- The Washington Times - Friday, May 30, 2008

During the first quarter of the year, area home builders sold 3,257 new homes in the Washington metropolitan area. That’s a drop of 39 percent compared to the first quarter of 2007.

Worse, you have to look back more than 20 years to find a year when new-home sales did so poorly.

Of course, the existing-homes market is also having a rough year, with sales at their lowest point in a decade. However, some aspects of the existing-homes market make it more competitive in a down market than the new-homes market.

For instance, many buyers today are price-sensitive.

Builders, on the other hand, have invested time, money and expertise in the construction of their homes. They may have bought the land during the market peak of 2004-05, further increasing the cost of their investment.

They need to recoup these expenses. Their ability to drop prices is limited.

There are still a lot of well-heeled buyers out there. They can buy just about anything anywhere. That’s why the most expensive resale markets in the region - Arlington and the District - are doing better than other markets.

For new-home sales, Fairfax County is having the roughest year of any local jurisdiction.

Eight years ago, Fairfax was the region’s largest new-homes market. This year, sales in Fairfax are off by 61 percent. Just 121 new homes were sold in Fairfax during the first quarter. That is just 10 percent of the sales we saw in the first quarter of 2004.

Anne Arundel County has had a much better year, although sales were down 11 percent. That’s a relatively strong market compared to the rest of the region.

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