Northern Virginia

McEnearney Sign

May-June 2017

MarketWatch, authored by David Howell, is published on a bi-monthly basis by McEnearney Associates, Inc. It provides useful and insightful summaries of current housing market trends. MarketWatch statistics include housing sales from all companies serving our Virginia - Washington DC - Maryland Metropolitan area.



As millennials are entering their prime as homebuyers, they are feeling the pinch between very low inventory for entry-level priced homes and rising interest rates in the metro DC market.

Contrary to much of the conversation these days, the overall inventory of homes is not at a record low. At the end of April 2014, there were almost 5% fewer fully available homes than there are right now. However, a huge shift of the price range of homes on the market has occurred.

In April 2014, 45% of all homes on the market were priced less than $500,000, and homes in this price category constituted 67% of all sales. Today, just 33% of homes are priced less than $500,000, and the percentage of total sales has dropped to 62% of the market.

No question – inventory is down significantly from this time last year, but the decreases have not been evenly distributed. While overall inventory is down 15%, the number of homes priced less than $500,000 is down 26%. But there are 3% more homes available priced more than $1,000,000.  

In the suburban markets, the differences are even starker. In Northern Virginia and Loudoun County, there are 32% fewer homes priced less than $500K than last year, and Montgomery County is down 23%.

It isn’t just the scarcity of inventory facing millennials – or any other first-time buyer – that makes this a challenging market. Mortgage interest rates are about a half point more than they were in November, making homes slightly less affordable. And ironically, those higher rates are contributing to the relative paucity of new listings coming on the market. In our robust sellers’ market, one might expect there would be a significant jump in the number of sellers taking advantage of very favorable market conditions.

However, new listings are up only 2% in the metro area year-to-date compared to the same time last year. Plenty of homeowners who purchased or refinanced in the last few years and locked in sub-4% mortgages are in no hurry to sell their homes. The prospect of giving up those very favorable rates, only to face the prospect of buying a home in a tight market at higher rates, is keeping people in their homes longer.

Another factor preventing many millennials from buying homes is student loan debt, and that’s certainly not unique to the Washington area. In their “Student Loan Debt and Housing Report – 2016,” the National Associations of REALTORS® found that, among those who are current in their debt repayments, 71% of non-homeowners cite student loan debt as the factor delaying them from buying a home. The level of debt impacts both their ability to save for a down payment, as well as their debt-to-income ratios to qualify for a mortgage. The delay in buying a home among non-homeowners and homeowners alike is five years.

So, buyers of entry-level homes are truly feeling the pinch of low inventory and higher interest rates.  Nonetheless, perspective and patience are both virtues.  Mortgage rates are still extraordinarily low from a historical perspective, and markets seek balance over time. Millennials and anyone else can be successful buyers with planning and persistence.



  • The month-end inventory decreased 19.5% in April 2017 compared to April 2016 – and the number of homes coming on the market decreased 14.6%.
  • Inventory is down for all but the top price category.
  • 32.4% of all homes on the market have had at least one price reduction since coming on the market.
  • In April 2016, 34.9% of all homes on the market had at least one price reduction.




  • The number of new contracts ratified in April 2017 was down 3.9% from the number of contracts ratified in April 2016, and was down for homes priced less than $750,000.
  • The drop in activity for the two lower price categories is probably because there are so few homes on the market.
  • As noted on page 3, contract activity year-to-date is up 3.4%.
  • 19.2% of all homes going under contract in April 2017 had at least one price reduction before going under contract. Last April it was 22.0%.




  • The overall supply of homes on the market at the end of April was 1.6 months, which was a decrease of 16.2% compared to the end of April 2016, when supply stood at 1.9 months. 
  • Price category supply ranges from a low of 1.0 month for homes priced between $300,000 and $499,999 and a high of 8.9 months for homes priced $1,500,000 and higher.