Virginia Housing Market Booming Despite Heavy Foreclosures

There is widespread concern over the U.S. economy. For over a year now, the media has bombarded us with news of the declining housing market, the sub-prime mortgage crisis, and predictions of recession. But we sometimes tend to forget that the U.S. economy is the largest in the world and is remarkably resilient. This resiliency is reflected in the fact that overall performance in the second quarter of 2008 was strong. Net exports were high, consumer spending was strong, and the economy grew by more than 3%.

A thorough analysis of market trends over the past 30+ years demonstrates that the latest U.S. housing market crash was inevitable. The severity of the crash, however, came as a surprise to many experts. After the 2001-2003 recession, the housing market experienced phenomenal growth as evidenced by huge demand from buyers willing to pay significantly more for houses than they would have paid between 2001 and 2003.

In mid 2007, the bubble burst as the sub-prime market fell apart. As a result, housing prices have fallen and it’s been more difficult for consumers to obtain mortgage loans. Particularly hard hit by the declining housing market are areas like California and Florida. However, this decline in the market is not an across the board trend. There are a number of markets across the country which remain strong and Virginia is one of them.

Although Virginia did experience a rise in foreclosures and a decline in home sales in early 2008, housing prices did not vary significantly. According the Virginia Association of Realtors and the GMU Center for Regional Analysis, a comparison of average home sales prices in the first quarter of 2007 and 2008 revealed very little change; average home sales prices remained at about $300,000.

According to the Office of Federal Housing Oversight, home prices in Virginia showed steady growth between the mid-1970’s and 2007. During the 2001-2003 recessions, home prices in Virginia actually rose. In 2007, housing prices were up from the previous year’s levels, despite a decrease in the rate of appreciation. If these trends are any indication of what’s to come over the next 18 months or so, home prices in Virginia should remain steady in 2008 and may begin to rise in 2009.

Northern Virginia in particular seems to have been unaffected by the current housing crisis. Statistics show a rise in sales volume in the early part of 2008 and a notable decline in the number of days homes were on the market before selling.

As dismal as things may seem, in the right market, many people are finding great deals.

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Virginia Housing Market Booming Despite Heavy Foreclosures