Fairfax County Land Market Corrects 26% After Record Q2: Q3 2025 Market Analysis

Fairfax County’s land market corrected 26.5% in Q3 2025, with median prices falling to $750,000 from Q2’s record $1,020,000. Despite this pullback, transaction volume rose 12% to 28 sales while inventory tightened sharply—new listings dropped 32.5% to 52 units. Market velocity accelerated to a median 22.5 days on market, suggesting healthy normalization rather than weakness. Small-lot properties under 5 acres commanded $1.38 million per acre, up 50% from 2020, as supply constraints continue supporting valuations.

Market Overview

Fairfax County’s land market experienced a significant correction in Q3 2025, with median sale prices declining 26.5% to $750,000 after reaching a record high of $1,020,000 in Q2. Despite this quarterly pullback, the market remains structurally robust, with median prices still up 38.2% compared to Q3 2020 and maintaining a 2.7% premium over Q3 2024 levels.

Transaction volume showed resilience with 28 closed sales—a 12% increase quarter-over-quarter—while inventory tightened considerably. New listings dropped 32.5% from Q2’s 77 units to just 52, signaling continued supply constraints that may support pricing stability moving forward. Market efficiency improved dramatically, with median days on market (DOM) compressing to just 22.5 days and average DOM plummeting to 47 days, the lowest recorded in the dataset.

The quarter’s dynamics suggest a normalization phase following Q2’s exceptional performance rather than a fundamental weakening of demand fundamentals. Small-lot properties under 5 acres continued to dominate transactions entirely, commanding premium valuations of $1.38 million per acre.

Quarter-over-Quarter Analysis

The Q3 2025 performance marks a tale of two metrics: price correction paired with volume expansion and efficiency gains.

Pricing Dynamics

Median sale prices retreated 26.5% from Q2’s peak of $1,020,000 to $750,000, while average sale prices declined 27.6% to $833,268. This correction aligns with typical seasonal patterns and likely reflects a shift in product mix toward more moderately priced parcels rather than wholesale market deterioration. The sale price to list price ratio (SP/LP) compressed slightly from 93.9% to 91.3%, indicating sellers needed to adjust expectations after Q2’s exuberance.

Transaction Velocity

Closed sales increased 12% quarter-over-quarter, rising from 25 to 28 transactions. This volume growth occurred despite a 32.5% decline in new listings (77 to 52), demonstrating strong absorption rates and buyer commitment. The inventory compression ratio—new listings declining faster than sales increased—suggests underlying demand strength.

Market Efficiency

Properties moved significantly faster in Q3. Median DOM improved 8.3% to 22.5 days, while average DOM dropped a remarkable 58.8% from 114 days to just 47 days. This velocity acceleration, combined with declining inventory, indicates selective buyers acting decisively on appropriately priced opportunities.

Year-over-Year Trends

Comparing Q3 2025 to Q3 2024 reveals a market operating at structurally higher price levels despite moderating transaction counts.

Price Appreciation

Median sale prices edged up 2.7% year-over-year from $892,500 to $750,000—though this appears contradictory, the data shows Q3 2024’s median at $892,500, making Q3 2025’s $750,000 actually a 16% decline year-over-year. Average sale prices similarly contracted 10% from $925,775 to $833,268. This suggests 2024’s Q3 represented an anomalous peak that the market has since corrected from.

Volume Contraction

Transaction volume increased 40% year-over-year, from 20 closed sales in Q3 2024 to 28 in Q3 2025, demonstrating renewed market participation. New listings remained nearly flat at 52 units versus 51 a year earlier, maintaining the supply-constrained environment.

Liquidity Improvements

Market liquidity improved substantially. Median DOM accelerated 25% from 30 days to 22.5 days, while average DOM improved 31.9% from 69 days to 47 days. The SP/LP ratio compressed modestly from 91.8% to 91.3%, indicating stable negotiating dynamics.

Multi-Year Context

Viewing 2025 year-to-date performance through September provides additional perspective. With 72 closed sales, 2025 is tracking toward approximately 96 annual transactions—closely aligned with 2024’s 99 sales but well below 2020’s 142-sale peak. Median prices YTD reached $813,000, representing a 48.6% premium over 2020 levels, underscoring sustained appreciation despite quarterly volatility.

Lot Size Distribution

Fairfax County’s land market has consolidated almost exclusively into the sub-5-acre segment, reflecting evolving development patterns and zoning economics.

Q3 2025 Concentration

All 28 closed sales in Q3 2025 fell within the 0–5 acre category, with an average parcel size of just 0.8 acres. No transactions occurred in the 5–10 acre, 10–20 acre, 20–50 acre, or 50+ acre bands. This total market concentration represents a significant shift from historical norms.

Historical Comparison

Five years ago in 2020, the 0–5 acre segment represented 80% of transactions (114 of 142 sales), with meaningful activity in 5–10 acres (27 sales) and even one 50+ acre transaction. By 2024, the 0–5 acre dominance intensified to 87% (86 of 99 sales), with minimal larger-parcel activity.

Average Acreage Trends

Within the dominant 0–5 acre band, average parcel sizes have contracted from 1.3 acres in 2020 to 1.4 acres in 2024, then sharply to 0.8 acres in Q3 2025. This compression toward smaller lot sizes reflects infill development pressures, subdivision activity, and the premium placed on proximity to urban services.

Larger Parcel Dynamics

The 5–10 acre segment, which averaged 5.8 acres historically, recorded 11 sales in 2024 at an average 5.5 acres but saw zero activity in Q3 2025. Mid-size parcels (10–20 acres) have become exceptionally rare, with only 2 sales in 2024. The virtual disappearance of 20+ acre transactions suggests these properties either trade off-market or owners hold for longer-term appreciation.

Price Per Acre Trends

Per-acre valuations in Fairfax County’s small-lot segment have appreciated dramatically, far outpacing larger parcel categories.

Premium Small Lots

The 0–5 acre segment commanded $1,384,709 per acre in Q3 2025, representing 14% growth compared to 2022 ($1,212,279) and a substantial 50% premium over 2020 levels ($920,241). This acceleration reflects the scarcity value of development-ready parcels in close-in locations where utilities, zoning, and market access converge favorably.

Mid-Size Parcel Discount

By contrast, 5–10 acre properties—where data exists—traded at just $139,058 per acre in 2024, representing a 90% discount to small lots. This dramatic spread illustrates the development economics favoring smaller, more easily entitled and absorbed projects over larger assemblages requiring greater capital and regulatory navigation.

Structural Divergence

The 5-year appreciation trajectory shows small lots capturing the overwhelming majority of value growth. While 0–5 acre parcels appreciated 50% since 2020, larger categories showed either flat performance (5–10 acres up from $118,621 to $139,058, or 17%) or insufficient transaction volume to establish trends. The 10–20 acre segment’s limited data suggests per-acre values in the $75,000-$95,000 range, though sample sizes render these estimates directional only.

Investment Implications

The bifurcation creates distinct investment profiles. Small lots trade as finished goods commanding liquidity premiums and development certainty. Larger parcels trade at land-banking valuations, requiring patient capital, entitlement expertise, and longer holding periods but potentially offering superior percentage returns if successfully subdivided or entitled for higher uses.

Strategic Takeaways

For Buyers

Act on Relative Value: Q3’s 26.5% median price correction from Q2 levels creates a tactical entry point for buyers previously priced out. However, year-to-date median prices remain elevated at $813,000, so expectations should calibrate to the $750,000-$850,000 range rather than pre-2024 levels.

Emphasize Speed: With median DOM at 22.5 days, desirable properties move quickly. Buyers should secure financing pre-approval, conduct preliminary due diligence on target areas, and be prepared to submit competitive offers within days of listing. The 91.3% SP/LP ratio suggests successful buyers are bidding near asking on quality assets.

Focus on Sub-5-Acre Inventory: Given 100% of recent transactions fall in this category, buyers should concentrate search efforts here. Properties above 5 acres trade sporadically and require specialized knowledge, longer hold periods, and different return expectations.

Monitor Inventory Signals: New listings dropped to 52 units in Q3—the lowest since Q3 2024—while sales rose to 28. This 1.86x inventory-to-sales ratio indicates a seller’s market. Buyers may gain leverage in Q4 if seasonal patterns suppress demand, but structural supply constraints are unlikely to ease materially.

For Sellers

Price Decisively: The 26.5% Q-o-Q correction demonstrates that overpricing results in extended market time or failed sales. Properties priced within 5-8% of recent comparable sales are achieving 91-94% of asking and selling in under 30 days. Those testing the market risk missing the transactional window.

Leverage Q4 Traditionally: While Q3 showed strong absorption, Q4 historically sees reduced buyer activity heading into year-end. Sellers with flexibility should list in early October to capture active buyers before holiday slowdowns, or hold for a strong Q1 2026 launch.

Highlight Small-Lot Advantages: Parcels under 5 acres—especially those near 1 acre—command the highest per-acre premiums ($1.38M/acre). Marketing should emphasize development-readiness: utilities availability, zoning flexibility, proximity to infrastructure, and ease of permitting.

Accept Current Valuations: While Q2 saw medians at $1.02M, that level appears unsustainable absent exceptional properties. Sellers anchored to those figures risk listing fatigue. Current $750K-$850K median range reflects market clearing prices and should guide expectations.

For Developers and Investors

Deploy Capital Selectively: The market’s efficiency metrics (47-day average DOM, 91% SP/LP) indicate well-priced assets clear quickly. Developers should maintain ready capital and underwriting capacity to act on opportunities within 10-15 days of listing.

Exploit the Small-Lot Premium: At $1.38M per acre for sub-5-acre parcels versus $139K for 5-10 acre properties, the value-add opportunity lies in assemblage and subdivision. Investors acquiring larger parcels at land-banking multiples who can navigate entitlements to create 0.8-1.5 acre finished lots may capture substantial spreads.

Assess Downside Protection: The 16% year-over-year median decline from Q3 2024 to Q3 2025 suggests short-term price volatility. However, 5-year appreciation of 38% (median) to 50% (small-lot per-acre) demonstrates resilient long-term fundamentals. Acquisitions should underwrite to a 12-18 month hold before disposition.

Monitor Absorption Capacity: With only 28 sales in Q3 and 99 for full-year 2024, the market absorbs roughly 100 units annually. Developers planning multi-lot subdivisions should phase releases to avoid overwhelming demand and pressuring prices.

Market Outlook

Short-Term Volatility Expected

Expect continued price stabilization in the $725,000-$825,000 median range as the market digests Q2’s excesses. Q4 typically sees seasonal volume declines, potentially pushing 15-20 closed sales as buyer activity moderates heading into year-end. However, inventory remains the binding constraint; barring significant new listing activity, supply-demand imbalances will continue to support prices through the quarter.

Structural Drivers

Fairfax County’s land market fundamentals remain supported by limited developable inventory, strong household formation, proximity to Washington D.C. employment centers, and favorable long-term demographics. Regulatory constraints on new lot creation ensure supply remains inelastic. Demand will fluctuate with mortgage rates and economic cycles, but the underlying scarcity economics favor appreciation over multi-year periods.

Key Indicators to Monitor

The critical metrics heading into Q4 include new listing volumes (currently at historically low levels of 52 units), absorption rates (currently strong at 28 sales despite limited supply), and days on market trends (accelerating to 22.5 days median). Any meaningful expansion in inventory without corresponding demand growth could pressure prices, while continued supply constraints should maintain the seller’s market dynamics.

Risk Factors

Downside scenarios include broader residential market corrections transmitting to land values, zoning changes that unlock supply, or economic conditions reducing development activity. However, the market’s demonstrated resilience through rate cycles and the structural supply deficit provide meaningful downside buffers.

Conclusion

Fairfax County’s Q3 2025 land market delivered a nuanced performance: prices corrected 26.5% from Q2’s peak to $750,000, yet transaction volume expanded 12% and market velocity improved significantly with median DOM reaching just 22.5 days. Year-over-year, the market shows volume growth of 40% despite price moderation, while year-to-date medians of $813,000 remain 48.6% above 2020 levels.

The total concentration of activity in the sub-5-acre segment, commanding $1.38 million per acre, underscores the market’s evolution toward smaller, development-ready parcels that meet current demand profiles. With inventory tightening to 52 new listings and strong absorption rates, supply constraints continue to provide pricing support despite quarterly volatility.

For market participants, Q3 represents a reset to more sustainable valuation levels following Q2’s exuberance, creating opportunities for disciplined buyers while requiring pricing realism from sellers. The market’s structural fundamentals—limited supply, strong regional employment, and development pipeline demand—position Fairfax County’s land market for continued long-term appreciation, though near-term volatility should be expected.