I wonder, in 3-4/years or more, how will the retiring baby boomers effect the market? The Washington Market is way too expensive to retire, as well as other big city areas. Wonder if those 67/million boomers looking to unload their nest egg and move elsewhere could continue to keep this market depressed.

Alby, I'm not sure I would use Zillow as the benchmark. Maybe good, maybe not. Trending may be OK.

See my comment to Leesburg. I believe there are an abundance of discretionary sellers trying to extract the maximum equity. It is unfortunate that there are so many "investment minded" homeowners. Not the right reason to own a home. This is not the stock market.

As for being upside down at the closing table...more than you would think. These are a combination of "trying to move up" and bad timing as well as "I gotta go" sellers. Auctions were unheard of 12 to 24 months ago. I get several emails a day about properties being auctioned.

The saga continues. Lets look back a couple (or three or four) years from now and re-read our collective commentary. It might make for good entertainment.

Leesburg, thanks for the comment and observation. You are right. Hard for the average (whatever average is, I'm not sure I know any more) to afford to buy in Loudoun. I'm not sure I know what is supporting current prices. Maybe a lot of things.

After being flat for several months, interest rates are spiking just in the last week or so. As R. says, we will see the effects of that maybe two, three or four months out as many current buyers are locked in.

What is interesting to me is the number of withdrawals rising in the last several weeks. A very noticeable trend (and we just began the summer!). That tells me discretionary sellers are pulling back. The "I gotta sell" people will do whatever it takes to get out.

Thanks again for being with us and your comments. They are always welcome! (and, you are a Leesburg neighbor)

I'm sure there are desperate sellers. You can spot them with listing commands that say, "Motived Seller" or "Priced to Sell". But the biggest factor in preventing prices from dropping like a stone is the price at which the now-seller bought their home.

Think about it, a Seller buys in 2005 @ $500k on a 5% down loan. The market has tanked and their home might only be worth $500k now. Does this seller reduce their price to $450k so that it will sell, only to fork over $25,000 at closing to cover the shortfall between the sale price and their mortgage loan of $475,000? I don't think so.. Most will just hold out until they get their price. I'll take a major issue for somebody to dig into their savings if they have any to fork over money at a loss.

If you look at prices of homes in Loudoun on zillow.com, you'll see the majority have all flatlined. Its as if the bottom has been hit. Maybe not a bottom in terms of market forces, but a bottom in terms of sellers being financially unable to lower their prices.

If I had to put money on it, I'd say the local market will stagnate until the day comes when buyers can afford these prices. But it would take a regional economic collapse before you see a firesale price decline on these properties. Most folks will just hang in their until somebody bails them out today, tomorrow, next year, or 5-10 years from now.

just did a little excel formula and realize that to qualify a 30 FRM with 20% down for $500K, you need a household income of 120K at 7.5%. Although Loudoun has the highest median household income nationwide, about 100K, that still means around 70% of family can't afford an average home if they buy today. I guess we will see another 10% hair cut soon, maybe late Aug, or Oct. I am sure there are some desperate sellers.

As for supply and demand the months supply is a good indicator. 5-6 months of supply is considered a balanced market. Currently at 7.2 months there should be some downward pressure on prices in Loudoun but nothing drastic. Based on months of supply Prince William should see more significant price declines.

With the 10yr treasury yield hitting 5.25 mortgage rates will be about 6.75% next time they are reported. If those rates hold it will keep more buyers on the sidelines at current prices. It will also prevent even more ARM holders from refinancing spurring more foreclosures. The impact of higher rates won't be seen in the stats for about 60 days because most buyers with contracts probably already have a rate lock. If rates head over 7% sales volume will really slow down and REO, foreclosures, and preforeclosures could make up 30% or more of the houses being sold.

Although inventory is up and sales are at 2002 levels, the supply is only a portion of the problem. The other is the price of these homes aren't at 2002 levels, interest rates are up, and lenders have tightened their lending requirements... Things would appear to be more gloomy than brighter. In just Loudoun, their are 3700 listings with only 400-500 sold per month. If not another house went on the market and the sales rate remained unchanged, it would take nearly 8 months to (June07 - Jan08) to draw down the supply to zero. But come Aug/Sept sales will drop as the new school year gets ready and most listings which didn't sell in the summer will be pulled. Only to repeat the process next Spring/Summer..

I don't see an end in sight. At least not until the Fed reduces interest rates or lenders reduce their lending requirements.. Just totday they reported foreclosures are up 90% from 2006. Thats bad news..

I love it when you use words like "supply" and "demand" in the same sentence. If you look at this chart, we are selling at a 2002 rate. The only difference then is that inventory was about 1/3 of what it is now.

Looks like the 2007 housing market is just as bad as the 2006 market. Too much supply and not enough demand. Bad news for builders and existing home sales. Good news for buyers. Well those are the breaks. Everything goes in cycles. I'm sure agents aren't happy either, since buyers have lots of choices and aren't stressed to make a purchase, leaving the agents spending money and time showing properties with no quick results.