Real Estate Market Report

Interest rates in 2010 are still low, but will likely rise over the next months. Home values in the local real estate market are slowly moving upward, but with fewer sales as sellers are less willing to take big price cuts. Some sellers with properly priced properties in good condition are getting multiple offers within a few days of listing their homes for sale, but most homes are taking longer. Many sellers who can afford it, have taken their properties off the market or rented them out. The average number of days on the market for real estate was 59 days in January 2010 in Fairfax County, but some properties have been on the market for many months. Many sellers and builders have reduced their prices during the last six months, but lately, price drops have been fewer and for smaller amounts. The market appears to be most active for owners selling a home below $450,000. In 2009, all price ranges were getting more showings and more contracts written than for the same time period a year ago. Avgerage home prices started the year a little higher in 2010 compared to 12 months earlier. Uncertainty in the job market and economy, a potential surge of foreclosures, and the pending end of home buyer tax credits make it hard to predict if this is a temporary upward push on sales and prices or the start of a recovery for the Northern Virginia housing market.

Late 2009 started to see some upward pressure on prices. Some deals are falling apart because of low appraisals reflecting past sales without allowing for increasing buyer demand and higher offers. More houses are being sold this year and prices have been moving up during the year, but they are still being sold at lower prices than last year. Lately prices are being controlled by foreclosures and short sales, and the average number of days on the market runs 40 to 70 days depending on the neighborhood and part of the area you are buying in. Bank owned foreclosure properties make up many of the sales. Some bank owned foreclosure properties are being priced low in order to obtain multiple offers and a final price over the asking price, so if something looks too good to be true, it probably is. If you are buying a home, the best homes usually go quickest, so it is important that you have a good real estate buyer agent looking out for you by doing a daily check for new listings that might meet your needs. The good news for sellers is that housing for sale inventory is going down and with expected government assistance likely to reduce the number of future foreclosures, house prices may be starting to go back up because of the multiple offers coming in on many of the properties.You can use the search links on our useful links page to do your own home search of the local MLS listings or set up an automatic daily search.

A Realtor should also be able to recommend lenders and tell you about any special financing programs offered in your area. Some lenders have community grant programs to assist first time home buyers. FHA loans are making a strong come back because they only require a 3.5% down payment and no longer have all of the restrictions that made them unpopular a few years ago. In Virginia, ask about the VHDA programs for moderately priced homes. There are also programs such as interest only payments for high and moderately priced homes and ways to avoid having to pay private mortgage insurance (PMI). If you don't have 20% of the sales price for a down payment, ask your lender about an 80/10/10 or an 80/15/5 loan package. It may be better to pay a higher interest rate and the PMI payments or get an Adjustable Rate Mortgage, if you are only planning to live in the home for a few years. Also, PMI payments are now tax deductible.

Because of the large number of mortgage loan defaults in 2007 and 2008, lenders have increased their credit score requirements for many loans. This may restrict the pool of potential buyers and help reduce or keep prices at their current levels. If you do apply for a loan, expect to provide a lot of documentation. You will need to prove the source of any income other than regular W2 type deposits.

The average price of a Washington-area home is $386,702 in the 3rd quarter of 2009. The metro-wide price of homes sold in the 3rd quarter of 2009 was up 1.1% from the 2nd quarter of 2009, but it was 5.1% lower than in the 3rd quarter of 2008.

Prices remain highest in the jurisdictions of the District, Arlington and Alexandria. The average sales price of a home in the 3rd quarter of 2009 is $476,062, down 4.3% from the 2nd quarter and 11.8% lower than one year ago. In Alexandria, the average sales price in September 2009 was down 5.5% compared with September 2008; Arlington posted price declines of 6.4% for the same 12-month period.

Fairfax, Montgomery and Prince George’s counties (and Falls Church and Fairfax cities) experienced price declines of 0.5% from the 2nd quarter; the average price in the 3rd quarter of 2009 was $395,463, which is down 8.6% from one year ago. Fairfax County home prices fell 8.6% from September 2008 to September 2009.

The outer areas of Loudoun and Prince William counties – where foreclosures led to the region’s steepest price declines in 2006 through 2008 – showed the strongest quarterly price gain. The average sales price of an outer home in the 3rd quarter is $298,912, up 6.5% from the 2nd quarter. In Prince William County, the average sales price in September 2009 increased 8.2% from one year earlier. In Loudoun, home prices rose 7.0% from September 2008 to September 2009.

As buyer activity has increased, properties are selling more quickly. For the Washington region, homes sold in an average of 81 days, down from 93 days in the 2nd quarter and 101 days one year ago.

The following information is for February 2010. The statistics cover all of Fairfax County, City of Fairfax, Falls Church, Arlington, and Alexandria. The trends are similar for Prince William and Loudoun Counties. Give me a call or send an email if you would like the current stats for your Northern Virginia zip code.

Source: Metropolitan Regional Information Systems, Inc. - MLS Resale Data
Copyright 2009 - Information deemed reliable, but is not guaranteed.