The Northern Virginia real estate market remained very strong last year, despite a sluggish economy, and Realtors are predicting another good year in 2003.
Pat Jablonski, chairman of the Northern Virginia Association of Realtors, said the continued growth in the industry has prompted many people to ask when the real estate bubble is going to burst. He had a simple answer: It isn't.
Members of the graying "baby boom" generation, he said, are increasingly starting to sell their homes in the suburbs to move into condos and apartments closer to transit and downtown areas. But their children, the "generation x-ers and y-ers" are moving into their parents' homes, he told an end-of-the-year meeting of area Realtors at the National Press Club in Washington D.C. last month.
If the market is not going to implode anytime soon, he said, it will nonetheless come in for a soft landing. Jablonski cited a prediction from Stephen Fuller, a regional economic expert at George Mason University, that this year's housing market will look a lot like 1997's, the fourth best year on record.
"This time we're kind of coming in for a slow leveling-off which is great," he said. "What we're going from is a seller's market to a neutral market pretty much. Everybody will be happy in 2003."
A TOTAL of 29,514 homes were sold last year in Northern Virginia, a 4 percent increase from 2001. The average sales price was $316,901, an increase of 10.6 percent over 2001. The average price for a detached home was $449,364 and $275,956 for an attached home. Total home listings also grew by 1.7 percent in 2001, reflecting a steady increase in the inventory of homes for sale.
But the average number of days on the market jumped from 18 to 25. And it has become more difficult to sell some of the more expensive homes, signaling, Jablonski said, "that the housing market now is more rational." A couple years ago, he said, sellers were making outrageous demands on potential buyers and getting away with it. That is not the case anymore.
REALTORS ALSO expressed concerns about the increasing lack of affordable homes. Northern Virginia only creates 6,000 to 8,000 new housing units per year compared to 20,000 to 30,000 new jobs that are generated every year in the region, said Jablonski.
"As community builders, I think we have a professional obligation to provide affordable, accessible housing," he said.
But efforts at this year's General Assembly session to pass tough growth management legislation will make it harder for builders to provide affordable housing, said Mary Beth Coya, the vice president for public and government affairs at the NVAR.
Smart growth advocates and several local governments, including Fairfax County, have called on the General Assembly to approve growth management bills including an adequate public facilities ordinance which would allow localities to veto any development if public facilities such as schools and roads were inadequate.
"They just increase the cost of housing," said Coya. "Local governments can use it as a stop growth measure."
Coya also rejected the notion that November's defeat of the sales tax referendum for transportation was a sign of frustration towards so-called "suburban sprawl."
ON THE COMMERCIAL side, the picture is not so rosy. About 17 percent of total office space is vacant in Northern Virginia compared to 10.6 percent in suburban Maryland and 6 percent in D.C.
"It's going to get worse before it gets better in Northern Virginia right now," predicted Dave Bevirt, president of the Greater Washington Commercial Association of Realtors.
"You have a difficult situation outside the Beltway and not so difficult inside the Beltway. It's healthier inside the Beltway."
Expectations of a post-Sept. 11 defense contractor boom which would have brought more workers to the empty offices never materialized, he added. With the location of the new Department of Homeland Security still unknown, Bevirt said, "we just don't know yet what the demand is going to be."