Double Dip for US, but not for DC

Take a look at this article - it seems like the metro DC market is one of the few that is not experiencing a double dip! I always hear that our area is usually the first to come out of a recession, and I think I'm seeing it firsthand. The fact that the unemployment rate is lower for us, and salaries higher, is probably helping. Regular sellers are coming on the market and expecting to get more value than in years past. And I have actually seen an influx of investors coming into the market as well. I guess no one wants to buy when they think prices may continue to decline.

Here is the article:

Slight Dip as Expected Through September 2010

The market has corrected since the expiration of the tax credit, as expected. The last month of the artificially raised prices was in July and then we started seeing the average price drop in August and September. The average prices are now back to where they were in April of this year, which is about the same place as June of 2009 (the height of the 2009 market due to seasonal fluctuations). We are still much higher than the bottom of the market, which seemed to be January and February 2009. The seasonal fluctuations of the winter may take us a little lower but I don't expect it to drop as low as Jan/Feb of 2009 for our area. The spring should show slow growth once again.



The incredibly low interest rates are keeping buyer demand healthy in our area and we are in a better position regarding jobs than much of the US. Anecdotally, myself and several other agents I know have seen an increase in activity during the past two or three weeks.

Good news for buyers - supply is rising slightly and the sold price as a percentage of list price is dropping a little so there's more room for bargaining and more houses available than earlier this year.





Sellers - It's an incredible time to refinance, but if you're thinking about selling, you might have missed the ideal time earlier this year to get the best price. If you have equity in your home, this may not be an insurmountable barrier. The conditions are great for buyers and your home will sell if your expectations on the pricing align with the market.

Median Sales Price and Supply & Demand through June 2010

There has been talk in the media about a "double-dip" recession recently but housing market numbers are not showing any indication of this in Fairfax County, at least.

Prices have continued to rise and are approaching 2007 median prices, which is quite surprising. My guess is that this increase in price is the final effect of the tax credit - buyers were supposed to be under contract by 4/30 and close by 6/30 (Congress extended this to 9/30) and some of those contracts seemed to be artificially high in desperation of making the deadline. I wouldn't be surprised if we start seeing a slight dip in prices during the next quarter, correcting for this artificial jump during the past few months.



The supply has been rising but demand seems to be rising at nearly the same rate so once again, we are not seeing indications of a slowing housing market in Fairfax County.



Days on market has not changed much since the end of March - it is still in the low 40s. And net sold price as a percent of list price is holding at about the same level - 97.3% as of the end of June 2010.

There continue to be rumors of a second wave of foreclosures based on the five year arms from 2005 and 2006 purchases starting to adjust. Maybe so... maybe not... with interest rates continuing to hold at incredibly low levels, maybe those adjustments will not affect homeowners as badly as expected.

The housing market seems healthy for sellers and buyers right now. Hopefully interest rates hold through the end of the year, as the media has indicated.

Mini Market Update - Rising Supply

The tax credit expired about a month ago and we are feeling the effects in the immediate Northern VA market. Housing inventory is sitting around and we are seeing attractive price reductions on regular sales. Meanwhile, sellers are still listing their properties in droves since it is the spring/summer market. So buyers currently have more options than they have during the past year or so. We have yet to see whether or not this is temporary - maybe buyers are in shock from missing the tax credit deadline and will start looking again soon. It's hard to believe that all of those buyers simply disappeared, but hey, I've been wrong before. The media news of interest rates rising in the near future will surely light a fire under buyers but maybe, like all things, it will take an actual rise for people to actually take action! The most likely outcome during the next few months may be a more balanced/reasonable market with some negotiating room for buyers and sellers no longer being able to list really high just because they know buyers are desperate for the tax credit!

Supply and Demand through March 2010

This chart clearly demonstrates one of the core reasons for the extremely high buyer-buyer competition that exists in our local marketplace today. Since December of 2007, the gap between the number of houses available and the number of houses selling has been steadily narrowing. We are seeing fewer and fewer choices available per buyer and buyers need to be aggressive when they find a home that works for them.



When we study the sold price as compared to the list price, there is also a dramatic trend. Homes in Fairfax County are selling closer and closer to the list price, which goes hand-in-hand with what we would expect from the supply and demand graph. Also, this graph excludes the seller subsidies. So when the average sold price is 97% of the list price, it means the average is list price with a 3% seller subsidy. Some homes sell above the list price and some sell below the list price.

Median Sale Prices through March 2010

There are seasonal fluctuations in the median sales price for homes. However, it is pretty clear from the data as well as our direct experience with the market that the bottom of the market passed in late 2008 and early 2009. Buyers should not see a decrease in the value of their home after they buy. Sellers are feeling more comfortable putting their homes on the market in an improving/stable market rather than a decreasing market. Interestingly, we've been seeing less problems with appraisals as well - they seem to be appraising at the higher contract prices.

Days on Market through March 2010

Things are selling quicker in Fairfax County - the average days on market in March 2010 was only 47! This was most likely influenced by the expiration of the tax credit in addition to the seasonal fluctuations of springtime.