The following article regarding the state of the local real estate market was published in The Free Lance Star on 06/11/09 and indicates that the market may actually be showing some signs of life. It has been a long and challenging 3 years in the local real estate market so let's hope the improving trend continues!

Date published: 6/11/2009

BY BILL FREEHLING

The Fredericksburg-area housing market showed strong signs of improvement in May, according to data released yesterday by Metropolitan Regional Information Systems Inc.

There were 412 homes sold in the Fredericksburg area in May through the Multiple Listing Service. That's the most since June 2007 and a 30 percent improvement from May 2008.

The 2,525 homes listed on the market in the Fredericksburg area as of yesterday's data is the lowest total since February 2006. The area includes the city and Spotsylvania, Stafford, Caroline and King George counties.

At last month's sales pace, there was a 6.1-month supply of homes on the market. That's close to what housing experts consider the sign of a healthy balance between supply and demand. It's the lowest ratio since December 2005. By way of contrast, there was a 20.6-month supply of homes in January 2008.

Area Realtors are reporting incidents of multiple contracts being written on homes within days of the listing. That's the kind of activity that occurred during the housing boom of a few years ago.

The significant difference between now and then is the prices of the houses being sold. The median sales price in May for the area was $210,000, a 22 percent decline from last May's median.

The figure is about a third of the springtime prices from 2005 and 2006. But it's also the first time that median prices have risen above $200,000 since January.

Many warn that more foreclosures will hit the market over the next couple of years, adding to the inventory. According to RealtyTrac data being released today, all of the following localities are among Virginia's top 20 for foreclosure rates in May: Spotsylvania, Stafford, Caroline, Orange, Fauquier, Culpeper, Fredericksburg and King George. Topping the list are Manassas, Prince William and Fairfax.

It's also possible that more people who have been renting their homes or waiting out the downturn may decide to list if conditions continue to improve. And May is always a strong month for housing sales.

Nonetheless, reduced prices, lower mortgage rates and tax incentives for first-time buyers appear to be drawing people into the market. A sharp decline in building permits is helping to keep the inventory low.

Homes that sold through the MLS last month spent an average of 105 days on the market, which is the lowest total since November 2006. The average sales price was a 10 percent discount to the list price, a smaller discount than in recent months.

Distressed sales--short sales or foreclosures--made up 43.9 percent of the total sales last month in the area. That's down from 48.5 percent in April and 56.3 percent in March.

Though government-backed loans continue to make up a majority of home financing types (54.4 percent in May), conventional loans showed a bit of a comeback. About a quarter of area home sales were financed with conventional loans last month.

Cash deals comprised 14 percent of MLS home sales last month. Nearly half of the 12 sales in Fredericksburg city last month were cash deals, a possible sign of investor activity.