What’s happening in the housing market and where is it heading? None of us possess a crystal ball, but one comprehensive report that pulls a lot of weight in predicting trends is the MRIS Trends in Housing Report.
MRIS is an abbreviation for Metropolitan Regional Information Systems, Inc. and is the name of the Multiple Listing Service (MLS) which covers the Washington, D.C. metropolitan area including D.C., suburban Maryland, and Northern Virginia.
Here are the major highlights pertaining to the Northern Virginia area from the report. If you’d be interested in receiving a copy of the full report, feel free to e-mail me and I’ll send you a PDF copy.
ECONOMY & JOB GROWTH:
The Trends in Housing Report states that “The Washington metro area remains a sturdy economy, despite job growth easing from its peak in 2004 and 2005.”
“In the 12 months ending May 2007, 53,200 new payroll positions were added to the Washington metro area, just above the 15-year annual average of 45,000. This is a 1.8% rate of growth, compared to 1.5% nationally. Northern Virginia created 45% of all new payroll positions in the Washington metro area in the last 12 months.”
Dr. Stephen Fuller of George Mason University projects that 44,500 new payroll jobs will be created in the Washington area in 2007, rebounding to 51,200 in 2008 and edging down slightly to 49,000 in 2009.
The report considers unemployment rate and states that “The Washington area unemployment rate was 2.9% in
May 2007, down from 3.1% one year ago. The current rate is the second lowest in the nation, behind Phoenix,
among major metro areas and compares favorably to the national rate of 4.5%.”
2.9% unemployment is almost full employment. Practically everyone who wants a job in the D.C. area can find one. The bottom line is that people are moving here for their jobs, whether it is with the government, the military, or the private sector.
HOMEBUYERS & SELLERS:
The report discusses the current position of buyers and sellers in the local housing market finding that “Buyers continue to have more negotiating power, due to the large supply of homes that are available.”
This large inventory of homes allows “room for buyer negotiation when it comes to price and incentives; however now, buyers should plan to stay in a home for its long-term investment value.”
NAR's senior economist Lawrence Yun thinks that “psychological factors are the biggest drag on the housing market causing some potential buyers to add roommates or move in
with parents until market conditions become more stable.”
While foreclosure rates are low in the Northern Virginia and D.C. areas, “the subprime market meltdown caused most banks to become more stringent with their lending, reducing the pool of eligible buyers in the market.
Regarding sellers, the MRIS Report states that they “have been forced to become more patient, as the number of days on the market remains well above the long-term average of 76 days, averaging 92 days in the Washington metro through the 2nd quarter. There is a lack of buyer confidence in the market, which continues to be a hurdle for sellers.”
The Trends in Housing Report concludes by predicting that:
“By year-end we expect that consistent demand (generated by job growth, migration, and a rising immigrant population) and a reduction in new construction will stabilize pricing leading to an uptick in sales activity, with improvement in market conditions being visible in early 2008.”
For a copy of the full report which also discusses the Baltimore region and the commercial real estate market, please contact me by e-mail and I will be happy to send it to you.