New Construction Update

Builders are still lowering base prices and/or offering bigger incentives than before though the number of available lots is decreasing. With most fiscal years ending soon, builders are trying to move remaining inventory and start fresh in January 2007.

Lower market inventory in the existing and new contruction home market are signs to builders that prices may be stabilizing and the market is becoming balanced. Many builders are finishing up "phases" of their communities and may be raising base prices or taking away many incentives beginning in 2007.

Average delivery times have dropped from 9 months to 6 months. This can mostly be attributed to less backlog due to lower sales volume and good overall weather conditions. 

Builders are now offering up to $20K in incentives for full deposits within 7 to 14 days of a "lot hold" in an attempt to have more money upfront and make it financially harder for a purchaser to cancel a contract. Some builders have completely gone away with "lot holds" and require full Purchase Agreements accompanied by Earnest Money Deposits of up to $90K. This may be an attempt by builders to combat the rising number of cancellations and buyer remorse.

Interest Rates Getting Better for Home Buyers

Since peaking during the summer interest rates have continued to go down.  The drop in interest rates is being attributed to lower than anticipated inflation rates.  This bodes well for anyone in the market to buy a home especially here in Loudoun County. 

With prices down significantly in the last year, and interest rates at the same level as a year ago, the opportunity to buy more house for the same monthly payments exists, or the same amount of house for less per month.   

The buyers market that has existed in the last 6 months will slowly move to a balanced market during the winter months.  If interest rates stay low and inventories don’t spike up significantly during the spring, there should be some stabilizing in prices during the first quarter of 2007.  The key piece of the puzzle will be how many people are waiting for the spring to go on the market and will they flood the market like this year. 

Median Sales Prices Down 16%

Through the first 2 weeks of November, median sales prices are down 16.7% over November 2005.  This is in line with the October drop in median prices of 16%.  It should also be noted that the median list price of houses that have gone under contract dipped below $400,000 for the first time in 2 years.

These are two indicators that the Northern Virginia Market, and more specifically Loudoun County, are 6 to 9 months ahead of the national averages.  The recent reports of declines in the national median price of 2% are comparable to what the local market went through during the 1st Quarter of 2006.