We’re always getting questions here at The Washington Post Real Estate section about the Washington area housing market, and sometimes, we don’t have the answers. Fortunately for us, we know who to call.
Since many of you have the same questions, we thought it might be useful to pose a question from a reader to an expert and print the response here. If you have a question you’d like answered, please e-mail us at email@example.com.
This week, we have a reader who wondered about Montgomery County after reading the latest report on the Washington area housing market.
As a proud Gaithersburg resident, why is Montgomery significantly lagging behind its closest peer, Fairfax County? By lagging, I mean all of the metrics: median sales price, monthly YOY appreciation and YTD YOY appreciation.
We posed the question to Bonnie Casper, president of the Greater Capital Area Association of Realtors and a real estate agent with Coldwell Banker Residential Brokerage. Here’s what she had to say:
Bonnie Casper: This is a really tough question — why one market performs differently from a neighboring market.
While it may appear that the year-over-year numbers make Montgomery County look as if it is lagging behind Fairfax County, it’s important to take a longer view of how these two markets have behaved throughout the recession. Below are the year-end median prices for each county going back to 2004 (prior to the recession).
Year end median prices
I would like to offer a few observations on these numbers.
●Montgomery County’s “best” year for home values was 2007 — where the median peaked at $444,000. Fairfax County peaked two years earlier, in 2005 at $479,000. Fairfax fell before Montgomery County so it makes sense that it’s recovering before Montgomery County and experiencing the “up-turn” sooner.
●Montgomery County’s housing prices didn’t fall as far as Fairfax’s. From 2007 (Montgomery County’s peak) to 2009 (Montgomery County’s bottom), the median price dropped 23.4 percent. Fairfax’s median prices dropped 26.1 percent from 2005 to its lowest point in 2009. Fairfax, therefore, has further to go to recover and thus the percentages may look better.
●Montgomery County’s median price is less than Fairfax County’s throughout the period in question, with the exception of the concentrated period when Fairfax had a deep loss. However, the patterns appear to be similar except for timing. Additionally, it is important to note that both markets have great stability.
Why one market is recovering at a different pace than another from 2009 to present is really a question for an economist. There are many factors at play, e.g., local economics, state and local public policies, demographics, etc., and I cannot begin to determine the weighing of such factors nor the implications of them.
Editor’s note: We tried finding an economist who could talk about the different factors but were unsuccessful. However, in researching the topic, we learned that Montgomery trails Fairfax in other areas, which may account in part for the housing market numbers.
According to 2011 data from the Census Bureau, Fairfax has a higher median household income ($105,797 compared to $92,909) and less unemployment (3.9 percent compared to 4.5 percent). Preliminary 2011 data from the Bureau of Labor and Statistics also indicate that Fairfax also had more job creation last year (7,635 compared to 4,608).