A quick drive through neighborhoods in Herndon reveals a large number of for sale signs pointing to one indisputable fact: there is plenty of inventory available.
Over the course of the last year, the residential real estate market in Herndon and the greater Northern Virginia region went from red hot to what Realtors are describing as more normal. The change has left homesellers holding their homes on the market more than four times longer than in the same time in the previous year, according to figures from the Northern Virginia Association of Realtors (NVAR).
"I think [the housing market] needed to slow down and it did," said James McGrath, principal broker at McGrath Real Estate in Herndon. "The market was too skewed to the seller's advantage ... and it was driving prices out of reasonable levels in some cases."
As the housing market slowed from its once white hot levels — when homes selling in as little as two days and multiple competing offers for one property were commonplace — total numbers of units sold and time spent began to reflect the new marketplace.
In November of 2005, 75 homes were sold in the 20170 postal zip code, which encompasses nearly all of the Town of Herndon. In November of 2006, the most recent month for which figures are available, total home sales were cut in half, dropping to 35, according to NVAR figures.
"In many cases, you'd sell a home in a weekend, but now it can take as long as a few months," said McGrath. "It's dizzying the amount of inventory [of available homes] there are out there for buyers to choose from."
But this hasn't meant that real estate investors can began to expect a drop in value, as these indicators have had little effect on the total average sale price of a home in Herndon, which rose five percent over the course of the last year, according to the NVAR figures.
While official numbers will not be released until February of 2007, officials are predicting that county home value assessments will neither increase nor decrease on average from the previous year, according to the Fairfax County Office of Tax Assessment.
A COMBINATION of a booming job market that has resulted in the large influx of population to the Washington, D.C. metropolitan area in recent years was what drove the real estate market to these monumental levels, according to Barry Allbright, former chairman of the Dulles Association of Realtors and an associate broker at Long and Foster Realty in Herndon.
"We had great population growth and a strong level of average family income as a result of a very favorable job market," Allbright said, "and the housing market reflected that."
A strong desire to own property then mixed with evolving mortgage lending options, such as interest-only loans and lower money down needed to purchase a house which led to a bidding war for property in the region, creating the high property values seen today, McGrath added.
But homeowners looking to sell have no reason to panic. The same realities that caused the initial explosion in property values and home sales are what will eventually cause it to remain stable and healthy over the years, Allbright said.
"This is still the third-best housing market in the country," he said. "I view what we're going through now is necessary so that we don't see housing prices being higher than the incomes of prospective buyers."
THE MOST IMPORTANT thing for sellers looking to manage the current real estate market is to have reasonable expectations and recognize realities, McGrath said.
"Sellers need to be realistic about their prices right out of the gate," he said. "Sellers often have tried to hang on to those old prices [from last year's market], and it's causing many homes to stay on the market for a lot of time."
"People need to understand that the market has changed and there's a lot of competition out there for buyers to choose from."
And selling at lower prices doesn't necessarily mean a loss of investment, Allbright added.
"People need to remember that they're not going to see the thousands of dollars that some sellers had seen in years past," he said. "But even when people get a five percent return on their investment ... that's still a great result."
AS PRICES LEVEL OUT and interest rates on mortgages remains low, an "uptick" in the market is expected in the Spring, McGrath said.
"I think we're looking at a stronger market in 2007," McGrath said. "We're already starting to see it now, even here at the end of the year, with homes starting to move a bit faster."
Still, the boom days of real estate speculation in Northern Virginia driving prices through the roof will more than likely not return, he added.
"It was a very unhealthy environment for everybody," McGrath said. "But with a market a bit closer to normal levels ... I think we'll see a lot of mutual benefits."