NORTHERN VIRGINIA MARKET IMPROVING

THE HOUSING MARKET IN THE AREA is beginning to stabilize. Just today, my wife and I spotted an UNDER CONTRACT sign posted on a $900,000 palatial homestead on Lovettsville Road. Metropolitan Regional Information Services has released its July statistical report. There is some very good news. Both single family and townhouse inventory is moving at a clip, dropping a whopping fifty percent or better from a year ago across the area. Median prices are holding firm from July a year ago, although 2009 year to date median sales price numbers still average 11-20% lower than 2008 prices year to date indices.

Click below for each report (pdf):

LOUDOUN COUNTY

FAIRFAX COUNTY

FREDERICK COUNTY

ARLINGTON COUNTY

FAUQUIER COUNTY

But before we draw too many false conclusions on the wall, let's give some attention to one common misconception in the real estate statistics game. Dictionary.com defines ‘Median’ as “the middle number in a given sequence of numbers”.

Studying the linked statistics above must be done with that definition applied. Keep in mind that the median price is not the average, nor is it the mean price, which is expressed as half the house prices in any given category rise above and half the house prices in that category fall below the mean price. The median price just means that if there are 7 sales—the price of the number 4 sale is the median home price.

One cannot draw the conclusion that all prices have fallen x% when comparing July ‘08 and ‘09 median home price figures. Remember many of the sales are foreclosures. Much of the movement in our market is in the lower price points and in the most distressed price points—hence a lower median price.

Median home price is still a valuable indicator in the market but one must be careful of the conclusion one draws from the information. There is no denying prices have fallen precipitously. But, it’s important to evaluate the numbers in the right context.