N.Va. Real Estate Prices Hold Steady in 2006

Arlington Sun-Gazette, January 11, 2007
by SCOTT McCAFFREY

The Northern Virginia real estate market in 2006 suffered through its second-worst decline in sales in the past 30 years, yet still managed to post an average sales price that was higher - if only marginally so - that the year before.

The Northern Virginia Association of Realtors on Jan. 10 reported that sales for the year totaled 20,753, down 29.1 percent from the 29,235 sales recorded a year before and off more than 36 percent from the all-time record sales pace reported in 2004.

Total yearly sales in 2006 were the lowest since 1997, when the region was emerging from its last real estate slump. And 2006's percentage drop from the year before was the worst since 1991, when sales dropped 32.3 percent from 1990 figures.

(The reported total includes sales from the inner suburbs of Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church.)

While the average sales prices of homes ebbed and flowed throughout 2006, the final figure was up ever so slightly from a year before, setting an all-time record of $537,741. That increase of 0.12 percent breaks a five-year string of double-digit growth in average sales prices, and is the lowest since the market recorded a decline in average prices in 1992.

All told, the sales volume across the inner suburbs totaled $11.16 billion, down from a record $15.7 billion recorded in 2005. But - and it's an important one - that 2006 volume was nearly identical to the volume recorded in 2003, in the heat of the Northern Virginia real estate bull market.

Margaret Ireland, president of the Northern Virginia Association of Realtors, said the market sluggishness that descended in 2006 was inevitable, since Northern Virginia's real estate sales had been roaring along for more than six years.

“Buyers in Northern Virginia had been in sprint-mode for a long time - they had to hit the wall eventually, and they did,” Ireland said at a December forum on the state of the market.

Homeowner in it for the long haul have made out all right. At the December forum, NVAR officials pointed to the case of a typical home, purchased in January 2001 for $269,819. That home's potential sales price peaked last summer at $578,689, then slid down more than $55,000 over the last six months of the year - but the homeowner could still likely sell the home for nearly double what it was purchased for.

“Buyers must focus on the long-term appreciation,” Ireland said. “They can be confident that if they plan to stay in their homes for three or more years, their home's value will build and grow.”

At the end of the 2006, there were 7,205 homes on the market across the inner suburbs, up 27.3 percent from a year before. That's a significantly higher number of homes, it appears that the big build-up in inventory that occurred in 2006 is beginning to ebb.

In the broader Northern Virginia market, trends were roughly the same as in the inner suburbs.

Home sales totaled 35,487 for the year, down 33.8 percent. But the average sales price rose 1.2 percent, to $503,855.

Total sales volume for the year across the broader market was $17.88 billion, down from $26.69 billion a year before.

(The broader market includes all of the inner suburbs, plus Prince William and Loudoun counties and other jurisdictions deeper out in the rapidly populating Virginia countryside.)

In the broader market, there were 16,111 active listings at the end of December, up 28.3 percent from a year before.

Sales figures include most, but not all, homes sold during the period. All figures are preliminary, and are subject to revision.