Region's Home Prices Continue To Fall; Some Pockets Thrive

The slump in home prices in the Washington region is deepening and spreading, according to data compiled for The Washington Post that shows that for the first time, every local county saw a decrease in prices for a significant period of last year.

The data from the Case-Schiller Home Price Index showed that prices for single-family houses fell 7.7 percent in the region during the third quarter of 2007 from the comparable quarter in 2006. That is among the steepest declines in home prices since 1991, when prices fell 5 percent during the first quarter from the first quarter of 1990.

The current slump is worse in counties far from the Beltway, such as Prince William, where prices fell 13 percent year over year, and slight in others, such as Arlington, which saw a 2 percent decrease.

The regional dip is not as steep as in parts of the country such as California and Nevada, but is worse than the 4.5 percent drop in prices nationally during that period. The figures mask the dramatic variations in the Washington region, where some areas thrive while prices have plunged in others, including Sterling, Manassas and Bowie. Those drops challenge the notion that a strong local economy would shield the region from the worst of the mortgage crisis. Instead, the depression in housing prices across the region is deepening and accelerating, according to the data.

Kristin Cockrell and her husband, Jake Cockrell, put their red-brick, three-bedroom Sterling Park house up for sale in April 2006 for $425,000. Then $379,000. They kept cutting to $350,000, then $325,000. Now, the couple hopes the new $300,000 price will attract the buyers they need in order to sell and move closer to family in San Diego.

"Watching the price fall right before your eyes, it's hard," Kristin Cockrell said.

At the same time, some places continue to have stable or higher prices. The distance between a neighborhood thriving or struggling through the current market can often be measured in a few miles and in proximity to good schools and public transportation, real estate agents say. Communities closer to the District with fewer new houses continue to fetch higher prices, they said.

Metropolitan Regional Information Systems, which tracks home sales in the area, provides a different snapshot of sales in December, traditionally one of the slowest sales months of the year. Median home prices were up 3 percent in the District and 1 percent in Alexandria in December from the same period in 2006, according to MRIS. That is a long way from 20 percent-a-year increases that epitomized the housing boom years, but still better than in the struggling communities.

The numbers from Case Shiller and MRIS measure prices differently. Case Shiller attempts to weigh price changes to the same home as it is resold over the years, while MRIS counts homes sold in a particular month, without regard to such things as the size and quality of the houses. MRIS also provides data down to the Zip code level.

Both sets of numbers show similar downward patterns in neighborhoods characterized by long commutes and lots of newly constructed homes. For example, MRIS shows that prices fell 18 percent in December in Sterling Park, about 30 miles from the District in the 20164 Zip code, as a spike in foreclosures depressed prices there. On one street, three houses were recently for sale. A few blocks away, there is a cul-de-sac with two for-sale signs. Two blocks over, homeowners took their place off the market after it languished; it is now for rent.

"Anything that is over 10 percent would be a crash in prices," said Mark Zandi, chief economist at Moody's Economy.com. "I would certainly consider a 20 percent decline a crash."

Whether the crash in prices spreads to other parts of the region will likely depend on whether a community has a high concentration of subprime loans that could force more foreclosures as interest rates adjust and payments increase, analysts said. If homes cannot be kept out of foreclosure, banks would take losses and sell at lower prices, pushing down nearby prices.