Why am I so bullish on Alexandria and Washington DC real estate at a time when interest rates are up, the stock market is down, and inflation is surging? First of all, business is coming to the area. We all know about Amazon but now Raytheon and Boeing will bring their world headquarters to National Landing, which is closer to Alexandria than it is to most of Arlington. With three major companies wanting to call Northern Virginia their headquarters, it bodes well for our region’s ongoing economic strength and growth.
In addition, Virginia Tech will be bringing its Innovation Campus to Potomac Yard, while Inova will have two new campuses, one in Oakdale Triangle in Del Ray and the other in the West End of Alexandria at the old Landmark Mall (which promises to make that end of the City the next hot place to live). Over the past 40 years living in DC I have not seen this level of confidence by the business community in our metro area and specifically Alexandria and Arlington. We all know the shot in the arm that Amazon gave to the local real estate market. Confidence in what was a sleepy government town has escalated creating a hotbed of interest in living specifically in Alexandria. As people move here, they will opt to buy instead of rent seeing an economy that will continue to grow.
So why is it a good time to buy? The biggest problem in real estate right now is not interest rates, but rather supply a shortage of homes. Nationwide, we are in a housing shortage. There are not enough homes for the population growth and the coming-of-age millennials, who make up 43 percent of today’s homebuyers. Regionally, the situation can only be expected to tighten. Job opportunities are pouring into the region faster than housing can keep up. Overall, DC and its Virginia and Maryland suburbs are projected to add about 413,000 jobs between 2020 and 2030, “but only approximately 245,000 new housing units,” according to a 2019 Metropolitan Washington Council of Governments report. ”
Just look around. There are no new developments of single-family homes in our area. You are not seeing any new single-family homes unless a small home is taken down and it is turned into a $2 million-plus home. The likelihood is that the only new housing units coming on in the area will be in the high-end condo sector.
As for the market today, homes are selling a bit slower than in the spring, but they are still selling! Don’t mistake this for a market crash. You can read more about why we don’t anticipate a market crash here. Part of that is due to the normal summer slow down with folks heading out of town for vacations and putting their home searches on pause. Although interest rates are increasing, so is the use of adjustable-rate mortgages (ARMS), a loan program used successfully before rates went so low. This is helping to cut back rates for buyers to 2019 rates. As more buyers discover the benefits of ARMs, they will resume their searches for a strong fall market.
In terms of investments, one of the best hedges against inflation and a bear stock market is real estate. While appreciation will slow down it will keep growing as supply will outstrip demand over the next 4-5 years. If you can buy now and find something you can comfortably afford, we recommend buying now and not waiting. With the prospect of new job seekers coming to the area and prices continuing to rise, albeit more slowly, affordability will be the major issue for more and more homebuyers.
We at The Goodhart Group can aid you in taking part in a great investment opportunity that is the Alexandria market. Contact us today to set up a meeting to discuss the benefits of this real estate market.