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Piedmont Real Estate Blog

Blog by Julie Emery
Amissville, Virginia
An ongoing dialog on real estate news, opinion and trends in Northern Virginia and the greater Piedmont area. Julie is an Associate Broker at Century 21 New Millennium, 5451 Old Alexandria Turnpike, Warrenton, VA 20187

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Piedmont Real Estate Blog

Looking Ahead to 2009
Dec. 30, 2008
Categorized in: Local Market Conditions
Tagged with: 2009 real estate forecast, culpeper, fauquier, foreclosures, inventory, prince william, rappahannock

How will 2009 play out? I can only speculate. In truth, this feels like one of the toughest years to predict. But I am undaunted! I'm going out on that limb to make some predictions.

I need to preface my predictions with a word about the overall real estate situation. There are two possibilities in 2009. The government could intervene in a meaningful way in the real estate markets. (Other than the Fed action earlier this month to say they’ll buy mortgage backed securities, federal intervention up until this point has definitely been NOT meaningful!) If they do that, the forecast, while not rosy, is for a market that’s beginning to stabilize. The other alternative is that the federal government does nothing about the real estate markets, the overall economy continues deeper into decline and there’s no end in sight. That produces a markedly more pessimistic forecast.

 
My forecasts here are based on scenario A, because I think that’s the likeliest outcome at this moment. The Obama administration appears poised to temporarily halt foreclosures. During that time the expectation is that measures will be put in place that would help prevent many foreclosures. Although whether it would prevent them permanently or delay them, it's hard to say.
 

 

Inventory, while declining in 2008, remains high for all counties by historical standards. But we’ve come down significantly from our highest point. The high point for inventory for most counties was mid-2007. (Rappahannock just hit their high.) At that point we had about 18 months to 2 years of inventory at the rate properties were being sold. Our inventory at the end of November (the last full month for which data is available) is down about 30% from our high point. Preliminary December data shows that number to still be falling. However, the rate of sales has also slowed so that we still, essentially have about a year and a half worth of inventory. There’s very little quality inventory at the lower price points, say, under $300K and what there is sells quickly. Above that price point things are very, very slow.

 
I expect inventory to continue to fall in December and January and then begin to climb in late February again. Some of this is normal. Typically spring and summer are when most people put their homes on the market. 2009 is likely to be the same as any other year in that regard. The thing to watch will be whether you see additional buyers coming out to buy up that extra inventory. I’ll also be watching what happens at price points above $300K and what prices are doing overall. And, if we do get a sharp increase in buyers, expect that to be followed by an even sharper increase in inventory as "shadow inventory" from frustrated sellers comes back on the market.
 
Prices are likely to stabilize this summer. (Again, this is assuming government intervention.) However, I would not expect any significant appreciation in 2009 or 2010. Prices will likely stay flat for several years. The lower part of the market will see the first price appreciation. Most sellers of owner occupied (meaning non foreclosures) will still have to lower their asking price in 2009. Average sale price has fallen roughly 40% in the last year. I’d expect to see a smaller decrease in 2009, perhaps 10% with most of that coming on properties over $400,000.

 

 
The total number of sales in 2008 in Fauquier County will be about 600, down from 630 in 2007. I believe that number will climb in 2009 to 645. In Culpeper, expect the 2008 number to be just below 600 and the 2009 number to be about 640. Prince William will close at about 8000 properties sold in 2008. Look for that to climb to 8800.
 

 

As with any projection, there are a multitude of factors that could make me look silly. The biggest factor impacting the real estate market next year will be foreclosures, the overall economy and what, if any, government intervention occurs. If I knew how all those would turn out, I'd be too rich to bother with selling real estate!
 
Here's to good fortune and happy lives to all in 2009! 

 

 
 
 
 

 

 

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