Humpty Dumpty and Real Estate Recovery
September 5, 2011
What I believe is holding the housing market back in the Northern Virginia area is the lack of consumer confidence. This crises of confidence reminds me of Humpty Dumpty. If you recall the nursery rhyme:
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.
The Northern Virginia real estate market from 2006 to present “had a great fall”. It was logical and necessary that a correction was in store. The market area had experienced 5 years of double digit appreciation in housing prices from 2001 to 2005, and any person that was thinking clearly knew that those levels of appreciation was unsustainable. In 2006 and 2007, appreciation was flat at .1% and in 2008 and 2009 there was a correction with depreciation of 14.4% and 6.5%, respectively. In 2010 there was a solid year of recovery with 8.9% appreciation over 2009, which brought the price levels back to the 2004 levels.
The Case-Shiller S&P Index for June 2011 was released recently and the Washington DC metro area fared the best out of 20 metro areas followed by the index. All of the 20 markets experienced a decline in prices from June 2010 to 2011. The Washington DC metro area declined by only 1.2% in June 2011 over the previous year. But remember that the Washington DC metro area had experienced February to May 2011 each month year over year price increases. So we had 4 months of price increases and 1 month of price decrease.
What is occurring now in the marketplace is a “bumping along”. In times like this the market ticks up and the market bumps down. So having one month of a bump down is not catastrophic! We can put Humpty Dumpty together again if consumers believe that the market is recovering. I honestly doubt that the government (all the king’s men) can put the real estate market together, but I do believe that home buyers and sellers can!
Clearly home prices in most of the Northern Virginia area have returned to prices that are indicative of a normal market and thus sustainable. The metro area is strong on job growth and has low unemployment.Interest rates are historically low and inventory in many sub-markets is in line with demand. All we need is Buyer confidence in the value of real estate and Seller willingness to price their home based on the current market.
The best source for understanding the local real estate market is by working with experienced and knowledgeable Realtors®. Karen Briscoe and Lizzy Conroy with the Huckaby Briscoe Conroy Realty Group would be delighted to be of assistance. Please contact via the means most convenient for you:www.HBCRealtyGroup.com, 703-734-0192, Homes@HBCRealtyGroup.com.
