Loudoun County Real Estate Activity November 2006
December 10, 2006
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Red Bars: HOT (Sellers Market) Blue Bars: COLD (Buyers Market) Gray Bars: Balanced Market |
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INVENTORY:
Inventory of homes for sale continues a rapid decline. Active listing are down 420 homes to the 3,390 level. Sold and new contracts are at about the same level as last month. New listings are down 27% for the month. Inventory absorption rate (new contracts / total active inventory) remains at a low 11%. Part of this trend is due to sellers withdrawing form the market in large numbers perhaps waiting until late winter to early spring to re-list.
Average appreciation is down 7% from November 2005. Down 6% in just the last 3 months. price declines reversed the trend in November rising 1 to 2%. Remains to be seen if average price has bottomed.
DAYS ON MARKET:
Average time it takes to sell is 120 days, up 14 days from last month. As of this morning (December 10), it rose to 130 days based on the rolling 30 day accumulation we provide on the Front Page Daily Market Watch.
SOLD TO LIST PRICE RATIO:
The "negotiated" ratio declined again to 91.5%. Successful sellers are drastically lowering their price and buyers are getting another 7 to 8% during negotiations (plus seller subsidies that are not "officially" reported).
NEW CONSTRUCTION:
Sales of new construction remains in the doldrums. Huge incentives, price reductions, guaranteed home sale to get sellers to the closing table, and increasing incentives to agents bringing qualified buyers. One was recently noted with a $50,000 agent bonus! Incredible. For buyers: finished basements...sun rooms...closing costs...mortgage payments for the first year. As of November 30th, the MLS is reporting 640 new homes on the market and only 12 new contracts in the last 30 days. A dismal 2% absorption. Average price for new construction is in the $775,000 range. There are more for sale and under contract that are not reported in the MLS.
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» Loudoun Real Estate Market | June 2006 from Northern Virginia Real Estate Guide
Official June Market update for Loudoun County, VA: Sellers continue to be frustrated in the buyers market. The annual spring bounce turned out to be like dribbling a basketball with no air; flat. [Read More]
Comments
Alby, first one today?
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made the following comment on December 11, 2006 8:03 AM
Sorry... I ment to say "Buyers" Market. Ugh!!
Sean, Alby; I don't think we are out of the buyers market for at least another year and well into 2008. I believe the discretionary sellers will be back in force spring of 2007.
As far as the basket is concerned: a few multi-million dollar homes will skew the average higher. Look at the Loudoun Daily price chart early to mid October. That is a good example of basket skew due to ultra high priced homes. I was concerned about the same issue and is why I performed the analysis of Loudoun single family, detached and less than $1,000,000 found at Prices Bottomed? ... that confirms the trend of all property types in the Daily chart.
Also, activity in different neighborhoods may show different results. There are some neighborhoods around Leesburg that are really getting whacked. I just don't have the resources to be able to be selective. If I only had access to the full MLS data base ... I could get transported to data analysis never never land...
I think it is far from a seller's market. As Merv has said before, the drop in inventory is due mainly to sellers choosing not to relist their homes, and not due to an increase in sales. Watch for a massive influx of homes into the market in in February-March 2007. My best guess: buyers market well into 2008. And potential further price declines of 10-15%.
made the following comment on December 10, 2006 10:17 PM
If the charts for Loudoun and Fairfax don't get back to a balanced market within the next month or two, there is a good chance it'll remain a sellers market throughout the Spring/Summer of 2007.
Merv,
Thanks again for all the hard work you put in your analysis. I generally check your daily market watch just before I go to work in the morning, or first thing when I come home.
There is one thing that I've been wondering, and I don't know if you have any insight into this or not... I am wondering if the fluctuations in average sold price are due to the "basket" of homes sold changing or if the changes are due to across the board price increases or declines. For example, if one month 150 single family homes sell at an average of $600K, and 150 condos sell at an average of $280K, the average sold price that month would be $440K. The next month, it could be that 200 single family homes sell at an average of $580K, and 100 condos sell at an average of $260K. The average the next month would be approximately $473K. Thus, the "basket" of homes sold changed, causing an increase in the average sale price even though most home prices declined in this example.
Over time, one would expect the basket of homes sold to remain fairly consistent, and thus the long term trend would accurately portray price increases or price decreases. Thus, I can understand how you can say it is yet to be seen whether the average price has bottomed.
Any insight?
P. S. One thing I have been doing is tracking certain communities. What I am seeing is some homes are beginning to list at prices that haven't been seen for those particular homes since late 2004.
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