As everyone begins to review the numbers and the predictions from last years market it is hard to ignore the numbers. Though the “official” tally for 2007 is still a few weeks away it isn’t hard to see the trend. No one is going to argue that our average sales price in Northern Virginia has fallen but we are no where near “historic lows” as some would like to say. In fact if you look at trends over time in Northern Virginia you can see that our real estate market regularly goes through cycles.
Between 1990 and 1991 we had a dramatic drop in volume of home sales, followed by a period of relatively “normal’ appreciation and mortgage rates hovered between 9-9%. In the early 1980’s when interest rates were rates were in high double digits (14-15%) the volume of home sales dropped and again followed a period of “normal” appreciation. Our cycles are almost predictable and each time we have had spikes in our volume and sales prices you can do a side by side comparison with mortgage rates and begin to put together a relatively easy to see cycles.
The last two years we have had a kicker of unusually low interest rates which created a new pool of buyers that we had not seen in the Northern Virginia market since the IRS took away the ability for most investors to take all of their losses off their income tax. Perhaps HGTV made this new breed of “investor” (flipper) or maybe it was just greed but any in case their contribution to the current market can’t be ignored.
Since at least 50% of the prognosticators got it wrong last year. I’m not sure how many of them are willing to jump on the bandwagon again at the beginning of this year. However for Northern Virginia the next few months will be important. If sellers continue to hold out for top dollar and buyers continue to take a wait and see approach then we may reach our historic lows. However this is Northern Virginia, our employment rates are still high, our economic outlook is still good and there are new jobs being created. Hopefully everyone who is looking at the market will continue to take those major factors into consideration and make smart decisions about how to buy and sell houses in today’s market.
As an Associate Broker with RE/MAX Allegiance in Northern Virginia and native of the area I can assist you whether you are buying, selling or renting a home anywhere in Northern Virginia. For more information about the area or my services you can check VaRealEstateTalk or my Northern Virginia website.
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