Housing Prices

As someone who has lived all over the country (KY, WI, DE, TN, NC, GA, etc.), but has never experienced housing prices as in Northern Virginia...is there any reason to worry that the $500/$600/$700k homes many in this community have recently purchased will begin to plummet in price?

Or is the demand so great in this particular area that the laws of supply and demand will simply overwhelm any extraneous forces?

Friends at AOL have hinted at layoffs of over 2,000 come November...could that have a material effect on our community?

Looking for some sound advice and wisdom here...

 

You're going to get plenty of advise, not much wisdom

 

I doubt this is wisdom but this is how I think about it. Prices are high because companies want to have a presence near government. Without some sort of major event to scare companies away, that is not going to change. Since the DC area doesn't suffer from any natural catastrophies (earthquake, hurricane) then the only thing left is terrorism. Hopefully the government will control that so housing should be stable. My guess is that at some point prices will level off and maybe drop a bit, 3/4 for an average SF is kinda rediculous.

Gregg

 

I think Gregg is right on the money. I actually hope that things stabalize or even go down some. Taxes are killing me.

 

Yes this exact area Ashburn and all of the DC area plummeted from the highs of the late eighties and early nineties into the nineties and really didn't really level from that downturn until a few years after then it stayed stagnant for years after that. These historic highs right now are only from the last few years. Not many years ago I bought the lot I live now on from a builder that almost went into bankruptcy because of the reccesion here for almost nothing. I am in the building business and designed some of the first homes around here you may have noticed the castle looking homes in the Farms. We also built the last few homes in the Regency. again they have the castle look in the front of the Regency and built several in the back. We have designed and built hundreds and hundreds and hundreds of homes in Northern Virginia. Some years hundred plus in a year. I only design high end homes these days and never ever did I dream the prices would rise so high and fast in the last several years.

Believe what you want but these current homes prices cannot be substained or will stay they will fall and many of the recent sales prices are going way South, I don't have a crystal ball so do what you want!!!

Lee J Buividas

 

Even if prices go down, taxes are still going to kill you. The typical assessment made by the county on property usually takes a couple of years to reach market value, so basically prepare for your tax bill to continue to go up.

 

Prices are already softening in other parts of the country- Boston for example. And in this area, houses are staying on the market much longer. Some prices are being "reduced". It will be interesting to see what effect all of this has in the future- especially given the recent blow to New Orleans and the economy. People simply can't afford to buy houses this expensive.

 

Housing Resales are starting to stagnate on the market. So you can expect some price decrease. People are starting to get too many $$$ in there eyes. I have seen several resales drop there price by as much as 50k

 

Here's my $.02 worth. If you bought your home as a pure investment than you have something to worry about. If you bought your home to live in and enjoy and you're not house poor, than you got little to worry about.

I think home prices will stabilize once it hits a level with buyer's buying power. Homes in the higher end of the price range will probably see the most price volitility.

DC is unique because there are lots of high paying jobs. I see lots of DINKS (dual income no kids) making upwards of $200k/yr. I think DC will have more jobs later in the future.

-Teak

 

Layoffs are not new and 2k was also predicted for last year. Plus HHMI is just starting to hire for Janelia Farm and that will bring a fourth sector to the area (government, technology, defense, and now medical research). I don't know about you but I see things looking up. And if you think this area is expensive take a look at the NYC metro area including Westchester County NY and Fairfield County CT. Our homes would be running about 1.5 million+ in those zip codes.

__________________________________________________________
Some software money can't buy. For everything else there's Micros~1

 

Some interesting perspectives, thanks. I guess if anyone knew for sure, they'd make a killing. You can make a strong case that it's still a good time to invest and that we've got another couple years to take advantage of rising home prices.

But you can also make a strong case that weakened consumer confidence (even if it's just because gas prices are so noticeable, even if not that impactful from a gross dollar standpoint), some softness and unsustainable, ridiculously high prices here may lead to a correction.

So what gamble do you make? Do you buy that $700,000 single family home (that in every other part of the country we've lived in you could have for $200,000) and risk losing a couple hundred thousand in equity should rising gas prices and the New Orleans tragedy, plus any possible terrorism, cause the economy to sour. Or do you bet that it will sell for $800,000 next year because of the new sectors coming in and such great demand in the area?

Interesting questions to consider and I appreciate the reasoned advice on both sides.

 

And we almost had a hospital that would have brought in hundreds of high paying jobs, too!!!
(Sorry, couldn't resist)

 

Very good points... DC/Northern VA is a very unique economy. It is booming and there are so many high paying jobs here it is kind of crazy. Just in driving through other cities on the East Coast, you realize that NOT all cities have such healthy 'local' economies and growth going on. You can see that this area has a lot of money. With a single income for a family, I can attest that it is hard for those that are NOT d.i.n.k.s!Text

 

I think the most interesting equation is to consider a rising interest rate, plus inflation, plus weaker growth in local and national economy. Factor all of the above with the fact that most of us in DC area aren't being getting salary adjustments for rising housing etc prices. If you keep the salary growths the same they have been over 5 years, just waiting till all the folks with ARMS AND Interest-only loans in those 800 K homes have to refinance... OUCH..

 

Mortgage rates have been falling. Even though the fed has been raising rates, Mortagage rates are currently better by almost a half point than when we purchased 2 years ago. That's not rising to me. Many economists believe that the rates will continue to fall as well.

 

Other factors to consider. 1) Job growth in this area is strong and all indicators are it will remain that way. Job growth means population growth and these people need to live somewhere. 2) Smart Growth (may be an oxymoron). Suppression of development adds to the demand side of the equation. The West Virginia pan handle is now an exurb because of growth restrictions in Loudoun. With gas at 3 bucks a gallon many people will think twice about making the drive from WV every day. There is no work out there so they will have to either eat the cost of gas or eat the cost of a home closer in.
I honestly don't think we will continue to see 25% per year but as long as job growth remains strong I don't see a burst bubble either.

 

Did anyone read the Leeburg Today article a few weeks back about the Planning Department's analysis of the costs to the taxpayer if the rezoning around Arcola/Rt 50 comes to pass.

I believe it went like this:

Current zoning allowed for 1500 more homes there, with an infrastructure cost to the taxpayer of $146 Million

Changed zoning will raise that to 5500+ homes, with an infrastructure cost of 746 Million, with about $500 Million paid by the developer. That leaves $246 Million to be paid by the taxpayer. Which does not include recurring costs.

In the meantime, RT 50 in Fairfax will not be improved, no additional North/South routes will be widened, and they'll be more traffic.

And this is a good thing ??



Neil Z.
Resident since 1999

 

Here is the problem you have to be able to afford it to live and buy their home. Most people in my neighborhood say they could not buy their home at today’s prices. Job growth only will continue if you can afford to live there.

Not much selling at the moment no sales no buyers for homes no significant job growth at the moment. I have heard all the optimistic stories at the start of five other housing recessions I lived through and what people are saying here just echoes them. The most optimistic ones more then likely have not lived through a housing recession or the are realtors who if not constantly optimistic would not even get the few sales they will get over the next few years. Realtors are not a good way to get a realistic opinion on what is happening just by the nature of their job and their job and their income depends on it. Not bashing realtors just telling it the way it really is from someone in the building business. What scares me the most about the oncoming recession here is I have never seen home prices rise this fast and this high so quickly ever before. The government salaries can not support the current home prices. If you see government jobs move elsewhere you will see the private industry support jobs which salaries are higher will move too. I don't see any job growth at the moment or much in the way of home sales. Because of the hurricane and the disastrous response of Home Land security especially FEMA to it will go through a major overhaul and heads are going to fly and I see a decrease and job loss in this agency which helps fuel the job growth in this area. 911 fueled the DC job growth and we now see we are no more secure now as before 911 and all the effort put onto that and jobs I see many jobs lost in that sector.

Congress has only begun to investigate all this. Unfortunately it took a hurricane to make us aware our government cannot protect us or help efficiently in a time of crisis. I would certainly like to know what job salaries on average in this area can support the current home prices. Now with gas at 3 dollars a gallon with little hope of it falling significantly ever and travel especially with the amount of people driving suv’s is going to start having an effect on the bottom line add that with the winter heating bills at least doubling this winter is going to have a significant impact on future homes sales.

This energy crisis is not going away like the previous ones. What no one is talking about much is the refining capacity it was at a critical stage before the hurricane, so a barrel of oil is useless unless it can be refined. Even if they build some new refineries it will be ten years or more before we see the effect of the refineries. We need a huge tax on any vehicle that does not get 30 miles to the gallon and increasing the gas per miles significantly every few years and of course anything that does not use energy efficiently most be taxed heavy. Painful in the beginning but it is the only long term solution, more oil is not the long term answer. Using energy efficiently is.

This will all have an effect on the home prices in this area to the negative.

Most people around here don’t work that close to their home and major companies around here have many people working here that live far far away, because they can’t afford a home here add high fuel energy prices we have a recession in the making.


Salaries must go up and durable goods must go down to have more major growth around here. As matter of fact I know more people moving out then I here moving in.



Lee J Buividas

 

"911 fueled the DC job growth and we now see we are no more secure now as before 911 and all the effort put onto that and jobs I see many jobs lost in that sector."

Lee, I hope you aren't comparing a terrorist attack to a NATURAL disaster. I don't believe our country has experienced a terror related attack since 9/11. Our homeland security may very well be better than it was before.