Despite the uncertainties surrounding the incoming new federal administration and other factors, the housing market should hold steady with some modest growth in the coming year, panelists at the presentation by the Northern VIrginia Association of Realtors held at the NVAR’s Greater Falls Church offices said Tuesday. The event was run in conjunction with the George Mason University’s Center for Regional Analysis.
None of the key issues – the potential for a significant downsizing of the federal bureaucracy, the impact of new tariff policies on the national economy, the impact of data centers on the localities around them, or policies on returning to the workplace versus continuing to work from home – are seen as having a significantly disruptive impact on the market here, they agreed.
The biggest pressures they identified concerned housing availability, affordable housing and cost factors impacting first time home buyers.
In addition to the moderator, NVAR’s CEO Ryan McLaughlin, Dr. Terry Clower of Mason’s regional analysis center, NVAR incoming president Casey Menish and NVAR current president Thai Hung Nguyen took part in the discussion which was videotaped.
Clower said it is not yet known whether there will be “massive disruptions in the federal government” impacting job growth with the incoming new administration in Washington. “We don’t yet know how it will play out,” he said, adding that while “we need to adapt to the future, and there will be challenges, the situation is not dire.” Of greater concern, he said, is whether or not there is affordable housing available.
Concerning the controversies over data centers, while their aesthetic and energy demand issues are turnoffs in some communities, in others they are major economic drivers. Clower said that one study has shown their expansion in Loudoun County, for example, has lowered homeowner taxes by as much as $3,500 on average, while having no impact on the value of homes.
With or without data centers, though, “we are on the cutting edge of innovation, and must not be scared of the future,’ he added.
Factors surrounding pressure on those in the workforce who are being told to return to their offices instead of continuing to work from home include lost productivity due to being stuck in rush hour traffic, where to live in that context, and, of course, the price of housing determining how close to the urban center one might choose to live.
Hybrid solutions may prevail, namely, a combination of both working from home and in an office. But meanwhile, there is no surge in housing inventory in closer-in locations like Arlington and Alexandria.
Compared to other areas of the country, like Charlotte or Orlando, “there is a tremendous pent up demand here,” Clower said.
More than job issues for federal employees going forward, a radical new tariff policy
could have more of an impact on the cost of buying a home, driving inflation and interest rates both, he noted.
“We’ve seen Northern Virginia’s housing market improve during the last few months, and we expect that trend to continue into 2025,” said McLaughlin. “In fact, monthly sales growth in our regional market have outpaced the national housing market several times this year. While it remains unknown how the new administration’s proposed policies might impact the local economy, overall we expect an improved housing market next year.”
Northern Virginia’s outlook is similar to the national 2025 housing forecast that predicts the worst of the housing inventory shortage is ending, mortgage rates are stabilizing, and job additions are continuing, the panelists at Tuesday’s presentation said.
“In the Northern Virginia region, working families are finding it increasingly difficult to find housing they can afford,” added Clower. “This November, a total of 1,168 homes sold in the region, a 10.8 percent increase from last year. That’s good news. But the region’s median home price also rose 6.6 percent, to $699,900, compared to what housing cost in November 2023.”
The forecasts presented Tuesday included the following:
1. Most markets will see more moderate price gains than in 2024, closer to 3%, with some higher levels of increases in tight markets — such as single-family homes inside the Beltway;
2. Sales activity will increase with modest improvements in the region’s inventory;
3. While still below pre-pandemic levels, most market segments in the region will see more homes for sale as move-up purchasers re-enter the market.
4. Stability in mortgage rates will support higher levels of sales, as the market
acclimates to higher, but more historically normal mortgage rates.
5. But there are still some undetermined factors that may affect the region’s housing market. The promises made by the incoming administration during the presidential campaign may have an impact on the Northern Virginia housing market, which is a large submarket of Washington, D.C. The timing and magnitude of any government policy changes are unclear at this time.
The NVAR’s 2025 Housing Forecast included Alexandria City and Arlington, Fairfax, Loudoun, Stafford, and Prince William Counties. Data for the City of Falls Church was not separated out in the report, but subsumed by its immediate neighbors.
In the case of Arlington, the forecast shows a decline in single family home sales of 6.5 percent year-over-year, with median sales prices rising 5.3 percent and inventory growing by 1.8 percent. For condominiums, sales are projected to decline 1.5 percent, prices to rise 1.6 percent, and inventory to rise 3.5 percent. For attached townhouses and row houses, sales are expected to decline 1.3 percent, prices to rise 8.1 percent and inventory to drop 4.3 percent.