- The Washington Times - Thursday, September 30, 2010

Once again, I thought it would be helpful to show you what’s been happening with home prices. Today’s charts show median resale prices for jurisdictions in the Washington area for nearly three years.

I considered giving you just the past couple of years of data, but context makes all the difference.

For example, if the Virginia chart began at January 2009, all you would know would be that home prices in Virginia have gone up lately. By going back to January 2007, we can see the recent rise in prices in Virginia is more of a recovery than anything else.

Loudoun and Prince William counties show that recovery most clearly. You can see that prices fell hard in those counties in 2008, hitting bottom by the end of that year. Those lower prices, however, caught the attention of buyers. Home sales began to rise in 2009 because of the lower prices, low interest rates and federal tax credits.

In fact, sales rebounded so much that we can see a clear rise in median sales prices over the past 20 months - at least in Virginia.

Home prices have not bounced back in Maryland quite the way they have in Virginia. The simple explanation for that is competition. Sales activity has improved on both sides of the Potomac, and the region as a whole is much better off than it was at the end of 2008.

Maryland, however, has not seen the same supply-and-demand ratio that Virginia did during the past year and a half. Because Virginia had more buyers (demand) fighting over a smaller supply (inventory) of homes, prices went up.

Now that sales activity has slowed throughout the region, we can’t expect to see much movement in prices until the spring market, at the earliest.

One final note: Remember, price data jumps up and down each month. It doesn’t mean your home’s value is rising and falling, too. 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 focus on data for a single month.

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