0
Votes

Hope for Home Buyers?

Prices flattening, sales dropping and inventory spiking; time for patience for both buyers and sellers.

With the slowing market, Susannah Palik was happy to go house hunting a month and a half ago. "We knew that it was a buyer's market," she said. "And because of that we found a [detached] house that we may not have been able to find otherwise."

But, after Palik and her family found a new home and then put their townhouse in Reston up for sale, they also anticipated a wait — a rarity just seven months ago.

"I think that patience is something you have to have if you put your house on the market now," said Palik, who has noticed more and more "for sale" signs in her neighborhood. Her townhouse has now been on the market for four weeks.

She’s not alone. More importantly, neither is her townhouse.

IN NORTHERN VIRGINIA, 7,122 homes are on the market as of October, which is more than double the number a year ago when 3,254 homes were on the market. But it’s also more than double the number since May, when inventory began to skyrocket this year. Eight consecutive months have passed of inventory increases compared to last year. From January to October, the region’s home listings have ballooned from 1,193 to 7,122.

In October, sales dropped 28 percent compared to last October, the largest percentage decrease of the year. For the first time since February, fewer than 2,000 homes were sold, according to the Metropolitan Regional Information Systems. Declining sales have been the trend this year, occurring in all but three months compared to last year. According to figures from MRIS, sales in September fell by 14 percent compared to last year. In August, sales dropped 8 percent compared to last year.

With housing supply up, prices seem to be leveling off. The average home sold in October for $550,069, a 24 percent increase from last year. However, this year’s largest monthly average was in July, when the average home in the area sold for nearly $560,000.

Realtors, though, have said not to worry. Many think the market is still strong and healthy. "All of us have known that the 20 to 25 percent appreciation rate was not sustainable," said David Howell, managing broker of McEnearney Associates in McLean. "That doesn’t mean the market is cratering, it means the market is returning to normal."

Howell, who has followed the regional market for 20 years, agrees that the inventory numbers are much higher than they’ve been in the past five years. "The context, I hope, these numbers will be viewed is that we have had historically low inventory the past five years," said Howell, who noted that in much of the 1990s inventory hovered around 10,000.

He also pointed out an interesting trend in October’s decline in sales. In October, 969 homes that cost above $500,000 sold compared to 784 a year ago. So, Howell said, homes priced at $500,000 and below make up the decline in sales. "It shows the market has priced out many first-time buyers, and now we’re seeing a correction," said Howell.

THOSE LOOKING TO sell, like Palik must forget the stories they’ve heard about neighbors selling their homes over a weekend.

For those people who are rushing to cash-in because they think the real estate bubble is going to burst, a fast pay-out is not right around the corner.

Last May, homes were on the market for an average of 15 days. In October, homes stayed on the market for more than a month on average, reaching levels not seen since March 2003.

For months, economists and experts have said the market is balancing out, that the seller's market of the past five years is slowly transitioning toward equilibrium. A more normal market, economists have projected, would also bring a more normal rise in home prices. Economists with the National Association of Realtors predict that in the coming years the area’s home values will increase at a healthy 10 to 14 percent.

Angela Gates, a spokesperson for the Northern Virginia Association of Realtors, said buyers are enjoying "quite a bit more leverage than they once had."

"There are more choices for the buyer, and it shows we’re really settling back into a more stable market," said Gates.

She also speculated that investment buyers may have contributed to the spike in inventory. In the past five years, she said, many investors looked to the Northern Virginia market. "A lot of those investors are cashing out on their investments," said Gates.