Shades of 2005: Falls Church Houses Are in Demand

By STEPHEN SIEGEL
Falls Church Times Staff

It’s been a relentless barrage of ugly news for real estate since the peak of the boom in 2005. Stories about declining prices, foreclosures, and banks with impaired balance sheets have been a constant refrain over the last four years.

But a turn in the market may be upon us, and home buyers are making Falls Church City one of their favorite destinations.  At least 17 houses in the City have sold this year in fewer than 21 days, and 10 of them have received a contract in less than a week, a stunning turnabout for the formerly sluggish market.  And it’s not just the result of first-time buyers suddenly able to find something they can afford, as in foreclosure-ravaged California. Homes here are selling quickly in all price ranges and neighborhoods.

For example, 109 Buxton St. was priced at $1,074,000 and had a signed contract after just five days. The highest-priced listing to sell this year in the City is 707 Villa Ridge, which took just 15 days after being priced at $1,375,000.

At more typical price levels for the City, 404 Little Falls sold in five days after being priced at $799,000, and 1011 Birch found a buyer after 6 days with an asking price of $615,000. The lowest-priced home to sell quickly has been 1010 Madison, which was priced at $514,900, sold in a single day, and subsequently has been torn down to make way for new construction.

“I think we’re seeing a definite uptake,” said real estate agent and City resident Sarah Arnold-Bouscaren, who recently sold her listing at 201 Noland St. “It went under contract the same day we listed it.”

This feverish activity all around the City comes despite a report in The Washington Post on July 28 which suggested housing sales were weaker here compared to the District, Arlington, and Alexandria, which the newspaper said were faring the best.

The reporter on the story did not respond to an email from the Falls Church Times asking how they came to that conclusion. But real estate agent and City resident Will Gaskins said of the Post’s assertion: “That’s bunk. Our absorption rate is 1.4 months of inventory. That’s pretty darn phenomenal.” The absorption rate refers to the amount of time it would take to sell all the homes listed for sale at the current sales rate. Anything under three months is generally considered a strong market, while rates above six are considered weak. Nationally, there is an 8.8 month supply of houses for sale, according to the U.S. Census Bureau, but that number could shrink in a hurry if sales accelerate.

On average, the time required to sell a house in the City this year has been comparable to, or better than, Arlington. Data from Metropolitan Regional Information Systems, Inc., the local data provider used by area real estate agents, shows that the average time to sell in Falls Church City in June was 62 days; in Arlington, it was 64. For 2009, City homes needed 65 days, Arlington 77. And the number for the City is down from 94 last year, a 31% improvement, while Arlington’s time for a sale is up 11%.

Giving the Post the benefit of the doubt, it’s possible they were referring to the fact that the number of sales in the City through June is lower this year, 56, than it was last year, 66. That’s a drop of 15%. In Arlington, sales declined just 2.4%, Ms. Arnold-Bouscaren pointed out. “It’s a very small market, and it depends on how you do your analysis. I think it’s holding up quite well,” she said.

Mr. Gaskins noted that City home sellers accepted discounts of just 5.5% off their original list price in order to get a signed contract, while that discount grew to 8.7% in the District, Arlington, and Alexandria. In a weak market, sellers would generally have to reduce prices more to sell.

Another interesting data point about the current market is that higher-end homes, which languished as the jumbo mortgage market melted down beginning in August 2007, have begun to move — at least in Falls Church City.

New construction at 314 Grove, priced at $1,199,900, and 710 West St., at $1,249,000, each received contracts in July. In both cases, the developers felt compelled to reduce their asking prices before they were able to sell. Mr. Gaskins attributes the higher-end sales to an improvement in the credit markets that he dates to the beginning of this year.  “The financing is loosening,” he said. “I’ve got a few local banks who will do 10% down with no MI (mortgage insurance) up to $1.3 million.”

That was not the case in recent years, as banks pulled way back on the credit spigot and began requiring down payments of 20% or more on homes over $1 million.

Among the homes that have sold in the City this year, 1017 Parker belonged to Pete Geren, Secretary of the Army since 2007. He plans to step down once his successor, Congressman John McHugh, a Republican from New York, is confirmed by the Senate. His house sold in 3 days.

Update, August 12: The market continues to sizzle. Since this story was written, four more houses in the City have gone under contract with minimal market time:

- 607 Hillwood, priced at $720,000, sold in 3 days;

- 905 Madison, $575,000, 8 days;

- 1306 Gibson, $585,000, 8 days;

- 1019 Spruce, $949,900, 18 days.