Lawernce Yun, Chief Economist at National Association of REALTORS® states in his recent post on LinkedIn, The typical home price was $20,200 in 1965. In 2024, it looks to reach $420,000. That represents 5.3% nominal average annual gains. The consumer price index growth over the same period period was 4.0%.
Albert Einstein purportedly said that the most powerful force in the universe is the power of compound interest.
Applying the past experience to future at 5.3% average gain, then the median home price in 2085 would be $9.9 million. Though most of us would have passed away, that is a generational wealth to pass it down.
In 1965, the median annual household income was $6,900, per U.S Census data. With homes selling for a median price of $20,200, a median earner would spend just under three times their income on a home.
In 2024, the median annual household income is estimated to be $78,171, according to data consulting firm Motio Research. That means that a typical homebuyer is spending 5.3 times their income on a home at today’s median price.
Home prices have increased 40% in the last 4 years. The average homeowner can not afford to buy a home. First time home buyers are struggling to find down payments and affordable housing. While interest rates are holding steady around 7%. Renting a home is more affordable at this time. Everyone is just waiting to see what the Feds will do next since inflation is still above the norm.
The stats below show what is happening in Loudoun County:
Closed Sales for April 2024 are up 5.2% over April 2023 and up 26.2% since March 2024.
The Average Sold Price for April 2024 is 11.8% higher than April 2023 and up .5% since MArch 2024.
The average days on the market is 15 days which is 6.3% fewer days than April 2023 and 7.1% more than March 2024.
How does this resonate with you? Home prices remain stable and aren't increasing as much as a year ago or during COVID. Buyers are still buying, and there's more available inventory than year's past. Buyers have a little more time to think.
Are multiple offers being made? Absolutely. Multiple offers are becoming common, especially for homes that score a 9 or 10 in terms of maintenance and aesthetics. Sellers should focus on preparing their homes to maximize their returns on investment.
According to Curbio, Inc., a leading pay-at-closing home improvement solution for real estate, nearly half of sellers underestimate the need for updates before listing, despite reports indicating buyers prefer move-in ready homes.
For sellers in Loudoun County, it's crucial to prepare your home for sale. We've transitioned from the COVID era where properties sold effortlessly; now, readiness and presentation are key factors in attracting buyers.
I am also seeing more buyers opting to rent. Yun Stated that one strange data point is rent, which the official data shows at 5.8%. The unofficial data from the apartment industry indicates falling rent due to over-construction. If rent data calms, then overall inflation will automatically be lower. It is, therefore, possible to get to the 2% inflation target by year’s end, even with bumps and delays. This was stated last month. Not sure why inflation is still sitting at 3.48%.
Closed sales for April 2024 and March 2023 are about the same. We are seeing this month after month. Is this our new norm? Again, we need more inventory of pre-existing homes to boost this number.
In conclusion, there remains a significant number of prospective buyers in Loudoun County, waiting on the sidelines. Some buyers have opted to rent and see if interest will fall. Is this a wise choice? Will interest rates top out at 8%? Sellers, ensuring your home is meticulously prepared and poised for sale is crucial. Additionally, pricing your home at fair market value is essential. Two vital steps I always recommend are conducting a pre-inspection of your property and obtaining a comparative market analysis or an appraisal before listing your home for sale.
Buyers, be prepared to present your strongest offer when entering negotiations on a 10 out of 10 home!
I am also seeing those that are priced out of the Loudoun County Market buying in Jefferson County, WV. See chart below for a snapshot of Jefferson County, WV:
April 2024 sales have 100 more closed sales than last April. Is Jefferson County, WV become a "Little Loudoun County"? In my opinion, YES, IT IS! I will have a separate report on Jefferson and Frederick County, VA. I do believe Jefferson is a great place to invest in!
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