Three years ago, at the height of the boom in home sales, Long & Foster CEO P. Wesley Foster Jr. was asked to predict the future of the housing market and said that it was headed for a slowdown. Time, of course, has proved him right.
In October, he was asked again for his prediction. It was much more encouraging this time around.
The current situation will continue through the end of this year and at least the first half of next year, he said. It may even get a little worse, but not too much. But by 2009, he said, the picture will become much brighter.
Even now, he said, business seems to be picking up in some of the Long & Foster offices, especially those like McLean that are closest to the District.
His views are supported by the experts who spoke at the yearly Economic Summit this September, hosted by the Northern Virginia Association of Realtors.
Next year will be better, and 2009 will be better yet, predicted Dr. Stephen Fuller of Alexandria, director of the Center for Regional Analysis at George Mason University. We have a large inventory and need to move it down before the market becomes stable.
Even now, however, Fuller said, Things are better here than in other places. We must tell both sellers and buyers that they are in a different picture than the one they see on the nightly news, with its unrelieved gloom.
Indeed, our local picture may be dim enough, but it is positively glowing compared to the national scene.
This August, for instance, the NVAR home sales report showed the steepest slide of the year for its Northern Virginia area, including Alexandria and Fairfax County. Home sales fell by 15.57 compared to the same month of 2006. For the nation, however, August sales plummeted by 21.5 percent. Even the NVAR figures for greater Northern Virginia, including Loudoun and Prince William, still stayed ahead of the national average by showing a 17 percent drop.
He explained the findings by saying, We have the lowest unemployment rate of the 15 largest business centers, with Detroit being the highest, at 8 percent.
2008 will be better than 2007, agreed Dr. Lawrence Yun, senior forecast economist for the National Association of Realtors.
We are not yet at the bottom of the market, sad to say, reported Dr. Frank Nothaft, chief economist for Freddie Mac. But by the middle of 2008 we will have hit the trough and begun to see a recovery. Home sales and construction will stop falling, level off and then gradually start rising again.
A few days later, Christine M. Todd, CEO of the NVAR, spread the same message in a public lecture sponsored by the Sterling of Oakton, a new active adults community.
The outlook for 2008 is positive, she said. The worst will be over by the end of the year and 2009 will be even better. You may not be able to sell your house this year, but in two years you will be, and we will be back in a sellers market again.
The commentators joined together in giving credit to the same favorable factors … higher employment, rising wages, falling home prices and lower interest rates in Northern Virginia. The result, they say, will be more affordable housing satisfying the pent-up demand.
Our July unemployment rate for Northern Virginia was 2.3 percent, compared to 4.9 percent for the nation, Todd reported. The jobs were not at McDonalds or Wal-Mart, but professional and business sectors. Our economy is always ahead of the nation, because of our closeness to the federal government with its contractors and lobbyists.
The mortgage rates have also been encouraging, hovering around 6 percent.
But housing prices are still too high for many people, including would-be first-time buyers, she said. The median this August, for instance, was $480,000. As prices continue to fall, however, the buyers will be able to satisfy their pent-up demand.
With a smile, she added that their parents would be especially pleased. Yun had reported that household formation had stalled, as a result of the housing crisis, so that young single people are moving back home.
My nightmare is that my daughter will come home from college, get a job and move in with me! Todd joked.
If she does so, the graduate will probably find herself in more crowded quarters than she recalls from childhood. Having recently moved to a condo in Reston, Christine Todd said that she was an example of one reason why condos should recover more quickly than other forms of housing.
Many of the shoppers will be baby boomers who feel as she did. I loved my house, she reported, but I wanted someone else to shovel the snow. Others will be first-time buyers, who will be able to afford a condo on the way to the single-family home of their dreams.