"Market in a Minute"
A Summary of Market Conditions
CONTRACTS: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.
PRICES: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.
INTEREST RATES: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.
AFFORDABILITY: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.
DIRECTION OF THE MARKET:
DIRECTION OF THE MARKET: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 http://www.suzanneleedy.com