Loudoun County: You Gotta Accentuate the Positive…

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Image: Panoramic view of Ashburn (photo credit)

Finally, a little bit of good news to go along with the not-so-good! Although Loudoun County home sales were down by 1/3 (or 29%) in the 1st quarter of 2008 as compared to the 1st quarter of 2007, Loudoun still fared better than the rest of Northern Virginia, where home sales were down by 36%. During the same period, Loudoun’s average sales price dropped from $514,436 (2007) to $420,111 (2008), a decrease of 18%. Overall, home sales in the state fell 26% and the average sales price decreased by only 5%. 

I found this information in an article on LoudounTimes.com, which cites a report from the Virginia Association of Realtors. I couldn’t locate the exact report the article pulls its numbers from, but I did manage to find a similar report that provided some interesting data. The report states that even though prices have fallen 21% in Loudoun as compared to last year (which should, theoretically, help to get the market moving), the amount of unsold inventory leads the report’s authors to believe that the market will not stabilize for another 10 to 12 months. One thing I’m not clear on is what they mean by “stabilize”; do they mean that prices won’t stop falling until then, or that it’s going to take that long to clean out the inventory surplus, or both? Whatever the case, the report makes for interesting reading even if you’re not a real estate geek like I am, so be sure to check it out.

  • http://www.itznewstome.com Jim

    By “stabilize,” they mean that prices will stop dropping in another 10-12 months.

    IMHO, they’re wrong about that, but that’s what they mean. You have to remember the source. The national level Realtors association was telling us late last year that “things were looking up.” They get paid to be “optimistic” (read: completely out of touch with reality) because they want people to buy now rather than later.

    The inventory overhang will be worse by then, the economy will be worse, and the credit standards will be just as tight if not tighter because of the declining economy.

    The old analogy of buying into a declining market from the stock market applies: it’s like trying to catch a falling knife. Even if you manage to pull it off, you’re gonna bleed.

    Better to wait until the knife hits the floor and pick it up safely.

  • http://washingtondc.redfin.com/blog/category/Loudoun_county Kira

    Hi Jim,

    Normally, I’d agree with you that this is just another bit of positive spin from a realtor’s association, but the authors are not realtors. Lisa A. Fowler is the Director of the Office of Housing Policy Research at the GMU School of Public Policy and John C. McClain is a Senior Fellow at the Center for Regional Analysis. I do agree with you that some people are more prone to being a bit “Pollyana-ish” about the market than others for some obvious reasons, though.

    One piece of info I left out of my post was this:
    “Another bright spot in the sales activity was in Prince William County, where the number of sales in the first quarter of 2008 was 3 percent higher than it was in the first quarter of 2007. Since Prince William County has a large inventory of homes on the market and is on the frontline of the foreclosure situation (see below) this increased sales activity could be a signal that conditions in this local housing market might be poised to improve.”

    From what I’ve seen, there do seem to be some small signs cropping up that the free fall is slowing down a bit. In Loudoun, I’m seeing way fewer foreclosures and short sales on the market and I’m seeing more properties come on the market that have been rationally priced. I still think Loudoun’s oversupply is largely caused by sellers hideously overpricing their properties and then waiting too long to lower the price, so a lot of homes are lingering on the market longer than they would have had they been properly priced.

    I love the analogy about catching a falling knife – completely apropos.

    Thanks for stopping by and for the insightful comments!