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Market Adjusting, Not Nose-diving

Demand for housing still strong, says leading regional economist.

Stephen Good, a financial planner, just bought a three-level townhouse in Fairfax last month. The end-unit, which includes a garage, sold for $460,000 in April of 2005. Good, 28, paid $430,000.

“It was an interesting process,” said the former Miami resident who moved to the area after his fiancé, a physical therapist, took a job in Springfield.

The couple first explored the market last May when they knew they were moving to Northern Virginia.

After studying the market and working with his Realtor, Susan Mekenney of Remax Allegiance in Alexandria, Good felt comfortable buying.

“I felt I could get what I want, not that I would necessarily get a deal,” said Good. “I don’t think I bought at the top [of the market], but I don’t think I bought at the bottom either.”

THE ASSESSMENT wasn’t far off from what George Mason University economist Stephen Fuller told a crowd of about 500 real estate professionals at the Northern Virginia Association of Realtor’s 10th annual Economic Summit.

It’s people like Good, and thousands of others who are drawn to the region because of a growing economy, that gives Fuller reason to say that the demand for housing is still strong, despite sagging sales and climbing inventory.

Between July 2005 to July 2006, the region added nearly 75,000 jobs, most in the category of professional and business services, according to Fuller, director of GMU’s Center for Regional Analysis.

“Buyers are out there,” said Fuller. “They want to buy. They don’t want to buy prematurely.”

SINCE BUYERS haven’t disappeared, just withdrawn some, Fuller’s forecast was far from bleak, including continued rising home prices for this year, somewhere between 3 and 7 percent. He predicted sales volume in the region would mimic levels in 2002 and 2003, between 85,000 and 100,000.

Fuller also said sales are likely to pick up in the spring. “We’ve passed through a lot of the harder part of the adjustment,” said Fuller.

But as the market cools, what Fuller says is “purely an adjustment,” Realtors should emphasize the long-term advantage of buying.

In the past 28 years, the value of the average home in Northern Virginia rose 7.2 percent each year, according to Fuller. Thus, he said, the typical home will double its value every 10 years. “That’s the story I tell people,” said Fuller.

YET PRIOR TO FULLER’S evaluation of the local market, agents heard a discussion about the region’s transportation woes.

The panel, headlined by Pierce Homer, Virginia’s secretary of transportation, outlined planned and ongoing improvements, like the expansion of rail to Dulles, the Springfield interchange and the completion of the Woodrow Wilson Bridge.

Homer said traffic and congestion were the “hidden costs” of doing business in Northern Virginia, “one of the most dynamic economies in the entire world.” But without a large, sustained investment in the region’s transportation infrastructure, these costs will continue to rise, he said.

As the Virginia General Assembly gets ready for a special session on transportation funding, Homer urged the audience to stay engaged. The outcome, he said, would have long-term ramifications for every sector, including housing. “We face a dire situation on the funding front, and no where more so than in Northern Virginia.”