The upswing in residential sales continues for June, with the Prince William County area leading the Northern Virginia region for the sixth straight month. Prince William County sales in June were up 82% over 2007, Manassas Park City sales were up by 116%, and Manassas City sales were up a huge 178%. The Prince William County area as a whole registered a 91% increase in the number of residential sales, topping the 69% increase seen in May 2008 over May 2007. The number of homes active in the Prince William real estate market decreased in June for the third month in a row, turning an important corner, while the region as a whole saw a disappointing 5% decrease in sales.
The market recovery isn’t quite here yet as prices are still declining, but the conditions that contribute to price declines are improving. Again this month, those areas formerly burdened with residential overcrowding are showing some of the most dramatic jumps in residential sales (for example, zip code 20109 had a 339% jump in sales in June). As inventories continue to decrease towards manageable levels, bringing supply and demand into balance, we should see price some stabilization in the near future.
A few notes, from observations on websites focused on the local real estate market:
- Buyers are cherry-picking the properties in good condition, and often shunning those requiring major renovations because there are so many choices available. With the lower-quality properties remaining on the market, it puts downward pricing pressure on the market as a whole.
- There are continuing subprime Option ARM resets coming up through October, which could keep a supply of new foreclosures entering the market over the summer and fall. Despite the current rate of foreclosures which remains high, inventories are declining. The number of rate reset induced foreclosures may be declining.
- Affordability is helping drive demand to Prince William County, and potential buyers are more than ever able to identify where the deals are. Many single family houses in Prince William are selling at price levels that are result in mortgage payments on par with rental prices for apartments closer in to D.C., notwithstanding the tax advantages.
- Not showing up in the statistics, but the continuing difference between the performance of Prince William, and Fairfax County which registered only a 2.11% increase in month-over-month sales is anecdotally a result of the Rule of Law Resolution. People don’t make long-term investments in communities where long-term investments are comparitively risky.
In the end, if we continue to see inventory declines as we have been, the value erosion in Prince William real estate is going to end pretty soon. We’re doing much better than surrounding jurisdictions, and continue to lead this recovery.
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