The popping of the real estate bubble is hitting with a vengeance in Northern Virginia, according to the latest numbers compiled by the Virginia Association of Realtors. The average sales price for a home in Northern Virginia was $512,00, down $31,100 from the year before.
Long-time homeowners should escape unscathed — their property values rose so much during the boom that they should have plenty of cushion. But not all homebuyers were prudent boys and girls. Some, we can presume, tapped their rising homeowner’s equity to fund lavish spending. Others bought more house than they really needed or could afford, and now face the prospect of getting sucked dry by mortgage debt. As one of my Northern Virginia friends noted disdainfully, many purchasers of the $1 million McMansions are “house poor.” They’re spending so much of their income on mortgage payments, they don’t have enough money to furnish their houses.
While house values go down, fixed mortgages stay stable and adjustable rate mortgages go up, there is no indication that the local tax burden will decrease. My hunch is that the level of palpable unhappiness in Northern Virginia will rise exponentially, and voters will express their wrath at anyone they perceive as costing them more money. Raise regional taxes for transportation? Er… maybe in the next election cycle.
Northern Virginia is not the only place feeling pain. The Eastern Shore and Massanutten markets have seen precipitous declines as well. (Can anyone say “second home”?) To my surprise home values have increased modestly in Hampton Roads. And Richmond… well, what can I say about my home town? We’re a year behind every trend. Apparently, housing prices rose about 10 percent. Pssst. Guys, the housing boom is over. You can stop now.