The local real estate market is thriving, with Realtors reporting multiple offers on homes in some areas and dwindling inventory of homes for sale. At least two things are contributing to this change in the market.

First, interest rates have been in the basement: Freddie Mac reported a 30-year fixed-rate of 3.57 percent for March this year, as opposed to 3.95 percent in March 2012 and 4.84 percent in 2011 (for reference, March 2005 was 5.93 percent).

Second, home prices are rising: RealEstate Business Intelligence reported a 10.23 percent increase in average sold price in Fairfax County between February 2012 and 2013. Even though inventory is shrinking across the county, distressed sales (foreclosures and short sales) are a smaller part of the market.

On the whole, everyone has warm fuzzies about the market.

“It’s as healthy as it’s ever been,” said Dane Work, an associate broker with Re/Max Preferred Properties in Fairfax. “Everything is a hot potato. The whole market is red hot, white hot.”

BUT HOW LONG until the extended honeymoon phase is over? And what will that market look like? According to George Mason University professor of finance Gerald Hanweck, a lot like it has before.

“The hype is, fundamentally, what you would expect from a market like this,” said Hanweck. “For quite a while, this has been a terrific housing market in Fairfax County.”

Hanweck came to GMU in 1985 after spending nearly two decades in the research division at the Federal Reserve Board. Today in addition to teaching MBA finance courses, he is also associate dean for graduate programs.

The professor has seen real estate go through cycle after cycle over the decades. “It really just took time to allow housing prices to get on a path of rising, at a rate they had in the past,” he said.

“When I first came here in 1968, the thought was housing prices should always go up ten percent a year. That was a rule. And in fact they did for some time,” Hanweck said.

“Now we’ve hit a plateau,” said Hanweck, “to where we probably should take off and start having price rises between 4 and 6 percent a year, on average, for residential properties. Once we hit that, and that’s been happening now for several years, prices are high enough — after they had fallen in 2005 and 2006 — that people are willing to buy and sell. Enough time has passed.”

WHY THE DWINDLING SUPPLY? There are several factors, according to Hanweck, which result in people hanging on to their properties. Among them is a gradual increase in the number of retirees in this area who choose to stay in their homes. Another is people simply waiting to see how high prices will rise. There are also more instances of business investors buying properties to rent.

But none of this should dissuade anyone from jumping into the real estate market right now, Hanweck said. “Sell. Sell and buy.”

“If you want to move, sell now, buy now. Buying six months ago would be even better, buying a year ago would’ve been even better. But buy. Over the next year, two years, it’s going to be a good market. After that we’re going to see federal government cuts actually start to impact.”

“I’m incredibly optimistic,” said Work. “I have been for about a year and a half. It makes me look like a saint. The writing was on the wall for some of this.

“It’s such a great opportunity for the end user, for occupants,” he continued. “Everybody’s got to live somewhere. Now is the time to lock in on something and secure it.”