Front Line

FRONT LINE


This used to be called Market Watch but we changed the name to reflect how current the information really is. What we write about in this column is happening this week in our local market. It is not based on last month's or last quarter's statistics or what is happening in California or Georgia. It is information from the front lines of our local market. The market in 07 has certainly been different from past years.
At years end 2007 will rank as the 5th best year ever, behind 03,04,05 & 06. That is based on the total number of sales during the year. Our market has been better this year though than last as our inventory was down by 20-25% for both single family and town homes until August. That means a higher percentage of existing inventory was sold this year compared to last year. Pricing was down 5-10% depending on the month and category of home compared to last year. We saw significant drops this year in May-June and again in Aug-Sept , same as we had last year. This is due to sellers reacting to the transition from Spring to Summer markets and Summer to Fall markets. Pricing drops as those that have to sell jump out in front so they do not miss the next spurt of sales.
In August though things took a dramatic turn for the worse as we saw the collapse of the sub prime market. This affected our market in a number of different ways. First, a large segment of our buyers we no longer able to get a loan as the stated income and Alt-A financing disappeared entirely. ( these were loans that catered to those with credit dings or other qualifying problems) 100% financing was cut way back as well, as the qualifying requirements became way more restrictive. Second, our market was flooded with foreclosures. This is what caused the financing to disappear in the first place as those that had obtained this type of financing defaulted by the score. In Centreville 17+ percent of the homes that are listed are in foreclosure, are owned by a relocation company or are offered as a short sale, meaning that more is owed than they can sell the home for.
In Prince William County the numbers are much, much higher plus there is builder competition. This not only bumps our inventory back up but brings some very motivated sellers (and hence lower pricing) to the market.
Lastly, consumer confidence drops as buyers adopt a wait and see attitude to the market. Lots of lookers but few buyers as they wait to see signs of the bottom or are just too scared to buy until pricing bumps back up. The winners in today’s market will be those that buy in the next couple of months. In January we will look back on 2007 as a whole and go Out on a Limb and tell you what to expect for the coming year.