Realtors Looking to Mid-2008 for Local Rebound

Arlington Sun Gazette, December 12, 2007
By BRIAN TROMPETER, Staff Writer

Despite stagnant home sales and a subprime mortgage crisis that won't go away, area real estate officials said they expect regional home sales to rebound beginning next summer.

“I remain optimistic about our region's future,” said Luis Lama, 2007 board chairman of the Northern Virginia Association of Realtors (NVAR). “It's a great time to buy, especially in Northern Virginia.”

Lama and other officials gave their views at a Dec. 11 luncheon at the National Press Club.

Northern Virginia housing sales are down 11.5 percent this year, and there is a nine-month supply of houses, Lama said.

While homes in McLean saw higher prices and fewer days on the market compared with last year, houses in Herndon had the opposite results, he said.

“Like politics, real estate is local,” said Mary Beth Coya, NVAR's vice president of public and government affairs. “Each neighborhood has its own DNA.”

The Washington area's economy, buoyed as always by spending of the federal government and its contractors, continues to outperform other regions nationwide, said John McClain, a senior fellow at George Mason University's Center for Regional Analysis.

Because Washington-area economic fundamentals are so sound, 2008 will be moderately better than this year, McClain said.

Housing sales will stay below historic, long-term levels, and inventories will remain above those averages, McClain said. Housing prices will remain flat at least through the spring, he said.

Foreclosures are up in the Washington area, but still below the national average, officials said. While foreclosures in Prince William and Loudoun counties are above the national rate of 84 per 10,000 housing units sold, rates in close-in areas such as Arlington, Fairfax and Alexandria are considerably lower.

Foreclosures in Detroit and Miami are more than three times the national average, McClain said.

McClain introduced a new statistic, the “kick-out rate,” to his presentation this year. While only 4 percent of home buyers in 2004 and 2005 left their deposits and walked away from a deal, that rate peaked at nearly 66 percent this August, he said.

President Bush's plan to freeze some adjustable-rate mortgages for five years is not a cure-all for the subprime lending crisis, but it's a step in the right direction, they said.

Real estate association leaders defended Realtors' actions during the heyday of subprime loans, saying many professionals - especially lenders are involved in real estate transactions. Buyers also must share in the blame, they said.

“Consumers knew what they were doing,” Lama said. “They're claiming ignorance at this point.”