The New Year is upon us. But if we travel back to 2007-2009 and review the news headlines one would think it was Halloween for several years in real estate. You may remember some of these news bytes:
Housing Horror- Crains Business
U.S. Housing Crash Deepens in 2008 After Record Drop – Bloomberg
Worst Case Scenario CNN/Fortune
and on and on . . . .
It was Friday the 13th every day for a while as literally every local market in the country experienced falling sales and homes values as buyers froze and the banking, mortgage, building, and residential brokerage industries came to a virtual standstill.
In Northern Virginia, depending on location and price range, values dropped between 25-50 percent from peak, new home construction slowed drastically, some national builders left our market or went out of business, and many local small builders went bankrupt or could not obtain construction financing. The number of real estate agents and mortgage brokers began to shrink. Consumer confidence was at all-time lows. And in 2009, the Northern Virginia area lost jobs for the first time since 1990-1992.
Its good to learn from the past and not to live in it.
At the end of 2011 and headed in to 2012, local headlines read differently. Reminding ourselves that residential real estate is local, local, local and not a national market, our region has performed fantasticly compared to most every other market in the USA. Vienna in particular was ranked the #5 best housing market in the USA according to a recently released study by Bloomberg/BusinessWeek with median home values increasing almost 13% in 2011. Yes, 13%, that is not a typo! While not ranked in the report, many of the other local adjacent communities are doing comparatively well, especially as you get closer to Washington, DC. Thanks to a healthy local economy and extremely affordable interest rates for mortgages, we are experiencing the most stable market since the frenzied run up of 2004-2007.
According to the GMU Center for Regional Analysis, Northern Virginias unemployment rate is at 4.5%, which is about one half the national rate. A significant number of new jobs were added in 2011 and many of those were filled with people relocating to our area. The market theme most weeks and almost every month in 2011 was a decrease in the inventory of homes compared to the week/month before and year over year. The latest numbers show that as of December 12, 2011 the Washington, DC region had 48,934 versus 64,266 units during the same week of 2010. Thats a whopping 23.9% decrease. The months supply of homes is now 6.1 compared to almost 8 months a year ago. Locally the months supply is between 2-6 months depending on price range, home style and type. A 5-6 month supply of homes is considered to be a balanced market between buyers and sellers.
The data also shows that total sales volume for 2011 is less than 2010 and if you read news headlines highlighting this it can be misleading. The truth is that sales are off because there are fewer new listings, especially attractive homes that people want to buy. The result is a pressure on prices to increase, which we saw in 2011. Some headlines will also state the fact that in most areas the time to sell a home has increased and the percentage of list price is decreasing. Again, the uneducated buyer or seller that relies on headlines and sound bytes might think that it is a buyers market. The truth is that homes that are prepared properly, show well and are priced to what the market comparables indicate value is are selling quickly in weeks not months and in many cases with more than one offer.
So what is in store for 2012?
The local real estate market is not as volatile as the stock market and residential real estate markets move at a much slower pace. While we always experience temporary fluctuations in local housing activity that affect the psychology of buyers and sellers due to national news events like the recent credit rating downgrade by Standard & Poors or 911 or local incidents like the sniper attacks, weather, earthquakes, etc; the local trends we see in housing are expected to sustain in the new year. As long as mortgage rates remain at or near historical lows, affordability at all time highs and our local economy is healthy, expect 2012 to look very similar to 2011.
This is what the final report from The GMU Center for Regional Analysis titled Housing the Regions Future Workforce. Policy Challenges for Local Jurisdictions stated in the summary of key research findings in the 4th quarter of 2011:
Over the next 20 years, the Washington DC metropolitan area will add more than a million net new jobs. At the same time, the region will need 1.8 million replacement workers to fill jobs vacated by retirees and others. The ability to absorb these new workers into the region and to ensure robust regional economic growth depends critically on providing a sufficient amount of housing of the right types and prices and in the right places. If each jurisdiction provided enough housing to accommodate all of its future workers, the Washington DC region needs to add 731,457 net new housing units between 2010 and 2030.
If the research and forecast for population and job growth is even remotely accurate, the future for housing in our area is sound. Happy selling and buying in the new year to come!
If you are looking for an advocate to help you navigate & negotiate in TODAY’s market, email The Belt Team or call us at (703) 242-3975. Our expertise is the Northern Virginia real estate market. Call now to schedule a Buyer or Seller consultation, to request a FREE WRITTEN REPORT of your homes value or to be put on our FREE PRIORITY NOTIFICATION LIST for special buying opportunities that are not in the MLS or on the Internet. You can’t afford not to.