Northern Virginia Market Update October 2009

Real Estate Sales Representative with McEnearney Associates

"Market in a Minute"

A Summary of Market Conditions


October 2009 contract activity was up 23.8% from October 2008 in

the immediate Northern Virginia area; was also up 23.8% in Loudoun County, but

was down 31.3% in Prince William County. The number of available homes on the

market is down significantly in all three greater Northern Virginia jurisdictions.


The average sales price was essentially unchanged in Northern Virginia

and Loudoun County from October 2008 and was up 9.7% in Prince William. Prince

William's increase is entirely a reflection in a change of what's selling - the lowest

end of their market has seen a significant drop in contract activity, so the arithmetic

average of what is selling is higher.


While rates are well below the rates of this time last year, they

did tick up just a bit from September. The Fed has given very clear signals that it

intends to keep low the rates that are within its control, but the market will ultimately

determine mortgage rates. We still believe that the need to finance the enormous

federal budget deficits will result in higher mortgage interest rates over the next

year, so it is highly unlikely that rates will get much better than they are right now.


Homes are significantly more affordable today than this time

last year - or at any time in the past three years because of lower interest rates and

continuing lower home prices. However, since prices, especially at the lower end,

are showing signs of heading up, affordability will vary greatly depending on price

range and geography.


As we stated last month in this space, we're not

out of the woods yet; this is not a housing market that has "recovered." We're a lot

better off than we were at this time last year, but there is likely to be another wave -

not a tsunami - of short sales and foreclosures as interest rates reset on ARMs

originated 4-5 years ago at the peak of the market. Nonetheless, we're keeping the

arrow pointed "up" for now, in large measure because of the extension and

expansion of the homebuyer's tax credit.

For the full report go to my website

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