Residential
We have one of the strongest residential markets in the country and it will only grow stronger. All of the elements are in place for a rebound in sales volume and prices! We have far more buyers than sellers and good properties fly off the market. There are only two problems. Prices are flat and very few people want to sell! How can this be? We all know what happened to our prices, overbuilding and speculation caused a bubble and that bubble popped. Our prices are now below where they should be, and conservative appraisals are restricting any increases. Without price increases the only sellers are those who have to sell, consequently we have no inventory. This problem will persist until prices are once again allowed to reflect the market and begin to increase.

Comparing Sept. 2009 to Sept. 2008, my market surveys of the Route 7 corridor Leesburg, Ashburn, Potomac Falls and Sterling showed an increase in prices of 16%! This sounds great except that what it really reflects is a greater percentage of higher priced homes being sold. There are two reasons for this. First the higher markets are starting to loosen up and second the number of lower priced homes are drying up. Our number of transactions comparing this Sept. to last Sept. decreased by 16% and I expect this trend to continue through the end of the year.

Commercial 
Our commercial markets are in trouble! We have too much inventory in all categories. Until we stop building more inventory we will continue to see commercial vacancies increase and values decline sharply. This will continue for at least another 18 months.

The rest of the story!
With real estate values falling sharply what else will this affect? TAXES! The majority of the Loudoun County income is derived from real estate taxes. When the values fall the rates have to go up for the county to continue to operate. There should be very little difference between the way we handle our personal finances and the way the county budget works. This however is not the case! We all have to live within our means but this message has never been understood by our politicians. Not only does the tax rate go up but the county budget also continues to rise. Over the next couple of years our taxes, not just our tax rate but also the amount of our total property taxes will increase dramatically. This will effect our personal finances and if they rise high enough will begin to alter the values of our property.

When someone purchases a home the single most important number is PITI (Principle, Interest, Taxes and Insurance). This determines how much you can spend monthly for a home. Simply put, if interest rates or taxes rise sharply it dramatically reduces the amount you can borrow for a home purchase. In some areas, such as New York, high taxes have traditionally held back home prices. This could become a problem here as well.

In the coming years it will become a struggle to balance the very real needs of our schools, police and other critical services with our ability to pay for them. As you can see the issue of declining property values influences not only the owner of the property but also the ability of our government to provide services to all of us.