Hottest areas cool the most

Buyers and sellers in Northern Virginia found themselves in a time warp at the end of 2005.

At the beginning of last year, the Northern Virginia communities of Fairfax County, Arlington County and the city of Alexandria were the hottest markets in the region.

Homes sold more quickly, buyers battled harder and prices rose more rapidly in those three jurisdictions than anywhere in the area.

But by the end of the year, it was suddenly 1998 again.

In February 2005, sales chances were 135 percent in Northern Virginia.

Buyers bought homes so quickly that the inventory of homes for sale was at a record low.

Buyers only had 1,584 homes to choose from in those three markets combined.

But by October, more than 7,000 homes were for sale, and they weren’t moving quickly.

Sales chances were down to only 29 percent — lower than in Montgomery, Prince George’s and the District.

Sales chances are a measure of market activity, calculated by dividing home sales by inventory. When chances fall below 20 percent, we’re in a buyers market. Many Washington-area markets could be there soon.

Another thing changed dramatically between the start of 2005 and the end. In February last year, I wrote this sentence: “Condos are the most sought-after type of housing.”

That was true, then. By the end of the year, however, the market was flooded with condominium listings that weren’t selling.

Realtors tell me that condos were the hardest type of home to buy early last year, but now they’re the easiest. That, too, reminds me of 1998. Condos were not doing well back then, and it appears an abundance of condo inventory is rewinding the clock.

One thing that is different from 1998, of course, is home prices. Even though the Northern Virginia market cooled down more drastically than other parts of the region, home prices didn’t fall through the floor.

The median sales price in Northern Virginia fluctuated some last year. In July the median was $500,000. In December it was $479,000.

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