2007 Northern Virginia and DC Real Estate Forecast....

There is one question I get asked weekly by people from around the country, "What's going to happen in the real estate market next year? Should I buy now or wait?" Well based on my experience the last 12 months and a lot of research I've done I have much to proffer on the issue. My previous post noted how much inventory had declined since the peak in March 2006. Well I just pulled the November numbers and found some interesting trends. For Northern Virginia real estate the number of units sold in November 2006 was 24% lower (1,475) than in November 2005 (1,933). And the average sales price was 4% lower than in Nov. 2005. The average days on market was 85 versus 36. Washington DC real estate sold for 11% lower in Nov. 2006 versus 2005 and there were 17% fewer units sold in Nov. 2006. What I've found is that many, many 2006 buyers still have not purchased their homes yet. The realtors I know and myself are busier now than we have been all year. It seems that many buyers are starting to come off of the sidelines now that there have been some corrections in the marketplace. Prices are significantly lower than they were just 5 months ago in the summer--my rule is a 5% decrease in value from whatever sold in the summer 2006--maybe more. So what's my forecast??? Let me start these bullets by saying I am not a prophet. I've made predictions and been wrong in the past,..although I did state in writing back in Nov. 2005 that one should not purchase a new construction condo in the near future as their prices were likely to drop significantly. I am proud to have nailed that and hopefully some people took my advice who will now be purchasing with me in 2007. So here are my forecasts and solutions:

Forecast:

• there will be a LARGE number of 2006 buyers who buy in 2007 finally. They have been on the sidelines for much of 2006 watching prices move downward and waiting for the right time to buy.
• there will be standard 2007 buyers
• prices are about 10% lower than a year ago (I'll elaborate in another post on why I say 10% versus the 4% number I quoted from the Nov. stats above) making homes so much more affordable than before
• interest rates are significantly lower now than for most of 2006 meaning people can afford slightly higher loans
• market value will hover between -5% and +3% depending on location

Solution:

• it is a good time to buy right now, but one must take what they think is current market value and then negotiate down a couple of percentage points to protect oneself unless the market has started showing signs of appreciation such as shorter DOM (days on market), multiple offers and higher sold prices
• there will be a LOT more real estate transactions this year compared to 2006 due to reasons above
• get a good deal and you won't be sorry by referring to first bullet in this section. Example is a townhouse I just went under contract on in Clarendon. Previous sale was for $642,000 in the summer 2006. I subtracted 5%ish to get a market value of about 600ish for my purchaser. Well due to seller's circumstances we got the home under contract for a net of $570,000. Smokin' hot deal! I believe they have purchased the home with some built in equity. Since this home is in Clarendon it likely will appreciate since it is closer in to DC on the orange line metro.
• homes closer in will hold value better than homes further out from DC. Property inside the beltway retains its value much better than property in Woodbridge or Sterling for example.
• most listings out there are prepared to negotiate downwards right from $15,000-$50,000, and for more expensive property $900,000+ the negotiating can involve $100,000 or more depending on the listing

• Rate this Post!

  Select Your Rating:

  • 5 Stars (Excellent!)
  • 4 Stars
  • 3 Stars
  • 2 Stars
  • 1 Stars (Poor)

• Share this Post

  Share With A Friend:

  Your Name Your Email

  Friend's Name Friend's Email

  Optional Message

  Send

• Print
• Social Bookmarking

  Add to Bookmarks: