- EDEL TRIPP/THE FREE LANCE-STAR

- EDEL TRIPP/THE FREE LANCE-STAR

Home sales and the economy

Bill Freehling

Date published: 1/12/2008

Bill Freehling

McLEAN--About 22 homes were listed on the market in Stafford County for every one that sold there in December, John McClain told about 400 people gathered at the Hilton Hotel in Tysons Corner yesterday.

McClain, deputy director of George Mason University's Center for Regional Analysis, was one of three presenters at the GMU center's annual conference on the Washington-area economy.

The other two presenters spoke more broadly on the outlook for the regional and national economies. They forecast weak growth this year but said the area and nation should avoid a recession.

McClain's presentation focused on the local housing market, and gave the only specifics about the Fredericksburg region.

Stafford's ratio of 22 active listings per home sold in December was the highest in the Washington metropolitan area, McClain said. Regionwide, the ratio was about 12-to-1, well above the 2.5-to-1 ratio earlier this decade.

It would take nearly two years to clear Stafford's inventory of homes at the December rate, McClain said.

Stafford's foreclosure rate as of Dec. 28 was 183 per 10,000 units. Spotsylvania County's was 111 per 10,000. Both rates were up slightly from Nov. 30 levels, according to McClain's data. The metro average was 88 per 10,000.

Prince William County's foreclosure rate was 288 homes per 10,000 as of Dec. 28, McClain said. Loudoun County's was 235.

McClain called Stafford, Prince William and Loudoun the "California and Florida of this metropolitan area," referring to the states hit hardest by mortgage problems.

McClain said home prices, foreclosure rates and inventories in Virginia localities closest to Washington, including Arlington County, Alexandria and Fairfax County, are holding up better than in outlying areas such as Stafford and Spotsylvania.

He said building permits in the metro area have dropped to their lowest levels since 1991, when the area experienced its last recession. That drop will help bring back the balance of supply and demand to appropriate levels.

In the meantime, McClain expects continued price declines for homes, perhaps significant ones in outer localities. He doesn't think the housing market in the outer localities will fully stabilize until 2010.

Douglas Duncan, an economist with the Mortgage Bankers Association of America, said he expects the nation's housing market to hit bottom this fall. He expects the Federal Reserve to cut interest rates by a half-point this month, which will help people with mortgage rates that are about to reset.

Stephen Fuller, director of the GMU center, said the Washington-area economy is cushioned on the downside by federal-government jobs. He noted that commercial construction remains strong, and pointed to the area's 3 percent unemployment rate. He projects 2.8 percent economic growth in the region this year.

"The economy is bumping along," Fuller said. "It's not a recession. It's muddy, but not rocks."

The data used during the presentations are available at cra-gmu.org

Date published: 1/12/2008