Residential real estate prices were up 4.4% in 2012 over 2011 in the Northern Virginia market area of Fairfax, Arlington, Alexandria and Falls Church. The recovery began in 2010 and is now only 7.4% from the peak prices which occurred in 2007.
The typical interim is 7 years between market cycles from peak to peak. The Northern Virginia area saw real estate values peak in 2005-2006. Therefore, my prediction has been that for this area, home values will return to market peak in some segments beginning in 2012 and continue into 2013. With the 2012 results in hand, I affirm the prediction that much of the market will be back to peak prices in 2013.
The Sun Gazette has for 38 years annually published a chart (which follows) of the history of home sales in Northern Virginia. In that time frame there has only been one period where the market experienced double-digit appreciation 5 years in a row. It began in 2001 and ended in 2005. In the last 38 years there was one 3 year cycle and one 2 year cycle of double digit appreciation – but the run up from 2001 and 2005 is the longest in this recorded history.
This means to me that what the Northern Virginia area experienced in 2001-2005 residential real estate was clearly a market anomaly. An anomaly by its very definition means it is very likely not to occur again. So most reasonable people would consider that the recovery of a market anomaly could take longer than a typical recovery.
The two obvious segments of the market that in my perspective will take longer than the typical 7 years are the upper brackets and areas outside the beltway and beyond. Much of the upper bracket market still has considerably more supply relative to demand, which means that would have to get in line before recovery can be complete. The outer areas of any metro area typically take longer to recover because land is cheaper and it is easier to overbuild. These segments could very well require 10 years for full recovery to be realized.
Karen Briscoe and Lizzy Conroy are active and experienced Realtors® in the Northern Virginia, Washington DC market place and would be delighted to assist whether for home buying or selling. The Huckaby Briscoe Conroy Realty Group of Keller Williams Realty was recognized as one of the Wall Street Journal Top Real Estate Teams in the United States. Please contact via the means most convenient for you: www.HBCRealtyGroup.com, 703-734-0192, Homes@HBCRealtyGroup.com