It’s official: The housing boom is over.
The National Association of Realtors made its first definitive statement on the housing market Tuesday — which up until this point had been described as “cooling” or “slowing” — with the release of its monthly housing and economic forecast and acknowledged the end of the boom.
“I think it’s just stating the obvious,” said Walter Molony, a spokesman for the association. “We’ve come so far down from the levels we saw last year.”
A dip in home sales, an increase in inventory and slowing home appreciation rates all reflect the end of a frenzied sellers’ market. The report forecast that new home sales will fall by 13.4 percent and existing home sales will dip by 6.8 percent this year.
In the Washington region, housing inventories have already spiked in the last several months. In April, inventory of single family homes in Northern Virginia increased by 207 percent from the previous year — from 2,259 to 6,936 homes.
But despite declaring the boom over, the National Association of Realtors — and local real estate agents — continue to assure consumers that the end of the frenzied sellers’ market is a good thing.
“In recent years, we were occasionally challenged to find appropriate superlatives to describe surprisingly high home sales,” said David Lereah, the association’s chief economist. “Now the housing market has cooled, but 2006 is still expected to be the third-strongest on record. In this case, experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy and slower appreciation will help to preserve long-term affordability.”
The Washington region remains one of the highest-priced housing markets in the country, and although the housing boom is over, the area will still see property values increase. In 2006, housing prices will rise 6 percent to 12 percent, according to projections by the George Mason University Center for Regional Analysis. That’s compared to an average appreciation of 25 percent in 2005.
“What [the end of the boom] means for us is we’re going to be going from sharp double-digit increases to high single-digit increases,” Molony said.
“If you think you’re going to be able to tack 20 percent on to the selling price from a year ago, you’re not. You have to be realistic about the market.”
Average days on the market
» With the housing market significantly cooled, the average number of days a home stays on the market is climbing.
» In April the average number of days a property was on the market was 37, up from 27 in March. In April of 2005, the average number of days was minus 1, which factored in homes that sold before officially going on the market.
Source: George Mason University’s Center for Regional Analysis
