Summer Doldrums Hit Virginia's Loudoun County Housing Market

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Perhaps it was the unprecedented heat wave that stifled home purchases in Loudoun County, Virginia during July. In any case, total existing home sales (384 units) declined 30 percent compared to revised figures from last month and 27 percent compared to last July.  It appears to be a regional phenomenon though; according to the Metropolitan Regional Information System (MRIS), the Northern Virginia Association of Realtors reported a 23 percent decline in sales from June and a 19 percent decline since last July.  Likewise, total sales in the Prince William Association of Realtors declined by 24 percent last month and 25 percent vs. July 2009.  Annualized year-to-date total sales are lagging behind 2009 totals by 9 percent here in Loudoun County.  Pending sales also declined; the total as of August 10th was 9 percent lower than the unrevised June total and 34 percent below the July 2009 total.

For the second consecutive month, the total share of homes sold so far this year is higher than it was in 2009 for homes priced between $300,000 and $899,999.  For several months, only those homes priced below $600,000 accounted for a larger share of the total sales than in 2009.  As sales for higher priced properties increase, the median sales price also advances.  The year-to-date median sales price ($355,000) is now 6 percent higher than the 2009 median.  Further, the monthly median ($380,000 in July) has exceeded the median in the corresponding month in 2009 for seven consecutive months.

According to Virginia-based real estate consultant Rosemary deButts, "Home prices have been consistently rising in Loudoun this year thereby attracting more sellers to the market, finally.  However, declining consumer confidence adversely affected home sales activity in July."    

Another indicator of price escalation is the average close price for detached units indicator.  In July it reached the highest level since May 2008 at $552,225.  Also, a remarkable eleven homes sold during July with prices that exceeded $1M.  The closest we've come to that kind of sales activity for luxury homes and properties in one month was in June of 2009 with 7 total sales in this price range.

Rosemary deButts further commented, "Although total sales in Loudoun declined sharply  and unexpectedly in July, the luxury market for properties priced $1 million or higher was booming in July, presumably due to the combination of pent up demand in these price ranges and historically low mortgage rates."

Every month this year the days on market indicator has been below the comparable month in 2009.  July was no different although the average increased from a revised 45 days in June to 57 days in July.  With a sharp decline in monthly sales, the month's supply of inventory naturally increased.  In July, available inventory was at 4.4 months after four consecutive months in the 3-month range and recorded the highest level since February 2010.  However, the Loudoun market is generally considered to be in equilibrium (there is enough supply to satisfy demand) when the MSI is between four and five months.

Finally, the share of distressed (short sales and foreclosures) to total sales declined for six of the last seven months.  And in July, the percentage of distressed sales (28 percent) was less than 30 percent for the second time this year.  The distressed percentage was highest in May 2009 (47 percent).

 

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