Loudoun County Housing Inventory Cause for Caution

After a year of steadily diminishing housing inventory throughout Loudoun County, inventory has spiked over the last 2 months. After dropping almost 30 percent from the beginning of May 2009 to the middle of April 2010, inventory has spiked up almost 10 percent in a matter of a few weeks…

More Loudoun County housing inventory statistics…

• The number of new listings coming on the market in March 2010 was 50 percent higher than in March 2009 (1092 versus 727)
• The number of new listings coming on the market in April 2010 was 32 percent higher than in April 2009 (994 versus 752).

The increase in new listings and overall inventory may be a very welcome thing if you ask buyers. Most buyers can’t seem to find a home that meets their needs or they’re competing against multiple offers every time they do.

But if you’re a seller, that’s a different story. More homes on the market means more competition, lower selling prices and increased days on market.

Loudoun County housing inventory and the rate of new listings coming on the market is something we all need to keep our eyes on because if inventory continues to go up AND interest rates go up this summer as everyone is saying they will, the market will soften.

Loudoun/Northern Virginia Housing Market Conditions per Price Range

The question I get asked most often is, “How’s the Loudoun/Northern Virginia housing market?” Today’s housing market conditions do not allow for one, general correct answer. For the purpose of giving you a good, general idea of the Northern Virginia* housing market conditions, I’m going to break it down by price range - you choose the price range you fit into.

*I am referring to all of Northern Virginia, which includes Loudoun, Prince William and Fairfax counties (including Arlington, Falls Church, Alexandria, etc)

Note: If you would like to know what the specific housing market conditions are within your community or the area you are interested in buying within, click here to contact me so I can provide you with the specific details and statistics.

Less than $150K

• This is probably the most competitive price range to be in. The majority of properties in this price range can be found in Prince William County
• Most of the properties you’ll find in this price point are foreclosure/bank-owned and short-sale properties. But this price range is also very popular with investors so you’ll see investor flips/rehab properties on the market
• A buyer I’m currently working with had to go through countless properties and compete against over 50 offers before finally getting their offer accepted on one. One reason is because a significant amount of the offers being placed on properties at this price point are all-cash offers with no contingencies whatsoever. Trying to compete against cash offers with FHA, VA and even conventional financing offers is extremely tough - though it definitely can be done
• Properties in this price point that are priced at or below market value typically receive multiple offers within a matter of days so buyers have to jump on them as soon as they hit the market
• I have seen properties in this price range in some areas sell for 10 to 20+ percent more than they did at the beginning of 2009
• If you’re a buyer, expect to see 5, 10, 15+ offers on well-priced properties. But don’t be scared or intimidated by that - just make sure you have some extra patience and are ready to jump on a property you like as soon as it hits the market. And if you don’t get it, don’t be too down - it happens a lot at this price point. You have to just keep plugging along
• If you’re a seller in this price point, you’re sitting pretty and can expect an offer quickly if you’re priced correctly

$150K to $350K

• This is also a very competitive price range to be in. Properties in this price range are a mixture of foreclosure/bank-owned properties, short-sales and traditional resales
• The type of properties in this price range depends on how close or far you get away from Washington, DC. The closer you are to DC, the smaller and/or older of a property you typically get
• Cash offers are also becoming more common in this price range though not as much as in the sub$150K price point
• I have seen properties in this price range in some areas sell for 10+ percent more than they did at the beginning of 2009
• As a buyer, expect to compete against many other offers especially on properties priced at or below market value
• As a seller, you’re still sitting pretty as long as you price your property correctly

$350K to $500K

• This price range is also competitive especially within the Beltway. Properties in this price range are also a mixture of foreclosure/bank-owned properties, short-sales and traditional resales
• Though there are fewer instances of cash offers in this price range, they’re still out there. Though you may not be competing against 10+ offers as is common in the lower price points, I’m still seeing a handful of offers on well priced properties
• I have noticed values in this price range remain steady with some areas showing a slight increase in values
• As a buyer, expect to compete against other buyers on well-priced properties. You should be aggressive and jump on a property that interests you as soon as it hits the market
• As a seller, you’re still in a price range that has a decent amount of buyers in it. But don’t get greedy because of that fact - you still have to market and price your property correctly

$500K to $700K

• This price point puts the majority of buyers into the ‘”jumbo” loan/financing category (financing over $417K), which makes for a smaller number of buyers. The reason why is because it’s harder and more expensive to secure “jumbo” financing these days. Fewer buyers means less competition though there are still so few properties on the market that it’s still competitive
• Nevertheless, buyers are out there. A recent listing of mine in Broadlands has many buyers come through as soon as it hit the market and it the sellers received and accepted an offer within 10 days of being on the market
• Most of the properties in this price range are short-sales and traditional resales though you may see a foreclosure/bank-owned property here and there
• Though cash offers are rare at this price point, they’re still out there. I had a buyer who put 20 percent down, use conventional financing and offer the highest amount of all the offers lose to a lower priced, all cash, non-contingent offer
• I have seen values in this price range remain relatively steady since 1/1/09
• If you’re a buyer, you still have to be aggressive on finding and buying a property in this price range. But it’s definitely not as crazy as the sub-$350K range
• If you’re a seller, make sure you’re aware of your competition/other homes on the market so that you price your property correctly and adjust to comps and new properties as they come on the market. The higher the price range, the more important it is to have an experienced and knowledgeable Listing Agent working for you

$700K to $900K

• This is where the pendulum starts to swing the other way a bit (generally speaking). Properties in this price range tend to stay on the market longer and have fewer buyers competing for them. Nevertheless, if the property is priced at or below market value, buyers will come out from everywhere
• For example, there was a foreclosure/bank-owned “McMansion” in Fairfax listed just last month that was priced at $722K. This was an incredibly attractive price because the property was worth well over $800K. A buyer I’m working with offered $800K using conventional financing with a down payment of 30 percent. Their offer was not chosen because the winning offer was…take a guess…all cash, non-contingent. (Yes, someone paid $800K+ cash for a house)
• The example I just gave is not isolated to Fairfax - it’s happening in Loudoun and across Northern Virginia
• I have seen values in this price point remain steady or go down since 1/1/09 depending on location and how hard the particular community has been hit with foreclosures and short-sales
• As a buyer, this price point can be good and bad. It’s good because the market is not as crazy as the lower price points. But it’s bad because there is so little inventory on the market to choose from. You may have to wait weeks or even a few months before a property that fits your criteria. Some of my buyers have made adjustments to their criteria so they can have more properties to choose from
• As a seller, price and marketing are key in this price range. Make sure your Listing Agent is knowledgeable and is on top of your local market

$900K+

• This is the least competitive price range especially in Loudoun County. Properties in this price range in Loudoun have been known to be on the market for months and months. As you get closer to DC, the average days on market is less, but still much higher than lower price points
• Some of the properties in this price range are foreclosure/bank-owned properties, but most are short-sales and traditional resales
• This price range is still showing signs of weakness and depreciation especially the farther you get from DC
• If you’re a buyer, you’re in a good position in this price range. There are few buyers that are in the market for a $900K property and a fairly decent amount of inventory for you to choose from, including new construction
• If you’re a seller, you’ve got an uphill battle especially in Loudoun County. Be patient and realistic when selling your home. Even more so than in any other price range, make sure you have a knowledgeable and aggressive Listing Agent who will market your property correctly and will price it where it should be to get an offer

Please remember that these are general market conditions. To find out what the housing market conditions are within your community or the area you are interested in buying within, click here to contact me so I can provide you with the specific details and statistics.

The Latest Loudoun County Housing Inventory Statistics

The number of homes for sale in Loudoun County (and the entire DC metro area) is definitely either down or trending down. Let’s look at the following charts showing inventory levels of single family homes and town homes in the Sterling, Ashburn, Leesburg and South Riding/Chantilly areas:

(Note: These are new interactive flash charts - feel free to play around with them, move the slider around, etc., and let me know what you think)

Sterling

Ashburn

Leesburg

South Riding/Chantilly

Home Buyer Demand, Sales Up Across Loudoun and Fairfax County

Home buyer demand/sales in Loudoun County were up 11 percent in the 3rd quarter of 2009 over the 3rd quarter 2008. And it’s up 53 percent over 2007. (Buyer demand is defined by the number of homes that go under contract during a set time period)

Fairfax County had an 18 percent increase in home buyer demand/sales in the 3rd quarter 2009 over 2008. And it’s up 62 percent over 2007.

Why the increase?

1. Lower prices - prices have come down considerably since the peak making it more affordable and appealing for home buyers. And the less expensive something is, the more people can afford it
2. Low interest rates - interest rates hit historical lows and are still very low. Lower interest rate = greater purchasing power
3. Programs/benefits - Programs such as the $8000 first-time home buyer federal tax credit has helped spark demand (click here for more info on first-time home buyer tax credit). I’ve worked with more first-time home buyers this year than in any of the last 6 years (and it’s only October). Other programs such as the Freddie Mac HomeSteps SmartBuy program have also helped increased demand (click here for more info on Smartbuy program)

Will it continue?

Maybe. If rates remain steady and/or the tax credit get renewed or a similar program come out, then we’ll probably see home buyer demand steady or continue increasing (though I don’t think there’s room for too much more increase in buyer demand).

Maybe not. If rates creep up and/or the first-time home buyer federal tax credit not be renewed and/or (more) bad economic news come out, we may see buyer demand taper off or even decrease.

Who wins?

The buyers that purchased a home at a much lower price than years prior and at a low interest rate while taking advantage of the first-time home buyer federal tax credit made out the best.

Sellers came in at a close second - increased demand and very low inventory make for a winning combination when selling your home.

Leesburg Single Family Home Median Price up $35K

The median price of single family homes in Leesburg (20175 and 20176 zip codes) has gone up $35K since April. With inventory down 33 percent since 9/08 and buyer demand up, median prices have gone up. You can feel the effect of this in the housing market conditions in the area - Buyers have less inventory to choose from and more competition from other buyers while sellers are seeing more buyers coming through and competing for their property (if priced correctly) than since 2005.

Leesburg Single Family Home Median Price - up $35K

Leesburg Single Family Home Inventory - down 33 percent

Ashburn Single Family Home Median Price Up $20K

The median price of single family homes in Ashburn (20147 and 20148 zip codes) has gone up almost $20K since April. This is mainly due to less inventory on the market and more buyers purchasing properties - supply vs demand. We’re currently seeing a plateau in median prices, but that’s probably due to a typical slowdown in buyer demand over the summer months.

Ashburn Single Family Home Median Price - up $20K since April

Ashburn Single Family Home Inventory - down 30 percent since 9/08

P.S. Check back on Tuesday for Leesburg’s median price and inventory levels.

Sterling Single Family Home Median Price Up $70K

The median price of single family homes in Sterling (20164, 20165, 20166 zip codes) has gone up an astonishing $70K since April. Talk about a roller coaster of a ride for median prices in Sterling - they have been in a free fall since the market turned in 2005, hit $260K in April, shot up to about $380K and came back down to $335K.

If there was ever a great example of what supply vs demand means to median prices, Sterling is it. Check out how median prices starting coming back down at the very same time that inventory started to increase (July 1).

Sterling Single Family Home Median Price - up $70K since April

Sterling Single Family Home Inventory - up 25 percent since July

What will median prices do going forward? We’ll have to see whether inventory continues to go up, plateau or go down.

P.S. Check back tomorrow for Ashburn’s median price and inventory levels.

“On The Streets” of the Loudoun County Housing Market

You read the news and see the statistics. You hear what you’re neighbors and friends are saying. But what is really happening “on the streets” of the Loudoun County housing market?

Here you go…

Buyers looking to get a great deal on a property are seeing well priced properties sell within weeks if not days of coming on the market. Many very well priced properties are seeing multiple offers and bidding wars - 2, 5 even 10+ offers. Many buyers are bidding on 2, 3 even 5 properties before finally having the winning offer and buying a house.

Sellers who price and market their property correctly are seeing lots of buyers coming through their property almost immediately after coming on the market. An offer within the first few weeks on the market is common for properly priced properties. On the other hand, no activity and no offers is the norm for overpriced properties. In a nutshell, Value is King.

We’re also seeing an up-tick in median prices in some areas of Loudoun County (as well as some areas of Fairfax County) - though this does not necessarily reflect an increase in any one specific property’s value. Take a look at the latest statistics regarding median prices and inventory levels in different parts of Loudoun County to see for yourself.

The local market is such because inventory levels (number of homes on the market) have decreased an average of 50 percent since 2007 and an average of 20 percent since this time last year. At the same time, buyer demand (aka number of homes being sold) has increased by an average of 50 percent thanks to historically low interest rates and the $8,000 first-time home buyer credit. This translates to more buyers trying to buy the same type of property, but there are less homes to choose from. But even though more buyers are fighting over fewer properties, buyers are not being suckered into or getting frustrated to the point of overpaying for a property.

Note: Despite the majority of the Loudoun housing market showing signs of stabilization, the $1M+ home sector is not fairing as well. Inventory is stagnant as is buyer demand. This is bad for sellers of $1M+ properties, but good for home buyers in that price point.

Another trend we’re seeing is a substantial decrease in foreclosure/bank-owned inventory on the market (thanks to the foreclosure moratoriums of late 2008/early 2009) and a significant increase in short-sale inventory. This has led to increased frustration on the part of buyers and agents some of whom are not familiar with the nuances of short-sale transactions and don’t know how to properly navigate through such a transaction. Getting a response from the bank(s) on a short-sale can take as little as 45 days and as long as 6 months with the average being about 90 days (more on this in a future post over at LoudounForeclosures.com).

Up until this year, many real estate investors were sitting on the sidelines as median prices continued their downward trend and good investment opportunities were rare. But that has changed. We’re seeing investors getting back into the market buying up distressed properties, doing rehab on them and then either flipping them for a 10 to 30 percent profit or renting them out as part of their long-term investment plan. Investors are especially prevelant in parts of Sterling and Leesburg.

And that folks, is the reality of the Loudoun (and Northern Virginia) housing market.

If you would like me to go into more detail or need information about a specific town, neighborhood or subdivision in Loudoun (or north/east Fairfax County), feel free to contact me.

Sterling Housing Market Update

Here’s a look at what’s going on with the Sterling housing market (all zip codes)…

Sterling Median Price

The median price has been falling in Sterling since the market turned until about March of this year. Over the past rew months, the median price has spiked significantly (by almost $100,000).

Sterling Inventory

Inventory of single family and town homes in Sterling has dropped by 60 percent since 2007 and 56 percent since this time last year. The condo inventory in Sterling has dropped by 45 percent since this time last year. This is most significant decrease of inventory out of any large town in Loudoun County.

Sterling Housing Market Overview

The huge drop in inventory throughout Sterling along with a huge increase in buyer demand has lead to a huge shift in the housing market in Sterling. Sterling has some of the lowest price points in Loudoun and lots of foreclosure and short-sale activity making it extremely attractive to first-time home buyers and investors. We’re even seeing areas of Sterling with slight to substantial recent price appreciation.

Homes that are priced well are getting a lot of traffic and a purchase offer within 1 to 2 weeks on the market. Homes priced slightly below (or way below as is the case with many bank-owned and short-sale properties) are getting multiple offers (5, 10, 15+ offers) and are bidding up over asking price within days, if not hours of hitting the market.

We’re seeing slight signs of the inventory leveling out. Unless it levels out, we’ll most likely see median prices continue their upward trend and lots of multiple offers on properties well into the summer.

South Riding, 20152 Housing Market Update

Here’s a look at what’s going on with the South Riding/20152 zip code housing market…

South Riding/20152 Zip Code Median Price

The median price for single family and town homes in South Riding/20152 zip code is showing a slight uptick after having dropped over 70 percent over the last 2.5 years. We’ll need to see some more evidence of median prices going sideways or up to call it a trend.

Condo are in the same boat as single family and town homes. After having dropped over 60 percent over the last 2.5 years, they showing slight signs of stabilizing. We’ll have to wait and see what median prices do this summer and fall before coming to a more firm conclusion.

South Riding/20152 Inventory

Inventory of single family and town homes spiked like crazy in the 2nd quarter of 2007 and South Riding/20152 zip code has been working it off ever since. Inventory of single family and town homes is down over 40 percent from July 2007 and down almost 20 percent from this time last year.

Condo inventory spiked way up, then went pretty much sideways for a year and is now down almost 40 percent from this time last year. It’s gone up slightly over the past two months, but appears to be going sideways at the moment.

South Riding/20152 Housing Market Overview

The South Riding and 20152 zip code housing market is a bit more volatile than other markets in Loudoun County because it’ has less total properties within its’ boundaries with everything from condos to large McMansions. The lower price points are selling faster and at a higher rate.

Much like the rest of Loudoun County and Northern Virginia in general, if the property is priced well, it will sell in less than 30 days. If it’s not priced correctly, it’ll just sit on the market collecting dust.

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