On Tuesday, Dec. 11, local experts discussed the state of the regional market at a Year-End Press Conference Wrap-Up. Reflecting on the current market, John McClain, Senior Fellow and Deputy Director of George Mason’s Center for Regional Analysis, said, "We lost our competitive edge. It’s almost like we needed to have a housing market adjustment, [otherwise] we wouldn’t have been able to get anyone to move here." He noted the region’s low unemployment rates, steady job growth and moderating government spending. "Our economic fundamentals in the metro area are sound;" he said. These factors should bolster a resurgence of the housing market by the second half of 2008, "although in some places, the prices are now up" said McClain.
2007 NVAR Chairman of the Board Luis A. Lama noted that recent market data confirms all real estate is local. "National statistics cite rising prices in some metro areas, and declining values in others," Lama said. And in Northern Virginia, prices are holding steady. The year-to-date average sold price for homes at the end of November is $538,071 substantially unchanged from the year-to-date average at the end of 2005, which was $538,144. He predicted stability in the first half of 2008, with expected improvements in housing sales by next summer.
Three Times Is the Charm: Federal Reserve Lowers Interest Rate
The Federal Reserve cut the federal funds rate by one-quarter of one percent on Dec. 11, 2007, bringing that rate down by a full percentage since this past fall. A similar cut was made to the discount rate charged for direct loans to banks.
Although this year’s cuts have not yet affected consumer loan rates, the rate cut could benefit some home owners with adjustable-rate mortgages that will soon reset. According to REALTOR® Magazine online, For [adjustable rate mortgages] whose reset rates are tied to the one-year Treasury, that rate is currently 6.5 percent. Before the Fed began cutting rates in September, adjustment might have been 7.5 percent or more.
Federal Government Rate Freeze to Aid Some Consumers
President George W. Bush’s announcement of efforts to curb the increase in foreclosures, by allowing modification of certain loans or freezing the interest rates for up to five years, should help local mortgage-holders caught in the sub-prime mortgage mess.
"The President has offered the American people an early holiday gift today," said National Association of REALTORS® President Richard Gaylord of President Bush’s announcement. "We hope Congress will also help make the holidays happy for millions of Americans by doing their part and move swiftly with FHA modernization, GSE [government-sponsored enterprise] reform and elimination of the mortgage cancellation tax," he said.
November 2007 Housing Data
Northern Virginia: November 2007
The Northern Virginia Association of REALTORS® reports on November 2007 home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church and the towns of Vienna, Herndon and Clifton.
A total of 1,065 homes sold in November 2007, about 28 percent less than in November 2006, when 1,475 homes sold.
Active listings increased slightly, up 9.58 percent from last year, standing at 9,710 active listings in November, compared to 8,861 homes available in November 2006. These numbers were down slightly from October, which is in keeping with typical seasonal decreases. Homes are taking a little bit longer to sell, with the average Northern Virginia home in November 2007 staying on the market for 99 days, compared with 85 days on the market (DOM) in November 2006, an increase of about 16 percent.
The average sales price in November 2007 in Northern Virginia was $513,930, reflecting a dip of just 1.78 percent from the average sales price of $523,247 last November.
The median price of a home sold in Northern Virginia in November was $425,000, which is a decline of 7.61 percent compared to November 2006’s median price of $460,000. The median price reflects the price at which an equal number of homes in the region are sold at higher and lower prices.
Greater Northern Virginia: November 2007
Sales activity in Greater Northern Virginia (NVAR jurisdictions plus Prince William, Loudoun and the Greater Piedmont counties) for November 2007 reflects a dip.
Greater Northern Virginia sales data continues to reflect a higher inventory in further-out suburbs, resulting in continued price decline and an increase in DOM. The average sales price of $464,371 in November 2007 was about 5 percent below the November 2006 average sales price of $490,422.
The number of Greater Northern Virginia region units sold in November was 1,848, about a 24 percent decline from November 2006’s total of 2,438 homes sold.
Across Greater Northern Virginia, 21,926 listings are active on the market, which is about 15 percent greater than this time last year, when 18,999 homes were available. The average DOM for a home sold in November 2007 was 113 compared to the 97 DOM of one year ago.
While homes may be taking a little longer to sell, the Year-To-Date Average Sales Price for the Greater Northern Virginia region in November 2007 is $498,195, which is only a 1.11 percent decline from November 2006’s YTD average sales price of $503,797.