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Sunday, January 15, 2006

Northern Virginia housing prices down 10%

From The Chronicle:
You don't have to work in real estate to know there's been a change in the market. One of the agents in my office commented that property values in Northern Virginia have dropped about 10%. She based her opinion on list prices, not sold properties, as many of the properties listed in the past few months are still for sale.

A homeowner recently asked me why the market has changed. In the spring we had a shortage of inventory, creating a seller's market. Now we have a glut. Price reductions are rampant as homeowners who must sell lower their asking prices in hopes of attracting an offer.
That brings me back to the question of why buyers aren't buying. There are plenty of buyers out there and lots of houses from which to choose. But if, as Gladwell believes, the more choices you are given, the more overwhelmed you become, then it follows that buyers are not making offers because there are too many houses from which to choose, hampering their decision-making ability.

Gladwell's blink theory could help explain our current market condition. It mirrors the feedback I am getting from other real estate agents. Buyers may look at ten or 15 houses, find one that has all the features they want, then hesitate to make an offer. They know there are more houses to look at, and perhaps one that might appeal to them more. The sense of urgency to buy now or miss out is gone.

Further hindering the decision-making process are the steadily decreasing asking prices. Some buyers are waiting to see if prices will come down further. Active listings in Northern Virginia in September 2005 (the latest month for which figures have been posted by the Northern Virginia Association of Realtors(r)) were up 89% from the same time last year, and the number of units sold this past September was 14% lower than in September 2004.


Blogger James E. Martin said...

Actually Arlington Sale Prices are up by about 3%.

10:41 PM

Blogger A Citizen of Manassas said...

This is an interesting read. I recall when the market was red hot.. folks reacted as if they did not put an offer on a house, they would loose out. A mob mentality for sure.

11:09 PM

Blogger Bwana said...

Of course, it helps if all pertinent aspects of this article are posted. The final paragraph reads:

"A slowing market is not necessarily a declining one. Despite a continued increase in inventory and decrease in sales, the average sales price for September 2005 in Northern Virginia rose to $543,170, up 23% from September 2004's average of $440,150. Economists are keeping an optimistic eye on 2006, but as we've seen these past few months, market conditions can change in a blink."

I will suggest again, as i ahve in the past, that prices in Northern Virginia will remain higher than what they perhaps logically should be due to a constant influx (and outflow) of buyers due to the government, military, and expanding IT and Contracting companies up here, and by the congested roads. If you want to live in close, you are going to pay a premium.

I will also note that typically demand in the winter falls off. Let's see what happens when Spring rolls around.

8:54 PM

Anonymous NOVA Scout said...

For political nerds (I am in that number - so no one should take it as an insult) the very interesting element of this is whether the cooling off of the market portends a drop in market values. If so, local elected officials, particularly in the fast-risign markets of Northern Virginia, will face real difficulties in setting tax targets for out years. In recent years they've had the comparative luxury of a fast-rising tax base. If that stagnates or declines, people being people, a lot of voters will be upset when rates have to be raised. Strange as it seems, there already are a few folks who have been angered by their tax rates going down in situations where the values of their homes have risen so fast as to outpace the arithmetic of the tax reduction. An actual decrease in value might please those whose only focus is the ultimate tax bill, but most people, having grown accustomed to the increased wealth, at least on paper.

7:07 AM

Blogger Bwana said...

After looking at my post a second time, it should read "typically demand falls off in the winter".

As written, one might wonder what "demand in the winter" falls off from!

All comments on grammar can be directed to former 7th grade English teacher Susan Thomas, Marstellar Middle School, Manassas, VA, champion emeritus of the Little Red Grammar Companion.

7:47 AM

Blogger Fred Fry said...

"If you want to live in close, you are going to pay a premium. "

This of course applies if you are hell-bent on buying.

I am renting in Mclean, VA, three miles from my office. Right across the street are 2 bedroom condos being built for $800,000 ea. My two bedroom apt, with 2 bathrooms and a balcony is $1,400.

Down the road is a refurbished condo (in an apt building) smaller than my apt, with no balcony, going for $400,000. I know this because the Agent put fliers on all the cars in my complex. Too bad what he was offering did not match what we all already were living in.

9:09 AM

Blogger Bwana said...


Actually, I imagine it applies even to renters.

Take your apartment/building, place it in Manassas or Leesburg, and I bet the rent would be less than what you are paying now.

Again, that is pricing comparables. I imagine there are new apartments in those areas mentioned that cost more as they are new, come with certain amenities, etc.

I mention those two as being indicative of the direction folks have to go to purchase homes if they are unwilling or unable to live in close...

7:49 AM

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