OfflineClosing the Gap?*
There is still a gap between buyers and sellers. Sales have been slow in 2006 and 2007 because sellers want to obtain the best price possible for their property. This is understandable. Right now, however, because buyers have the upper hand in the market, sellers are finding that they simply can’t get the same prices that their neighborhood may have sold for just last year, or in 2006.
The Average Sales Price Percent Change Month-Over-The-Year, Single-Family Detached NVAR data confirms this situation. As in any bargaining situation, the seller pitches the high-ball and the buyer pitches a low-ball and they come together somewhere in between. It is rare in the existing market that a deal is struck above the seller’s request.
During the frenzied time of the market in 2005 and early 2006, multiple offers on homes often resulted in offers escalating above the list price. This is a rarity in today’s market.
In 2005 the sales price when compared to asking price was 98 percent of the list price. When you look at 2006 data, you will see that the level fell even more. It fell sharply down to 93 percent of asking price. That’s a 7 percent gap between a seller’s expectations for then current market value of a home and a prospective buyer’s idea of that home’s value. Sale Price as % of List Price shows this through 2006. The gap has not lessened, and the buyer is winning. That's good news for investors.
The fact that there are more homes on the market means that buyers can search for their first-choice home without imminent fear that unless they make an offer that day, it may be snapped up. There is also more time for buyers to get a home inspection, an appraisal and to secure the best loan product. In November 2006, the average house was on the market for 85 days, which resembles the time it took to sell a home in November of 1998, which was 90 days. In 2007, the figures show that the 90 days on the market has been exceeded in numerous pockets of the Metropolitan Regional Real Estate market.
Buyers today are also finding that sellers are willing to offer concessions to help cover some closing costs or are willing to bargain more on the selling price. We have all heard about the flat screen TV and the exotic car, thrown in to clinch the deal [but the exotic car is no longer allowed by lenders].
Real estate sales in Northern Virginia declined by almost 22% in January and February 2008. This is reported out of the National Association of Realtors and the Northern Virginia Association of Realtors (official verified data). Prices in NOVA likewise have cooled substantially, and it appears we have not yet reached the bottom. There is an uptick in prices and activity expected this summer, but that all depends on how the remainder of the jobs market and goods in this area plays out. While this area was previously insulated because of the Federal Government and Military in the area, there has been substantisl influx of private industry, and as a result the NOVA area is no longer "recession proof." For now – it’s wait and see and take advantage of short sales where you can.
Source: Northern Virginia Association of Realtors, National Association of Realtors, George Mason University Center for Regional Analysis, Metropolitan Regional Information Systems
Summary courtesy of: Texas Irish Lady
Texas Irish Lady
Until I recently moved here to Phoenix, I was living in the NOVA area for about 24 years. I can tell you from the two decades I lived there part of the reason for this decline was the market getting flooded with a LOT of new housing projects popping up too quickly. Anyone who has lived there knows what I'm talking about. The main areas affected are typically the metropolitan areas like Alexandria, Reston, Fairfax & the Woodbridge area. This has to do mainly with the influx of government jobs available in the Washington DC area & Alexandria areas some 10 years back (not to mention this place is a public contractors dream). Cost of living in this area got really expensive over the years and most houses in the northern virginia area that wouldve sold new 10 years ago in the low 300/400's have almost doubled (not to mention soaring property taxes in that area). However, over-crowding & prices have started a real big housing boom in areas south of there. I recommend anyone looking for property investments in the northern area to start looking at houses along the recently upgraded Rt.234 which connects the woodbridge/dale city area with the Dulles/Herndon areas. It used to be a road people avoided like the plague but recently is in the finishing process of an overhaul project that started in 1998 and has made travel in that sector a LOT easier.
The real money though is going to be looking further south, but still staying relatively close to the DC area. My old hometown of Fredericksburg is quickly on the rise. This area used to be lots of farmland, but commercial & residential offers were made to the property owners and this area still has plenty of housing projects in the works. Its also very close to Interstate 95, putting government-employed residents still within about an hour away from DC & Richmond, but with far more reasonable prices. There are many people having trouble selling their houses as new ones keep popping up and are a tough competitor for someone deciding between a brand new home and one that was previously occupied. Anyone looking at rental investments should also consider looking in the downtown Fredericksburg area, as the University of Mary Washington eats up a good portion of that area. There are many colonial style houses in that area (George Washington used to frequent there) and most were built in 1850 - 1950. Definitely some nice fixer-upper projects, and many college students rent there as it puts most of them walking distance from the school and crawling distance from the huge number of bars & nightspots in that area.
Of course, this is just research based off my own observation having lived in that area for many years. I haven't gotten around to running the numbers in those parts, but anyone looking for profitable investments in the VA area shouldnt over-look that area.
"What!? NO! We can't stop here! This is bat country!"
Hi ya'll,
I agree with the assessment. I live south in the Charlottesville area, which is a university town. We tend to remain somewhat in a bubble, but have been affected by the economy. There is still allot of new building both residential and commercial. We have our share of foreclosures and high end short sales. My plan right now is to do some auctions of some FSBO's since no one here in town is doing that and see what happens. I am always open to help from fellow DG family members!!
I am in Alexandria VA an it seems that Dead-raver is on the money. I got beaten in Florida (new construction)so i am back here staying with my daughter in Alex. I would like to start somewhere but Fairfax/Alex and Arlington are not the areas -- too pricey still. I have to do wholesale/assignments or lease purchase as I do not have funds/credit. I would like to partner with someone or get some assistance in starting out again. i have a piece of waterfront property (land) in a development with sister in Westmoreland County and go down into that area. Dead-raver can i call you? You seem to know the areas where i should start looking.