- The Washington Times - Friday, October 2, 2009

I’ve been writing in recent weeks about the rise in sales and the drop in inventory that have encouraged home sellers this year. Those two changes almost always cause prices to rise. In fact, we are already seeing some rebound in home prices in a number of jurisdictions.

Today’s charts look at the Washington region’s resale prices for the past 20 months. Taking such a long view allows us to see how far prices fell last year, but also how they are coming back.

The pattern is most clear when you look at the Virginia jurisdictions. Prices fell hard there last year. By December 2008, the median sales price in Prince William County was down by 47 percent, and Fairfax was down by 26 percent.

However, these lower prices caught the attention of buyers. This year, buyers became more active, causing sales to rise and inventory to fall. That combination means more competition among buyers, and competing buyers are the force that pushes prices upward.

As a result, we can see a clear rise in median sales prices from February to July of this year.

Of course, those are also the six most active sales months of each year. That’s why home prices tend to rise in the first half of each year. It is important to know that, so you don’t misread the lower median prices for August. Prices typically stabilize from August through January, as buyer activity decreases.

Looking at the other chart, you’ll see that the same trends are occurring in Montgomery and Howard counties and the District.

Anne Arundel and Prince George’s counties are not seeing much of a price rebound yet. However, those two important factors (rising sales and falling inventory) are now evident in those counties, and that should lead to price recovery. Perhaps we’ll see it next spring.

One final note: Please remember that price data jumps up and down each month. It doesn’t mean your home’s value is rising and falling. Remember that different homes were sold in July than in August - as obvious as that might sound.

A few very expensive or inexpensive homes can skew a month’s data. That’s why we want to look at overall trends and not obsess over a single month’s figures.

Contact Chris Sicks by e-mail (csicks@gmail.com).

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