• Expect Bidding WarsSeveral factors seem to be lining up in favor of sellers this year. Mortgage rates look to stay reasonable, meaning more people will be inclined to enter the market, but inventory will remain low. This high demand and low supply can definitely result in bidding wars, which is great news for those looking to offload homes this year. One report by Redfin predicts as many as one in four offers across the States in 2020 will face a bidding war. That’s compared to one in ten in 2019. 
• Virginia’s Median Sale Price Will Do Something Historic in 2020For the first time ever, the median sale price throughout Virginia is projected to crest $300,000 in 2020. Coming in at $308,819, the median price would represent a 4.6 percent jump over 2019. The national average is expected to be 3.6 percent higher than last year, and experts are attributing the higher-than-average jump in Virginia to the strong region-specific demand for employment coupled with low inventory.

Whether you’re looking to sell your home or to enter the Northern Virginia real estate market, it’s important to remember that projections and predictions are just that. Innumerable unforeseen factors can affect the market, and in many cases, buying or selling real estate is simply a case of hindsight being twenty-twenty. Maybe you sold a month too early or bought a month too late. There’s no way to definitively know the best real estate move at any given time.

There are ways, however, to give yourself a leg up. By working with a professional who has experience in the area you’re looking to buy, you put yourself in the best position possible to make the most educated guess. Nobody has a crystal ball, but people who have expertise in the area you’re looking to purchase or to sell can assess current data and gauge how similar situations have historically affected the market.

Here at Ray Gernhart and Associates, we have over thirty-five years of experience in the NOVA market. If you’re interested in talking more about where we think the market is going this year (for sellers and buyers), feel free to reach out today!