December 2007 Housing Market Update

January 16, 2008

All of our monthly charts are updated with December housing data for Northern Virginia (Fairfax, Loudoun and Prince William counties). See Market Conditions under Topics. Additional detail can be found at:

Metropolotan Regional Information System (MRIS) and
Northern Virginia Association of REALTORS@reg; (NVAR)

Trend lines were added to the Fairfax and Loudoun price charts showing downward direction from early 2005 to current. Loudoun shows a rate of decline of about $30,000 per year and Fairfax shows a corresponding declining rate of about $8,000 per year.

We can gain insight by looking at averages but there are inherent issues with averaging. What we don't know is how the mix of properties sold is changing. This fact is a bit hard to get but from anecdotal observations we know that the higher end homes (above $800,000) are selling at a significanly slower rate than those less than $800,000.

For example, from the December MRIS tables for Loudoun County we find the following:

Of the 328 mark as sold properties ...
Attached: 118 sold with 987 active or a 12% absorption rate
Detached: 168 sold with 1789 active or a 9% absorption rate
Condos/Rent: 42 sold with 436 active for a 10% absorption rate
... and then ...
High $ homes: 16 sold with 432 active for a 4% absorption rate (above $800,000)

From the same table we see that total average sold price is down 8% compared to 2006. What is interesting is that the high end townhouses (4+ bedrooms) are down almost 27% and the lower end single family homes (less than 3 bedrooms) are down 28%.

The "sweet spot" for TH resales appears to be evenly distributed in the $300,000 to $500,000 range while single family detached is evenly distributed in the $450,000 to $800,000 range. It appears buyers in the $400,000 to $500,000 are opting for the single family over a TH.

So, what does all this mean? The Loudoun market has definitely shifted out of McMansions. As financing jumbo loans get more difficult, builders lowering new home prices and a high number of "distressed sales" coming on the market this spring, downward pressure on prices for 2008 is anticipated. Is it a good time to buy? My answer is yes if you are buying for the long term and can weather the storm that is expected to last through 2009.

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