Loudoun single family prices holding steady
July 3, 2007
The Loudoun Single Family Detached Home Prices chart is updated with June, 2007 sold data. Average price is up 2% from May. Of specific note is the sold price to assessed value ratio. On average for June, homes sold at 95% of the assessed value. The average seller subsidy is running at about $7,000. Net-net: homes in Loudoun County are selling for about 93.5% of assessed value.From the Loudoun Daily Market Watch, we see listing activity declining, withdrawals rising and sold properties remaining constant at about 400 per month. If this trend continues, inventory should start decreasing again.
The real question prompted by this data analysis: What factors are causing prices to remain as high as they are with selling pressures in a buyer's market? The real answer is somewhat elusive. Is it sellers holding that firm on price? Is it the mix of higher priced homes becoming more affordable? What is the real year over year price change?
One of our readers, R. Timm, suggested an approach to try to normalize average sold values by the average assessed value. Assuming average assessments are flat 2006 to 2007, we performed these calculations and plotted the results on the following chart. Looking at June 2007, sold prices have dropped by as mush as 28 to 30% year over year this month. Our biggest problem with this approach is two fold: 1) assessed values are not always accurate and 2) homes sold in the first half of the year most likely had 2005 assessed values in the listing when listed. The latter explains the slow rise in average assessed value the first few months of 2006. It would be a significant manual research project to obtain the true assessed value from county records for each of the homes in the sample period.
R. suggested another approach using above grade finished square feet as the normalizing factor and, in fact, performed those calculations for me. Rational here is that square footage is a significant factor in home value (as is age and size of lot). It shows a May year over year decline in the 15% range. This seems much more reasonable. I haven't had time to generate the flash graph but, here's a picture of R.'s result.
Thanks R.!
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Merv,
You are welcome for the chart. Thanks for putting all of this data together and presenting it in an informative way.
So far this year it does appear that prices are holding up. Last year prices held up pretty well through June then dropped in the second half of the year. I don't know if things will be different this year or not. Inventory seems like it has leveled off already this year while last year inventory continued to grow through the summer. Inventory is also quite a bit lower than last year but sales are slower too. Foreclosures and bank owned properties will continue to grow in the second half of the year so that may put pressure on pricing. I think your graphs will be the best place to check to see what happens over the next few months.
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