By Dina ElBoghdady
Washington Post Staff Writer
Thursday, July 31, 2008
Home sales in Prince William County have surged in recent months, a dramatic turn that suggests prices have dropped low enough to lure buyers to the Washington area's most devastated housing market.
The number of sales in the county have been climbing since March, with the steepest rise last month, when sales jumped 83 percent compared with the same time a year earlier, according to George Mason University's Center for Regional Analysis.
The trend contrasts sharply with nearly every other county in the region, where sales sank.
The flurry of sales activity in Prince William has everything to do with its unusually high share of aggressively priced foreclosures. As of July 1, 55 percent of the homes for sale in the county were bank owned, down from the 72 percent peak in June, according to the Virginia Housing Development Authority. The median sales price for a home there last month was $250,000, down from $380,000 a year earlier.
Those snapping up the deals include bargain hunters from farther out in the exurbs, first-time buyers and investors. On occasion, bidding wars erupt.
"They're coming out of the woodwork looking for homes in Prince William," said Jim McClain Sr., owner of Greater Virginia Realty in Fredericksburg. "They're all price-driven."
Segen Kauo and her husband, Kalani, said they have been renting for seven years because they could not afford to buy until recently.
The couple has offered more than the asking price on two homes in Dale City that were headed to foreclosure, and they lost both times.
This month, they made another offer -- $370,000 -- on a five-bedroom house large enough for their growing family.
They bid more than the asking price, but they're up against five other offers.
"Isn't that crazy? I can't believe we're in this situation again," said Kauo, a dental hygienist who is expecting her third child. "We're keeping our fingers crossed."
Locally, the pace of sales continues to fall in most of the D.C. region, according to Metropolitan Regional Information Systems, the area's multiple-listing service. In Prince George's County, sales last month were down 35 percent compared with June 2007; they were off 30 percent in Arlington. Besides Prince William, the exceptions were Loudoun County, up 19 percent, and Fairfax County, where sales were up 2 percent.
There are other pockets of the country experiencing upticks. They tend to be markets where prices climbed most sharply, then fell the hardest when the boom ended.
But it's premature to predict a recovery based on such market shifts, housing experts said. In past slumps, a surge in sales typically signaled the start of a rebound. But this slump is unlike any in recent history. Never before have prices climbed so high, so quickly and then dropped so precipitously.
"We don't have any data to know what a normal recovery is in this case," said John McClain, deputy director at George Mason's Center for Regional Analysis. "What we're experiencing is new territory."
The macroeconomics of it all hardly matters to Angela and Sidney McMillion, who could not afford as big a house as they wanted in Prince William a few years ago.
Instead, they settled in West Virginia near family, although Sidney McMillion kept working as a foreman at an asphalt plant in Occoquan. For five years, he stayed with relatives in Prince William on work days and commuted 280 miles on weekends to see his wife and three daughters, ages 3 to 16.
Tired of the distance, Angela McMillion started looking online at foreclosures in Prince William and noticed those homes were selling for about the same as houses in her neighborhood. "We saw the phenomenal prices on the foreclosures and thought: 'It's time to live together as a family again."
In May, the couple bought a six-bedroom foreclosure with a large addition for $180,000 in Dale City. They're paying only $300 more a month than they did on their West Virginia mortgage, which is offset by gas savings.
"To find anything comparable to that before would have been impossible," Angela McMillion said.
Earlier in this decade, builders expanded aggressively in the county, taking advantage of its wide open spaces to meet booming demand for homes in the D.C. region.
Prices were lower than in most other parts of the region, attracting speculators and subprime borrowers with poor credit or little cash.
But when home prices started dropping around the country, many subprime borrowers could not afford the adjustable-rate mortgages they had, especially when they reset to drastically higher rates. With prices down, they could not sell or refinance their way out of trouble.
Foreclosures followed, and as more of them got dumped on the market, they pushed down prices in entire communities in Prince William County.
It got to the point where it no longer made sense for Kevin Ogrince to rent. "I looked around and it became clear that I could own a home for less than I could rent one," said Ogrince, who owns an auto body shop in Manassas. "I scoured the market for foreclosures."
In January, he found one and bought it for $160,000. The three-bedroom house had sold for $380,000 in 2004, he said. He pays about $1,200 a month on the mortgage, instead of $1,500 in rent, the going rate for most places he looked.
Coming up with a 10 percent down payment was tough. Ogrince set up a cot in his auto body shop and lived there a few months until he got his finances in order. But it was not nearly the struggle it would have been had he been buying at the 2004 prices.
"If I had the same circumstances in 2004, it would have been really impossible to get that kind of money together," he said. "I'd be sleeping on the same cot -- or renting."