Vicious Cycle of Hotness: Falls Church Real Estate Market

It only takes a quick look at these two charts below to see that the real estate market in the City of Falls Church is tight. At the end of August (the most recent data available) there were 30 homes available for sale, 28 homes were under contract, and 23 homes had closed during the month. I checked the MLS, and of 24 City of Falls Church homes that are under contract as of this post, 14 went under contract in 30 days for less.

Which leads into the second chart that shows that the average days on market for all three categories of homes – detached single family, townhomes, and condominiums – has been below 50 days since June.

So, the market is hot right? In a lot of ways that looks to be the case, and while in some ways it actually is the case, in others it is a phenomenon fueled by uncertainly and paralysis. Behaviorally speaking, it is very much a seller’s market and in many instances buyers are having to compete with each other. Quite simply, buyer demand is out pacing property availability. At the same time, however, buyers are still not prepared to push the market upward so they are very adept at sniffing out prices they feel are too high for the home in question and steering clear. This virtually reduces inventory even more in a way.

All those factors considered, it all begs the question: If we are ultimately in a seller’s market and we have a shortage of inventory why aren’t more people selling? Here are my top 3 reasons:

  1. It’s a seller’s market: Wait, what? In other words, sure it’s great that an owner can sell in this environment, but many home owners who sell are looking to “move-up”, which means they would also have to buy in this market. If you’re not sure  you can find a house, you are less likely to offer yours for sale.
  2. Still underwater: though the market has been hot in behavior, price gains have not be precipitous and so plenty of people are still underwater, or would be once they incurred the cost of selling. This is the paralysis mentioned above.
  3. Renovate: In some cases owners make the choice to stick with their amazing location (let’s face it, the City of Falls Church rocks!) and renovate what they have to meet their needs. Sometimes “renovation” goes so far as to include raising the existing home, and starting anew on the same lot.

Combined, these and other factors are working to keep inventory down in relationship to demand. This gives the market a hot appearance, but these factors create a cycle that in some ways is founded more on uncertainty than on boom-time glory.

So, what IS available in Falls Church? Well, here are the available listings for 22046:

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