The real-estate industry’s equivalent of the “f-word” – “falling,” as in “falling prices” – is beginning to be used across the nation even by some who earlier felt that the homes market would withstand economic pressures without seeing declines in sales prices.
But in the local area, one expert believes that localities remain largely insulated from the prospect of dropping prices over the near term.
Not that Lisa Sturtevant, chief economist for the multiple-listing and analytics organization Bright MLS, is necessarily bullish about the coming months.
“The party is over,” Sturtevant acknowledged in a July 28 blog posting.
“After two-plus years of bidding wars, buying sight-unseen and prices rising three times faster than normal, housing-market conditions are slowing down,” she wrote, opining that, in some ways, it would be a “welcome reprieve, a chance for buyers, sellers, Realtors, lenders and everyone who watches the housing market to catch their breath and reset.”
Sturtevant remains with the bulk of forecasters who see the housing market, overall, continuing to slow and price increases to moderate. But she also acknowledges the possibility of price drops in specific areas throughout Bright MLS’s coverage territory, which includes parts of six states (Virginia, Maryland, West Virginia, Delaware, New Jersey, Pennsylvania) plus the District of Columbia, where in 2021, a combined $142 billion in home-sales transactions were consummated.
Sturtevant pointed to five factors that could set the stage for price drops in specific locales:
• Where prices grew much faster than average over the past two years.
• Where second-home buyers drove up prices during the pandemic.
• Where remote workers have been heating up demand (rural and “exurban” markets).
• Where inventory is rising quickly.
• Where incomes are lower than the national average.
The good news? Most of the local area doesn’t meet those criteria, with Arlington, Fairfax County, the city of Falls Church, Loudoun County and Prince William County ranked in the least imperiled in a five-levels-of-risk scorecard put out by Bright MLS.
(Alexandria is in the second-lowest risk category, as is the District of Columbia. In Maryland, Montgomery County is in the lowest-risk category, Prince George’s County in the second lowest.)
Of the Bright MLS coverage area, the localities seen as most at risk of a price correction are (in descending order) Sussex County, Del.; Warren County, Va.; Worcester County, Md.; Page County, Va.; and Schuykill County, Pa.
In general, Sturtevant remains among those who see no calamity in the housing market, such as was seen 15 years ago, and believes the slowing conditions will merely put housing conditions “more in line with pre-COVID trends.”