Dr. Stephen Fuller has a very personal reason for believing that the Northern Virginia housing market is recovering.
I sold my house in Old Town Alexandria this November, he recalled, as he spoke at the Spring Forecast hosted by the Northern Virginia Association of Realtors on March 19. In addition to the three crucial factors of location, location and location for his buyers who work in Washington, he added, The price was right and the supply was low.
The price was right for the buyers, that is. Built in 1842, his small single-family home sold for $749,000, which was $6,000 less than he had paid three years earlier. I did not hold it long enough, he explained.
Location was the motive for his move, too. He wanted to be closer to George Mason University, where he is director of the Center for Regional Analysis.
His positive spirit is shared by NVAR chairman Susan Mekenney, of RE/MAX Allegiance in Alexandria. We are very optimistic that the market is starting to show a recovery, she said.
Fuller gave credit to the federal government for two related reasons. First, there is the bailout money earmarked for mortgage relief. It will have an enormously positive effect, he predicted. Second, there are the prospective homebuyers coming to Washington to manage the TARP and bailout programs.
He praised the Federal Reserve decision to pump another $1.2 trillion into the economy, announced the previous day. It will have an enormously positive effect, he predicted.
This stimulus package includes $750 billion to buy mortgage-related securities, as a way of lowering borrowing costs. Mortgage rates are now around 5.1 percent, but Fuller said he expected them to drop into the four percent range.
This came in addition to the earlier $75 billion program, intended to compensate lenders for modifying mortgages to 31 percent of the buyers income.
Whats more, these bailout programs require experienced staffs to manage them. They are among the federal government employees who showed an 8.4 percent job growth rate in the Washington area last year, following professional and business people with a 9.9 percent hike and education and health workers at 10.7 percent. At the same time, construction jobs fell by 11.9 percent, leading to the total job loss of 1,800.
Employment in the Washington suburbs stands at about four percent, or half the national average, which Fuller predicted would reach the double digits before the recession ended.
Other areas of the country are losing those business and professional people while we are gainingthem, Fuller said.
T.J. Doyle, marketing and communications manager for the National Association of Realtors, confirmed Fullers findings by quoting the NAR survey of Northern Virginia homebuyers. In 2008, he said, 55 percent of the first-time purchasers had a median age of 36 and a median income of $97,600. He provided even more encouraging news to current homeowners by saying that 88 percent of all Northern Virginia shoppers chose existing homes over new construction.
Single women accounted for another 25 percent, leading Doyle to warn the realtors that, This population is often ignored.
With their $68,300 median income and typically smaller dwellings, these single women are more likely to choose condos. Fuller said that the same goes for other incoming Washington workers, who tend to be childless people aged 30 to 35.
NVARs latest sales report helps to prove his point. In the City of Alexandria, condo sales increased by 27 percent in February and 41 percent in January, ahead of both townhouses and single-family homes.
At the same time, the condos median price declined. In February, it dipped by 8 percent, to $221,500, after dropping by 22 percent the previous month, to $240,500.
Fuller called the falling prices troubling. He explained them by saying that housing prices had risen by double digits during the boom that ended in 2005, compared to the traditional rate of seven percent. We will have to give some of that back, he said. He also predicted that condo prices would recover first, due to the higher demand.
Doyle also pointed out that convenience to my job and convenience to public transportation were among the major factors in choosing the home. They were cited by 75 percent and 41 percent of the population, respectively.
For Washington workers, this makes close-in areas like Fairfax County and Alexandria more appealing than the more remote suburbs, like Prince William County.