Unlike what we have seen during the bulk of the last five years, the Northern Virginia real estate market is great right now for buyers, but tough for sellers. The market has been sliding down since last year, primarily due to an oversupply of inventory (unsold homes) and increased foreclosure rates.
Looking at market statistics for the sales volume of June 2007, compared to the market in June 2006: there was an 11% decrease in sales in Fairfax Co, Arlington Co, Alexandria and Falls Church; a 41% decrease in sales in Prince William County; and a 14% decrease in Loudoun County. The average sales price to the 2007 tax value was about 94% in the Greater Northern Virginia area (this is a major difference from the ‘boom’ years when sales prices were often exceeding tax values by 15%).
Increased foreclosure rates are having the largest impact on our market. Not only do they increase the supply of unsold homes in an already flooded market, thereby forcing prices down, but also bank owned properties are often in disrepair and have to be sold ‘as is,’ so they sell for less than traditional resale homes which puts even more downward pressure on neighborhood values. The rate of foreclosed homes is much higher in the suburb areas than inside the beltway, and foreclosures are expected to increase through 2007 and possibly beyond.
While these trends and statistics indicate a not-so-healthy market for the most part, homes that are considered ‘good value’ to qualified buyers are still selling within 60-90 days. Price and showing condition are what determine whether or not a property is good value. Buyers understand that they have choices, and they will not even look at an overpriced home if there is a high supply of homes for sale in that particular area, which is typical of almost every local market in the greater Northern Virginia area. A home’s condition and its upgrades are also very important factors to consider in determining a home’s value; buyers prefer homes that have been cosmetically upgraded and well maintained. Thus, a property that is in disrepair, or one which needs thousands of dollars of upgrades, should be priced lower than the competition to be considered ‘good value.’ Buyers will not even consider a house that is outdated yet priced similar to updated homes when there are so many other homes to choose from.
It is, therefore, more important than ever to price a property competitively, while taking into account the current competition and the most recent sales data, and to make sure your home is as close to ‘model home condition’ as possible. This is the best overall strategy to command the maximum price the market will bear for any particular property.
If you would like to talk further about current market conditions, selling strategies, or any other matters concerning real estate, please don’t hesitate to contact me.