Despite the adjustment many of the nation’s housing markets continue to experience this year, the value of a Virginia home as a wealth-building investment remains stronger than ever.
• A Virginia home purchased in 1999 for the then-median price of $125,000 would realize an 83 percent return if sold in today’s market.
• A Virginia home purchased in 2002 at the median price of $144,480 has appreciated 58 percent in the past five years.

Reality Check

• “There are three things any homeowner or prospective purchaser needs to keep in mind in this current real estate market,” said VAR President Melanie Thompson of Fredericksburg.

1. “The past three years were extraordinary for real estate markets, in terms of both sales and price appreciation; now we’re experiencing an adjustment, and it’s somewhat misleading to compare this year’s more normal markets to the historic highs of the past three years. It’s likely that despite this year’s so-called slump, 2007 may actually end up being the fourth or fifth highest home sales year in history. That’s because it’s also a remarkable opportunity for buyers. There’s substantial inventory, and seller’s are having to face reality in their pricing.”

2. “While we’ve seen some price adjustments in some of the more populous areas of Virginia, those adjustments followed an unsustainable bidding up of prices over the past couple of years. The fact that we continue to see healthy price appreciation in the current Virginia housing market – as these September numbers show – is proof of the soundness of market fundamentals. Homeowners need not be worried; the value of their homes should continue to grow at a healthy pace.”

3. “Don’t forget that the vast majority of homebuyers don’t buy homes to flip them. They buy them for shelter. It’s a long-term investment that builds wealth, establishes roots and enhances communities, and that isn’t affected one iota by this current downturn in homes sales. Those folks can rest well knowing their investment is secure, whether they’re in a starter home or a gated community.”

• Virginia REALTORS® continue to be concerned about the impact of adjustable mortgage rate adjustments on homeowners in certain kinds of ARMs. Virginia REALTORS® are supporting several key pieces of legislation in Congress to address this issue, and to see to that underwriting requirements are strengthened so that this situation can’t recur in the future.