Where Have All the Buyers Gone?

This week the Northern Virginia Association of Realtors convened an economic summit to discuss the sluggish housing market. The summit, “Surviving and Thriving in a Changing Economy,” featured key speakers Dr. Lawrence Yun, the National Association of Realtor’s Chief Economist; Dr. Stephen Fuller, Director for Regional Analysis at George Mason University; and Colonel Mark Moffatt, the Deputy Garrison Commander for the Base Realignment and Closure Committee at Fort Belvoir.

First, the good news. All of the speakers reviewed the recent history of the housing market in the metropolitan area and concluded that Northern Virginia is faring the best out of the three jurisdictions (Northern VA, D.C. and Southern Maryland). Unemployment in Northern Virginia is at 4.6 percent, outstripping the performance of the rest of the country, which still maintains over 9% unemployment. When looking at housing, the overall supply is lower. Fairfax County is currently at about four months’ supply that should translate into a sellers’ market. Experts say that the market “hit bottom” in Northern Virginia two years ago, but the recovery will be slow. That has certainly been the case in 22309.

The problem is that this relative advantage in unemployment figures is not translating into growing home sales and rising prices.  Even though Northern Virginia, including Mount Vernon, has seen dwindling housing inventories, buyers have been slow to move this year. When evaluating 2011 compared to 2010, overall housing sales have been down. Part of the reason is that last year the Obama Administration offered tax incentives to inject the market with buyers.  Without these incentives in 2011, the market has not fared so well. 

Adding a breath of resuscitation to our local housing market should be BRAC at Fort Belvoir. Colonel Moffatt reported that about 2200 new jobs have been created at the main post.  The caveat is that most of those people will be living where they can afford to live, and most of the employees of the base live south of our area in Prince William or Stafford counties.  Still, some jobs should begin filtering into the area over the next 12 to 18 months.  Over time, we should see people transition from commuting to renting, then buying.  For the immediate Mount Vernon area,

Dr. Fuller expressed a similar time frame for the recovery of our housing market.  He said that it will be slow and is directly linked to the recovery of the U.S. economy overall. The US needs to see 3% growth or more to bring down unemployment.  He said that buyers don’t want to invest and put themselves into greater debt when they doubt they will see the value of their new homes increase.  Despite the temptation of low interest rates, buyers remain cautious.

Looking more closely at 22309, the summer market was indeed slower than the spring, but there is increased activity in the Fall market.  This is the second most active time statistically in the real estate market. June and July sales and prices declined from last year and August was a statistical anomaly because of the settlement of 9500 Ferry Landing Court, which closed for $8.26 million and pushed all the figures higher. 

Overall, it seems that the housing market here has reasons to perform better than more depressed areas in the region. We will see a modest influx of people over time due to the BRAC and government contracting.  Looking at the predictions of reduced government contracting in the area in general and assuming a slowly recovering economy, the housing recovery will continue to be modest as well.

August Statistics

Statistic

Values

YoY

MoM

Total Sold Dollar Volume

$18,401,801

+21.72%

+86.81%

Closed Sales

34

-34.62%

+9.68%

Median Sold Price

$272,550

+17.73%

+0.94%

Avg Sold Price

$541,229

+86.16%

+70.32%

Avg Days on Market

45 days

-22.41%

-35.71%

Avg Sold to Orig List Ratio

97.61%

-1.06%

+4.21%