Home sales springing back economist and Realtors agree

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Housing sales may have kept falling last autumn, but they are starting to spring back now. So said John McClain, senior fellow and deputy director of the Center for Regional Analysis at George Mason University, when he gave his Spring Market Forecast to the Northern Virginia Association of Realtors. His research was supported by the NVARs own February statistics, for the area including Alexandria and Fairfax.

It also supported the predictions made by Jeni Upchurch, a licensed agent with McEnearney Associates in Old Town Alexandria, in her March 22 column for Alexandria Homes. 

Speaking to the NVAR, McClain said, The market adjustment is at an end. It will be stabilized in March.

This makes Northern Virginia part of the national trend, according to the National Association of Realtors own chief economist, David Lereah.

After reaching what appears to be the bottom in the fourth quarter of 2006, we expect resale to gradually rise this year and well into 2008, he said.

Two area Realtors in the NVAR audience agreed that their own practical experience supported the statistical studies.

At her listed properties, Mary Thyfault Clark, of RE/MAX Allegiance, said, I am getting five or six people coming through with their brokers. In November and December, there might have been no one for two weeks.

Added Carolyn Connell, at Long & Foster, I have seen multiple contracts, including several offers for an Oakton townhouse listed at $425,000. I see more people coming into the market every day.

That $400,000 to $500,000 range is the sweet spot, for the most sales, Clark said. At the same time, she said that the lowest priced homes are selling the most quickly. Demand is also high for dwellings near Metro stations.

Connell also said, though, that she sold a $1.5 million house in McLean within one week…suggesting that the recovery is continuing in every price range.

Both agreed that the buyers have stopped waiting for prices to keep plummeting and are making offers again. A lot of buyers are ready, Connell said.

The NVAR statistics painted the same hopeful picture. Sales rose by seven percent this February, compared to February 2006.  Houses took longer to sell, however. They stayed on the market for an average of 108 days, compared to 63 for the same month last year. The median price also fell, by four percent, to $449,000.

McClain also pointed to several signs  leading right to a recovery, from the current buyers market to a more balanced market resembling 1998 and 1999.

For one thing, he said, the percentage of sales to listings fell to 20 percent in February 2007, having reached 60 percent in February 2004. Sales rose by 7 percent, although days on the market rose by 71 percent, for a total of 108.  Prices also decreased by 1.7 percent.

For homeowners hoping to sell their dwellings, more good news came from the home construction field. Building permits fell from about 33 thousand in 2005 to 27 thousand last year. Through 2007, there will be fewer new homes coming on the market, he said, and thus less competition for resale.

Asked about the effect of the national subprime mortgage crisis, he said that he did not expect it to be a major factor in our area. The foreclosure rate was the countrys lowest, he pointed out, at eight in 10,000…compared to the highest, for Dallas, at 100.

The news is so good, he said, that We were a little surprised.

While he predicted that inventories and prices would stabilize in March, the Realtor Mary Thyfault Clark had an even clearer prediction to make.

The market will turn around in a weekend, she said. It started slowing down on May 15, 2005, when I ratified three contracts without getting any competing offers. The NVAR statistics bear her out once again. The inventory increased by 18 percent for that month two years ago. It was a warning sign of worse to come, although the number of units sold also rose, by five percent, and the price soared by 23 percent to $543,129. 

As for this year, Clark said, I dont know when that weekend will come, but it may be soon. For Northern Virginias prospective home sellers, it cant come quickly enough.

 

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