Virginia Home Sales Rise, but Area Jobless Rate Also Grows
Tuesday, September 23, 2008
Home sales in Fairfax County rose 10.7 percent last month, the county's first double-digit increase in a year and a half, according to the most recent data from the company that tracks local real estate listings.
The flurry of sales activity suggests that prices have dropped low enough to lure buyers to the Washington area's largest county. But the uptick in sales is not widespread throughout the region, and unemployment data for August show a steady slowdown in the region's economy.
"The big unknown is to what extent the financial trauma we've seen in the news in the past week has scared buyers away," said Barry Merchant, senior policy analyst at the Virginia Housing Development Authority. "We know it has shaken people's confidence in the economy and their own personal situations."
Fairfax's median sales price was $375,000 in August -- meaning half the homes sold for more and half for less. That's nearly a 22 percent drop since August 2007. The last time prices fell lower was in April 2004, said John McClain, a senior fellow at George Mason University's Center for Regional Analysis.
"Perhaps we've seen enough cut out of prices to see a return to normalcy," McClain said. "We're seeing buyers move back in from the sidelines in the past few months."
Sales have dropped in Fairfax each month since March 2007 until they went flat in May and June, according to Metropolitan Regional Information Systems, the local multiple listing service. Sales rose 8 percent in July.
The trend contrasts sharply with almost every other county in the region, except for Prince William and Loudoun counties, both of which have been devastated by an unusually high share of aggressively priced foreclosures. Sales in those counties have been climbing for a few months as buyers have been snapping up deals.
In Prince William, the number of homes sold shot up 100 percent last month as prices plummeted nearly 42 percent since last year to $251,384. In Loudoun prices dropped 24.6 percent to $335,000, and sales rose by 28 percent.
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, which makes it tough to predict what's next.
"It's a sign that we're in the early stages of recovery, but in a downturn as severe as this one, the recovery is going to be much longer and slower than most people would like," Merchant said.
In Fairfax County, about half of the homes for sale are bank-owned properties, Merchant said.
Unemployment in both Virginia and Maryland rose 0.2 percent to near-record highs in August, according to the Bureau of Labor Statistics, a decline experts attribute to the collapse of the housing market in recent months.
The jobless rate in Virginia rose to 4.6 percent, the highest since January 1996, and Maryland to 4.5 percent, the highest since December 2003, experts say. Unemployment in the District fell by 0.2 percent, to 7 percent. The national average is 6.1 percent and represents a 1.3 percent increase from August 2007.
The bureau is scheduled to release data from the Washington region next week, a spokesman said. Because of a growth in government contracts, unemployment in Northern Virginia and in Maryland suburbs surrounding the District traditionally has been much lower than other parts of the states and in other regions around the country. The local rate in July was 4.1 percent, up from 3.2 percent a year earlier.
Still, with a slowdown in the construction and financial services sectors and the recent turmoil on Wall Street, experts predict that the situation will worsen before it improves.
"There is emerging weakness in the economy that will persist 12 months, perhaps longer," Anirban Basu, chairman and chief executive of Sage Policy Group, an economic and policy consulting firm based in Baltimore, said yesterday.
"The economy is not enjoying any kind of relief," added Basu, who keeps tabs on Maryland's data. "We are rolling from one crisis to another."
Unemployment in Northern Virginia has risen from 2.3 percent in July 2007 to 3.4 percent in July 2008. Jobs are up in contracting, hospitality, government and health care, but down in construction, telecommunications and transportation, said William F. Mezger, chief economist at the Virginia Employment Commission.
"This summer, transportation turned negative because the airlines started cutting flight crews," Mezger said. "What's surprising in a good area like Northern Virginia, the duration of unemployment is several weeks longer than not-so-good areas."
According to the D.C. Department of Employment Services, 23,600 people were unemployed in August. The number of wage and salary jobs dropped by 400. Contracting, transportation, utilities and information services were among the sectors that lost jobs.
"We're starting to see people pulling back -- they're not filling jobs they had before," said Barbara B. Lang, president and chief executive of the D.C. Chamber of Commerce.
"I think the city is going to be called upon to provide more health and human services" for the people losing their jobs, she added.