With security tightening around Washington D.C., Realtors may worry about buyers going on hold during the war, but Northern Virginia experts say the area is too desirable to suffer much of a housing setback.

"Northern Virginia is the natural suburb of our nations capital, Washington, D.C.," says Realtor Mike Wagner. "Because the United States government is constantly evolving, and by nature increasing in size, demand for property within commuting distance is and will always be at a premium. As a natural consequence of this, population densities within a ten-mile radius have reached near maximum limits.

Wagner explains, "With new growth industries (defense contractors, Internet/communication, bio-tech) that thrive with the coordination and cooperation of the government, making Northern Virginia/Washington, DC area their home, we have seen unprecedented demand and growth over the last decade. Fairfax County has become very densely populated and housing prices are very high. A simple 3-bedroom house on one acre of land might sell for one million dollars or more. Prices in this county continue to escalate (although somewhat slower due to lessening demand and alternative options in nearby counties).

"The surrounding counties of Prince William and Loudoun have undergone a tremendous transformation over the last ten years," he adds. "Much to the chagrin of many long-time residents, these counties have grown rapidly and homes there have become much sought after by Metro DC and Northern Virginian commuters. Because demand has consistently been greater than supply, these counties have been exposed to a strong seller's market with home values appreciating rapidly over the last several years.

"Due to the recent deflation of the tech bubble, lessening consumer demand, and a constant flow of new homes into these areas, we are now seeing a cooling of the market and leveling off of prices," advises Wagner. "Are we entering a buyer's market with strong downward pressure on prices? My supposition is no. With the recent emphasis on Homeland Security consolidation and development based in the Washington DC area, an influx of new arrivals continues to fuel growth in our housing market. Add an increasing presence of companies vying for defense contract dollars, and I believe we will see continued growth, consistent and ongoing transition of buyers/sellers. I predict a steady but more reasonable appreciation of housing values."

Says Realtor Peter Schlossberg, "The past month's activity suggests a moderation of the strong sellers market we've experienced for the last two years. Properties are staying on the market longer with many more price reductions and expired listings than before. There is still a strong demand from first time homebuyers for the lower priced properties, but there is definitely a softening of the market for properties above $300,000."

Suggests Schlossberg, "As always, homes that sparkle and are priced and marketed properly go quickly. Buyers should be encouraged by the return to a less frenzied atmosphere in the residential real estate market while sellers can be confident that their homes will sell quickly if they are properly priced and presented. Today's low interest rates are a powerful generator of the strong demand for homes and the experts suggest that rates will stay down through 2003.

"The low interest rates have encouraged many renters to become homeowners and a number of large, attractive rental projects developed over the past three years are now competing in this temporarily shrinking market," he says. "Investors should be careful when projecting short-term cash flow as properties are staying vacant much longer and reduced rents and other tenant incentives are becoming more common."

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Published: April 7, 2003

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