By JONATHAN HUNLEY
Published: February 25, 2009
What are local real estate agents doing to weather the doom and gloom about the housing market?
“Selling like crazy,” said Lee Odems, president of the Realtors Association of Prince William.
Last month, the region recorded a January record for sales. More homes were sold than in any January since the multiple-listing system began, Odems said.
That’s good news, especially considering the area logged Virginia’s largest percentage drop in median sales price last year.
The median sales price fell 40 percent from 2007 to 2008, going from $356,952 to $212,771, according to a Feb. 12 report from George Mason University’s Center for Regional Analysis.
But the number of sales increased by 73 percent in that same period, noted John McClain, the center’s deputy director.
The trend has continued. Odems boasted of multiple-listing data that showed 759 homes sold in January, an increase of 111 percent over January 2008’s 360 sales.
And this from a man in an industry that would seem to have little about which to boast.
“That’s the story,” said Odems, broker and owner of Buyers Advantage Real Estate Corp. in Woodbridge.
A comparison of local incomes to housing prices provides the details to that story.
Median incomes in Prince William County, Manassas and Manassas Park remain in the $90,000 range, Odems said, and the median sale price last month was $165,000.
That means the region has returned to a level of affordability not seen since 2001 or 2002, he said.
So prices are low, and houses are selling. The only thing missing from the market, Odems said, is consumer confidence.
Some people are worried about buying; others think they can stick it out for even lower prices.
Considering everything, though, Odems said, “I think it’s a relatively safe time to buy.”
Also, just because national numbers for the housing market may look scary, local data may not follow the same trend, he noted. Sometimes the figures can vary widely even inside a locality, or a smaller area.
“Real estate is seriously local,” Odems said.
Lately, much of the local real estate market has been focused on foreclosures.
But McClain said the drop in median sales price last year can’t all be contributed to one factor.
For example, over the past few years, the Prince William area had more homes under construction than other places, which meant more sales competition for existing homes.
That led to a much bigger imbalance between supply and demand even before homeowners started defaulting on loans in large numbers.
“It started out as a basic market overheating,” McClain said.
Getting out of the market bust will require housing prices to hit a bottom point, which foreclosures will help to find, he said.
The road there is tough, though, and means the loss of jobs in the construction and financial services sectors.
The upshot is that there are great buys out there for anyone who is looking, especially investors.
“That’s the way it always happens in these down times,” McClain said.
Staff writer Jonathan Hunley can be reached at 703-369-5738
Friday, February 27, 2009
Tuesday, February 24, 2009
FIRST TIME HOMEBUYER TAX CREDIT - IT IS REAL MONEY, NOT JUST A DEDUCTION
Did You Know (Tax Credit),,
Well ...... it's the one thing that we can actually start promoting NOW from the recently passed Economic Stimulus Plan. Done Deal. So if you've been working with a customer who's been sitting on the fence about purchasing ........ well NOW you can go back to them with some good news ..... news that might just take them off that fence (and into a home). Sure, I know -- you're saying "But Dwight, there is already a Home Buyer Tax Credit in effect -- it helped some, but not all that much".
Yep. But take a look at the reasons why this newer version is much more buyer-friendly than the one that took effect last July ('08). Let's go to bullet-world:
) The NEW tax credit is for $8,000. (Before it was for $7500.)
) The NEW tax credit is available for home purchases made between 1/1/09 thru 11/30/09. (Before it was 4/9/08 thru 6/30/09.)
) The NEW tax credit has NO repayment requirement. (Before the homeowner paid back $500/yr for 15 years, i.e., full payback.)
) The NEW tax credit has a 3-year recapture requirement (if the home is sold within 3 years). (Before if the home sold within the 15-year repayment period, the outstanding was recaptured on sale.)
) The NEW tax credit allows for MRBs .... bond loans(VHDA). (Before there was NO credit for state/local bond funding.)
So folks, THERE are five good reasons to "talk the NEW Homebuyer Tax Credit up" ....... it's improved, and it's NOW. Not all that familiar with the overall tax credit to begin with? Here are bullet points to synopsize, over and above the points mentioned above. Let us slice:
) The dollar amount of the credit is actually 10% of the purchase price, up to a max credit of $8,000. (Ex: $72,000 purchase price = $7,200 tax credit.)
) The credit is available for principal residences only (owner occupied).
) The credit is available to first time homebuyers -- note that the definition of a first time HB is a purchaser (and purchaser's spouse) who has not owned a principal residence in three years previous to purchase. Owning a second home(s) or an investment property(s) does not disqualify a person as long as the principal residence rule is intact.
) There are income limits -- To receive full credit the max AGI (adjusted gross income) for individuals is $75K; for joint returns it's $150K. There is a phase out above those caps.
) Any house, anywhere -- new/old, cheap/expensive, REO/short sale/regular, a manu or a hi-rise, a dump or a palace -- if the buyer is "eligible", the credit is there.
) AND I'VE SAVED THE BEST FOR LAST: This is an actual tax CREDIT -- it's not a tax DEDUCTION!!! As such, this is a dollar-for-dollar tax REDUCTION -- the buyer's tax liability for the year of purchase may be reduced, eliminated, OR he/she might even receive a "refund". (Example: The Purchaser is eligible for the full $8,000 credit; he/she has a total tax liability of $2700; the $2700 wipes to -0-, and the purchaser will receive a refund of $5,300 from the filed tax return.) Money INTO the pocket BECAUSE you bought ..... likely at a great price; likely at a great rate; likely with a PITI that competes loudly with renting.
Where we have to wait 'til March 4th for the final "details" on many of the 2009 Stimulus plans (and beyond that for lender interpretation and decisions), this one -- the FIRST TIME HOMEBUYER TAX CREDIT -- we don't have to wait for. It's here. It's now. It's good.
Well ...... it's the one thing that we can actually start promoting NOW from the recently passed Economic Stimulus Plan. Done Deal. So if you've been working with a customer who's been sitting on the fence about purchasing ........ well NOW you can go back to them with some good news ..... news that might just take them off that fence (and into a home). Sure, I know -- you're saying "But Dwight, there is already a Home Buyer Tax Credit in effect -- it helped some, but not all that much".
Yep. But take a look at the reasons why this newer version is much more buyer-friendly than the one that took effect last July ('08). Let's go to bullet-world:
) The NEW tax credit is for $8,000. (Before it was for $7500.)
) The NEW tax credit is available for home purchases made between 1/1/09 thru 11/30/09. (Before it was 4/9/08 thru 6/30/09.)
) The NEW tax credit has NO repayment requirement. (Before the homeowner paid back $500/yr for 15 years, i.e., full payback.)
) The NEW tax credit has a 3-year recapture requirement (if the home is sold within 3 years). (Before if the home sold within the 15-year repayment period, the outstanding was recaptured on sale.)
) The NEW tax credit allows for MRBs .... bond loans(VHDA). (Before there was NO credit for state/local bond funding.)
So folks, THERE are five good reasons to "talk the NEW Homebuyer Tax Credit up" ....... it's improved, and it's NOW. Not all that familiar with the overall tax credit to begin with? Here are bullet points to synopsize, over and above the points mentioned above. Let us slice:
) The dollar amount of the credit is actually 10% of the purchase price, up to a max credit of $8,000. (Ex: $72,000 purchase price = $7,200 tax credit.)
) The credit is available for principal residences only (owner occupied).
) The credit is available to first time homebuyers -- note that the definition of a first time HB is a purchaser (and purchaser's spouse) who has not owned a principal residence in three years previous to purchase. Owning a second home(s) or an investment property(s) does not disqualify a person as long as the principal residence rule is intact.
) There are income limits -- To receive full credit the max AGI (adjusted gross income) for individuals is $75K; for joint returns it's $150K. There is a phase out above those caps.
) Any house, anywhere -- new/old, cheap/expensive, REO/short sale/regular, a manu or a hi-rise, a dump or a palace -- if the buyer is "eligible", the credit is there.
) AND I'VE SAVED THE BEST FOR LAST: This is an actual tax CREDIT -- it's not a tax DEDUCTION!!! As such, this is a dollar-for-dollar tax REDUCTION -- the buyer's tax liability for the year of purchase may be reduced, eliminated, OR he/she might even receive a "refund". (Example: The Purchaser is eligible for the full $8,000 credit; he/she has a total tax liability of $2700; the $2700 wipes to -0-, and the purchaser will receive a refund of $5,300 from the filed tax return.) Money INTO the pocket BECAUSE you bought ..... likely at a great price; likely at a great rate; likely with a PITI that competes loudly with renting.
Where we have to wait 'til March 4th for the final "details" on many of the 2009 Stimulus plans (and beyond that for lender interpretation and decisions), this one -- the FIRST TIME HOMEBUYER TAX CREDIT -- we don't have to wait for. It's here. It's now. It's good.
Thursday, February 19, 2009
TAX CREDIT FOR HOMEBUYERS & HOUSING STIMULUS PACKAGE
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
Monday, February 16, 2009
What did realtors want for Obama's stimulus package?
Here's our take on the Stimulis Bill and Treasury announcements made this week. We look at the Stimulis package AND the Treasury's package holistically, in compliment with each other - mostly because that's how the Obama team is looking at it. Your representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have). Here they are: 1) get loan limits raised for high cost areas, 2) make the $7,500 tax credit NOT a loan, 3) try to find ways to push interest rates down (which are higher than they should be due to systemic risk right now) by 200 basis points, and 4) help provide solutions to the foreclosure/short sale problem.
So here's what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.
In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
We did make a run at the $15,000 credit -- and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of 'what we are willing to give up to get a $15,000 tax credit' and kept the debate again, on how much it should be. It's pretty hard to complain when they give you what you ask for and you lose something you never had.
While we study the Treasury specifics on their major role in providing the rest of the housing solution -- there is much more to come and we are working diligently with the Administration to help 'unclog the pipeline' and get capital flowing into housing again.
***************FURTHER CLARIFICATION (SEE BELOW)***********
Did You Know (Tax Credit),,
Well ...... it's the one thing that we can actually start promoting NOW from the recently passed Economic Stimulus Plan. Done Deal. So if you've been working with a customer who's been sitting on the fence about purchasing ........ well NOW you can go back to them with some good news ..... news that might just take them off that fence (and into a home). Sure, I know -- you're saying "But Dwight, there is already a Home Buyer Tax Credit in effect -- it helped some, but not all that much".
Yep. But take a look at the reasons why this newer version is much more buyer-friendly than the one that took effect last July ('08). Let's go to bullet-world:
) The NEW tax credit is for $8,000. (Before it was for $7500.)
) The NEW tax credit is available for home purchases made between 1/1/09 thru 11/30/09. (Before it was 4/9/08 thru 6/30/09.)
) The NEW tax credit has NO repayment requirement. (Before the homeowner paid back $500/yr for 15 years, i.e., full payback.)
) The NEW tax credit has a 3-year recapture requirement (if the home is sold within 3 years). (Before if the home sold within the 15-year repayment period, the outstanding was recaptured on sale.)
) The NEW tax credit allows for MRBs .... bond loans(VHDA). (Before there was NO credit for state/local bond funding.)
So folks, THERE are five good reasons to "talk the NEW Homebuyer Tax Credit up" ....... it's improved, and it's NOW. Not all that familiar with the overall tax credit to begin with? Here are bullet points to synopsize, over and above the points mentioned above. Let us slice:
) The dollar amount of the credit is actually 10% of the purchase price, up to a max credit of $8,000. (Ex: $72,000 purchase price = $7,200 tax credit.)
) The credit is available for principal residences only (owner occupied).
) The credit is available to first time homebuyers -- note that the definition of a first time HB is a purchaser (and purchaser's spouse) who has not owned a principal residence in three years previous to purchase. Owning a second home(s) or an investment property(s) does not disqualify a person as long as the principal residence rule is intact.
) There are income limits -- To receive full credit the max AGI (adjusted gross income) for individuals is $75K; for joint returns it's $150K. There is a phase out above those caps.
) Any house, anywhere -- new/old, cheap/expensive, REO/short sale/regular, a manu or a hi-rise, a dump or a palace -- if the buyer is "eligible", the credit is there.
) AND I'VE SAVED THE BEST FOR LAST: This is an actual tax CREDIT -- it's not a tax DEDUCTION!!! As such, this is a dollar-for-dollar tax REDUCTION -- the buyer's tax liability for the year of purchase may be reduced, eliminated, OR he/she might even receive a "refund". (Example: The Purchaser is eligible for the full $8,000 credit; he/she has a total tax liability of $2700; the $2700 wipes to -0-, and the purchaser will receive a refund of $5,300 from the filed tax return.) Money INTO the pocket BECAUSE you bought ..... likely at a great price; likely at a great rate; likely with a PITI that competes loudly with renting.
Where we have to wait 'til March 4th for the final "details" on many of the 2009 Stimulus plans (and beyond that for lender interpretation and decisions), this one -- the FIRST TIME HOMEBUYER TAX CREDIT -- we don't have to wait for. It's here. It's now. It's good.
So here's what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.
In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
We did make a run at the $15,000 credit -- and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of 'what we are willing to give up to get a $15,000 tax credit' and kept the debate again, on how much it should be. It's pretty hard to complain when they give you what you ask for and you lose something you never had.
While we study the Treasury specifics on their major role in providing the rest of the housing solution -- there is much more to come and we are working diligently with the Administration to help 'unclog the pipeline' and get capital flowing into housing again.
***************FURTHER CLARIFICATION (SEE BELOW)***********
Did You Know (Tax Credit),,
Well ...... it's the one thing that we can actually start promoting NOW from the recently passed Economic Stimulus Plan. Done Deal. So if you've been working with a customer who's been sitting on the fence about purchasing ........ well NOW you can go back to them with some good news ..... news that might just take them off that fence (and into a home). Sure, I know -- you're saying "But Dwight, there is already a Home Buyer Tax Credit in effect -- it helped some, but not all that much".
Yep. But take a look at the reasons why this newer version is much more buyer-friendly than the one that took effect last July ('08). Let's go to bullet-world:
) The NEW tax credit is for $8,000. (Before it was for $7500.)
) The NEW tax credit is available for home purchases made between 1/1/09 thru 11/30/09. (Before it was 4/9/08 thru 6/30/09.)
) The NEW tax credit has NO repayment requirement. (Before the homeowner paid back $500/yr for 15 years, i.e., full payback.)
) The NEW tax credit has a 3-year recapture requirement (if the home is sold within 3 years). (Before if the home sold within the 15-year repayment period, the outstanding was recaptured on sale.)
) The NEW tax credit allows for MRBs .... bond loans(VHDA). (Before there was NO credit for state/local bond funding.)
So folks, THERE are five good reasons to "talk the NEW Homebuyer Tax Credit up" ....... it's improved, and it's NOW. Not all that familiar with the overall tax credit to begin with? Here are bullet points to synopsize, over and above the points mentioned above. Let us slice:
) The dollar amount of the credit is actually 10% of the purchase price, up to a max credit of $8,000. (Ex: $72,000 purchase price = $7,200 tax credit.)
) The credit is available for principal residences only (owner occupied).
) The credit is available to first time homebuyers -- note that the definition of a first time HB is a purchaser (and purchaser's spouse) who has not owned a principal residence in three years previous to purchase. Owning a second home(s) or an investment property(s) does not disqualify a person as long as the principal residence rule is intact.
) There are income limits -- To receive full credit the max AGI (adjusted gross income) for individuals is $75K; for joint returns it's $150K. There is a phase out above those caps.
) Any house, anywhere -- new/old, cheap/expensive, REO/short sale/regular, a manu or a hi-rise, a dump or a palace -- if the buyer is "eligible", the credit is there.
) AND I'VE SAVED THE BEST FOR LAST: This is an actual tax CREDIT -- it's not a tax DEDUCTION!!! As such, this is a dollar-for-dollar tax REDUCTION -- the buyer's tax liability for the year of purchase may be reduced, eliminated, OR he/she might even receive a "refund". (Example: The Purchaser is eligible for the full $8,000 credit; he/she has a total tax liability of $2700; the $2700 wipes to -0-, and the purchaser will receive a refund of $5,300 from the filed tax return.) Money INTO the pocket BECAUSE you bought ..... likely at a great price; likely at a great rate; likely with a PITI that competes loudly with renting.
Where we have to wait 'til March 4th for the final "details" on many of the 2009 Stimulus plans (and beyond that for lender interpretation and decisions), this one -- the FIRST TIME HOMEBUYER TAX CREDIT -- we don't have to wait for. It's here. It's now. It's good.
Saturday, February 7, 2009
PRINCE WILLIAM COUNTY REAL ESTATE STATISTICS 4TH QUARTER 2008
Prince William County
ECONOMIC INDICATORS NEWSLETTER
Volume 8, Issue 4 October - December 2008
Economic Focus
WOW. What a year it was. Viewed from the
vantage point of January 2009, the year just ended,
2008, must be considered, for better or worse, a
critical juncture in our economic and political
story. It began with the springtime of our cautious
hope and finished a veritable winter of our shaken
despair. What Casandra among us foresaw the
depth and breadth of our current situation? And is
there a Champollion in our ranks who can decode
the economic Rosetta Stone we face over the next
year or so?
Consider these numbers, if you will:
In January 2008 unemployment in the United
States was 4.9%; in Prince William County it stood
at 3.2%. By December 2008, the unemployment
rate in the United States had increased to 7.2%, as
nearly 3 million jobs were lost to payrolls; by
November 2008 (the latest date available) the
County’s unemployment rate was 3.9%, translating
into about 1,500 more unemployed workers locally
over the course of the year.
The nation’s gross domestic product (GDP) was
reported at 0.9% in the first quarter and a rather
robust 2.8% in the second quarter, contracted in the
third at -0.5% and -3.8% in the fourth, prompting
at the end of the year, the economic world to
announce what the rest of the world already knew
was a recession. As we moved forward towards
the end of the year, the economy seemed to spit out
one bad story after another, as the housing market
spilled over into the financial and credit market,
which spilled over into retail and auto sales and the
plague spread.
The Dow Jones Industrial Average in January 2008
was hovering at around 13,000, actually peaking
during the year at over 13,100 in early May before
plummeting to just over 8,000 by November.
Estimates of lost wealth range from $10 to $50
trillion over the last year. In January, Merrill
Lynch, Bear Stearns, AIG, Fannie Mae, Freddie
Mac, Countrywide and Washington Mutual were
mainstays of strength in their respective markets;
by December, no more. Profoundly changed or
gone with the wind.
Highlights
• Fourth quarter 2008 GDP: -3.8%, follows 3rd
Quarter at -0.5%, expected to continue negative
over next 2 or 3 quarters.
• National unemployment rate: 7.2% in December
2008 an increase from November’s 6.8%.
• County real estate market mixed– prices are still
decreasing, inventory still high, though sales
have remained strong—over 800 monthly.
Commercial real estate seeing a rise in total
vacancy rates.
• County and area labor markets still healthy
relative to the nation, but unemployment is
increasing now, at 3.9% (November 2008).
• At-place employment: 104,892 (2nd Quarter
2007)—2.2% decrease from the previous
quarter.
Economic Indicators Newsletter 2
Housing starts, at over 1 million in January 2008,
sagged to 550,000 in December their lowest point
since the 1991 recession; locally, the average sold
price of a house in the County stood at $318,000 in
January 2008 and by December, shed about a third
of its value at $212,403.
In January 2008, Hilliary Clinton and Rudy
Guilanni appeard headed for an empire state
showdown on the national stage. By December,
the nation awaited the first African-American
president-elect. The political names of Spitzer,
Edwards, Blagojevich, Palin and Stevens were
small-print, unblemished or non-existant in the
national consciousness. Scandal may have peaked
our interest, and it is possible that the elctorate was
ready for a change, but the final political
kingmaker of 2008 was the tanking economy.
As the troubled old
year of 2008 gives
way to 2009, this
much is certain:
many more questions
than answers are
apparent and a time
of volatility and
challenge are here for
the present, and
likely for some time
to come.
Fears of inflation during the first half of the year—
led by dramatic increases in energy and
transportation costs—have largely dissapated. The
new concern is a spiral of deflation, led by drop in
worldwide demand for fuel as a result of the global
economic downturn. Deflated costs for fuel,
housing, apparel and transportation are greatly
appreciated by the consumer. But in a time of
consumer nervousness and drawback, deflation will
mean lower profits—particularly in retail and
transportation. This will in turn result in more
layoffs, which fuel the spiral.
Consumer confidence during the quarter reflected
the gloom and doom of the economy. In December
2008 consumer confidence stood at 38.6—the
lowest reading since the index began in 1967.
Throughout 2008 the severity and scope of the real
estate downturn spread into other areas of the
economy, notably credit and banking markets, and
has now rippled into retail.
Retail activity in the nation was down markedly as
a result of the shaken consumer. December retail
sales dropped 2.7% in December, posting one of
the worst holiday seasons in memory.
Despite the acute crisis in the housing market, the
local economy still exhibits some resilience. In
Northern Virginia, and in Prince William County,
unemployment, while increasing throughout the
year, continues to outperform the national rate. The
predominance of the federal government and
Prince William’s enviable proximity to it will help
to soften any downturn in economic activity. And,
like the impact locally of homeland security
measures in the
aftermath of 9-11, the
creation a massive
federal program to
bail out the troubled
financial sector may
well be a boon to the
Northern Virginia and
Prince William
economy. However,
the importance of real
estate revenue in
Prince William County’s fiscal considerations,
particularly from residential real estate, serves as a
major cautionary note over the next several years
and factors into all fiscal discussions.
National Economic Conditions
National economic indicators exhibited markedly
negative trends during the quarter, with relentlessly
bad economic reports, and an edgy, nervous
consumer and investor. Non-farm payrolls
declined by 584,000 in November and 524,000 in
December, establishing declines in every month of
2008. The goods-producing sector declined by
634,000 jobs during the quarter, specifically in
Source: Bureau of Labor Statistics
Economic Indicators Newsletter 3
manufacturing, which shed 376,000 jobs and
construction, which declined by 265,000 jobs.
Service-providing jobs declined by 897,000 during
the quarter. Retail trade jobs declined in the
quarter by 234,000 and business services declined
by 339,000 jobs. Real Gross Domestic Product
(GDP) is the broadest measure of economic
activity in the United States and is a reliable
indication of the overall strength and performance
of the national economy. The 2007 annual rate of
2.5% was slightly less than the average over the
last 4 years of 2.8%; the Fed’s target is 3.0%. U. S.
Gross Domestic Product began 2008 with a rather
modest 0.9% in the first quarter (revised in July),
but grew at a rather robust pace of 3.4% in the
second quarter. GDP for the 3rd Quarter 2008 was
-0.3% a reflection of a slowing economy. This was
followed by a dismal 4th Quarter decline of 3.9%.
Most predictions are for contraction for the first
half of 2009 as the economy reacts to the financial
crisis and tightening retail activity.
This publication includes an index of economic
indicators for the United States economy and is
provided quarterly. This index is based on 53
major indices, each nominally scored from 0 to
200. A score of 100 indicates expected or neutral
impact to the economy; a score of 0 indicates
severely negative impact or under performance,
while a score or 200 indicates a tremendously
positive impact or better than expected
performance.
• Labor Market – Payroll jobs declined by
1,531,000 during the quarter, compared to
699,000 job loss in the previous quarter. For
the year, non-farm payrolls in the United States
declined by 2,979,000. Initial claims for
unemployment benefits for the week of
December 29 were 499,000, well above the
400K weekly level which economists consider
the benchmark for a weak job market. The
national unemployment rate in December was
7.2% an increase from August’s 6.1%; in
January 2008, unemployment stood at 4.9%
Unemployment among women aged 20 and
above was 5.9%, compared to 4.2% in January;
among men 20 years and older, unemployment
stood at 7.2%, compared to 4.2% in January.
• Leading Indicators – The index of leading
indicators was -0.3% in December, as
compared to -0.4% in November, either a false
positive or an early glimmer of hope. The index
is designed to signal changes in economic
activity over the next few months.
• Automobiles – The nation’s auto industry
continued to feel the effects of both the ongoing
financial and credit crisis as well as consumer
uneasiness over the economy in general.
Domestic auto sales in November were
reported at 3.3 million, a 13.2% decline from
October’s 3.8 million, continuing a serious
erosion over the course of the year. Sales of
light domestic trucks were reported at 4.4
million in November, a 7.3% improvement
from October’s 4.1 million, but still troubling
when compared to August’s 5.9 million. Total
sales of automobiles and light trucks, including
foreign, was reported at 10.2 million in
November, a 3.8% decline from October’s 10.6
million. Domestic sales as a percentage of all
sales in the United States was reported at
75.5% in November. The industry may need to
consolidate. The National Automobile Dealers
Association (NADA) estimates that 700
dealerships may have closed in 2008 on top of
430 that closed in 2007. Fewer dealerships will
result in the loss of approximately 37,000 jobs
Our national index of economic indicators for
the 4th Quarter 2008 was 49.06 an indication
of substantial under-performance. In the 3rd
Quarter 2008, the national index was 63.39.
Economic Indicators Newsletter 4
and impact retail sales. Auto sales make up
18% of retail sales in the United States.
• Housing Industry – Some 550,000 housing
starts were reported in December 2008, a
15.5% decline from November. Housing starts
reached a 17 year low in March as did permits
to build. There was some improvement in early
summer, but this gave way to further
deterioration in the last half of the year. The
continuing bad news in this regard probably
served as a downward catalyst in financial
markets here and abroad. The plunge has been
a large drag on economic growth as further risk
surrounds the defaults/foreclosures that come
as a result of falling home prices and high loan
to value ratios. Any upturn in new construction
could be a long way off. The correction for the
inflated housing market was expected (and
needed) but not to the severe extent we are
witnessing. Poor quality mortgage
underwriting has added strongly to the
downturn. Stability will have to wait for new
home sales to tick higher and unsold inventory
to decline. For now, the majority of existing
homes that are selling are lower-priced and
foreclosed properties. Housing starts have
fallen over 60% since the January 2006 peak.
Building permits registered a 10.7% decrease in
December from November, with 549,000 new
permits reported nationally in December 2008.
By comparison, 786,000 permits were issued
nationally in September, a number which at the
time was considered a troubling indicator.
New home sales followed housing starts and
permits, reaching a 13 year low in December, at
331,000 reported nationwide, a 2.1% decline
from November’s 338,000. Existing home sales
were reported at 4.74 million in November, a
6.5% increase from November’s 4.45 million—
fueled by increases in sales of foreclosed and
other distressed properties. Indications are that,
despite modest improvement in existing home
sales during the quarter, and the imposition of a
moratorium on new foreclosures in December,
a new wave of pre-foreclosed, auction and
bank-owned properties can be anticipated in
2009 that will substantially add to an already
burgeoning inventory of unsold homes on the
market. The data suggested that more
Americans could lose their homes--many now
as the result of the troubled economy and not
necessarily due to bad judgment--and that the
housing market’s troubles might persist longer
than many analysts have been predicting.
• Inflation – The Consumer Price Index (CPI)
for December was -0.7 compared to August’s –
1.7%. Energy, motor fuel, transportation and
apparel led the declines, with fears of inflation
checked for the present. In fact, the new
concern is for deflationary pressures, resulting
in lower profit margins for businesses and
increasing unemployment. The core CPI, which
removes energy and other costs, was flat in
November and December. The Producer Price
Index (PPI), a measure of wholesale costs,
decreased by 1.9% month over month in
December following November’s decline of
2.2%. The core PPI increased by 0.2% in
December 2008 from November’s 0.1%.
Local Economic Conditions
Prince William County economic indicators were
mixed: continued downward trend on prices in the
housing market, but with strong volume of sales;
increased commercial inventories but also
increasing vacancy rates; increasing unemployment
rates, but still outperforming the state and the
nation. But still dominating the local economy: the
local real estate market.
According to data from Metropolitan Regional
Information Systems (MRIS), home sales in 2008
(single family, townhouses and condominiums) in
Prince William County totaled 8,398 - an 80.9%
increase from the 4,642 units sold in 2007 but a
25.7% decline from the peak year of 2005 when
11,301 homes were sold in the County. In the fiveyear
period 2001-2005 an average of 9,334 homes
were sold annually in the County; in the three year
period 2006-2008, an average of 6,537 homes were
sold annually (approximately 70% of the 2001-
2005 average). The average sale price of homes
sold in 2008 was $257,927—a decline of over
$137,000, or 34.8%, from the previous year, when
the average sold price was $395,616. Clearly,
while the volume of homes sold in the County has
Prince William County
Economic Indicators Newsletter 5
rebounded during the year, and particularly in the
second half of the year, the average sold price has
continued to drop, an indication that homes in the
more modest ranges and bank-owned homes
comprise most of the market in Prince William
County.
Home sales in Prince William County for
December 2008 continued to reflect a troubled
market, though some positive signs were apparent.
Some 3,596 properties were in the County’s
inventory of homes for sale in December 2008, a
decrease of over 2,200 (39%) since April. Home
sales, which increased dramatically over the
summer, continued at a healthy pace during the 4th
Quarter, with an average of over 800 homes sold
monthly. These numbers indicate a significant
trend as compared to January and February 2008,
when fewer than 400 homes were sold monthly,
but must be tempered with the knowledge that a
large proportion of sales in the County are
currently made up of foreclosed properties.
The volume of foreclosures and bank sales in the
County is reflected in the ratio of homes on the
market to sales. The inventory-to-sales ratio has
declined during the year from 16.5 in February to
4.3 in December—the lowest point since December
2005 and a definite improvement since September
2007, when the ratio stood at 18.6. By comparison,
the ratio of homes on the market to sales in
Northern Virginia was 4.9 in December.
Manassas, Manassas Park and Prince William
County currently rank first, second and third
respectively in Northern Virginia in this category.
Home sale prices continued to decline throughout
the quarter, with the average home in the county
selling for $212,403 in December. This represents
a decline of over $246,000 (-54%) in the average
sale price since December 2005, when the average
home in Prince William County sold for over
$458,000. The increase in sales, coupled with
decreased prices from a year earlier, suggest that
lower priced homes, such as those found in
foreclosure, bank auctions and short sales, are what
are moving in the market. This may be the
precurser to the entire market’s moving to a more
reasonable state, but a turn around is quite some
time off with a still substantial inventory of homes
on the market—a market still swollen with
foreclosed properties; and chances are that any
upturn will see much more modest appreciation of
home values over longer periods of time.
A further indication of intransigent problems in the
real estate market is the number of “distressed”
properties, meaning homes in pre-foreclosure
(mortgagee has missed at least 3 mortgage
payments), auction (property has been publicly
advertised and put up for auction) and bank-owned
(lender has foreclosed). Realtytrac.com is an online
service that tracks this type of activity across
the nation. In April 2007, a total of 1,103
distressed properties were reported in Prince
William County, including 70 pre-foreclosed, 448
auction and 585 bank-owned. By January 2008,
the number shot up to over 5,000 distressed
properties, with expectations that at least one more
wave was on the way. In December 2008,
Realtytrac.com reported an average of over 8,300
distressed properties in Prince William County.
The number of foreclosed properties in Prince
William County, as recorded by the County, have
followed this dramatic trend. In 2006, Prince
William County recorded a total of 249
foreclosures; by 2007, this number had increased
by over tenfold to 2,805; in 2008, some 6,549
Source: Metropolitan Regional Information System
Source: realtytrac.com
Economic Indicators Newsletter 6
foreclosures were reported in Prince William
County, an increase of 134% in one year. In late
2008, a moritorium was imposed on foreclosures
that was extended thorough the early part of 2009.
This is reflected in the diminished number of
distressed properties in December 2008.
Expectations are that once this moritorium is lifted,
distressed properties will increase and continue this
trend, at least through the first half of the year.
This publication includes an index of economic
indicators for the Prince William economy and is
provided quarterly. The index of economic
indicators for Prince William County includes
nineteen local economic indices each nominally
scored from 0 to 200. A score of 100 indicates
expected or neutral impact to the economy; a score
of 0 indicates severely negative impact or under
performance, while a score or 200 indicates a
tremendously positive impact or better than
expected performance.
• Labor Market – The civilian labor force was
205,771 in November 2008; there were
197,846 employed persons in the county in
November 2008; the unemployment rate for
Prince William County was 3.9% in November
compared to 3.5% in October—a troubling
trend, but still well below the national
unemployment rate of 6.8% in November.
• At-place Employment - According to data
from the U.S. Department of Labor and the
Virginia Employment Commission, Prince
William County has outpaced regional, state
and national economies in businesses, and job
growth over the last five years but has mixed
results when comparing growth over the last
year. In 2008 (2nd Quarter) there were 6,960
establishments in Prince William County, a
growth rate of 4.8% since 2007 and 28.2%
since 2003 (2nd Quarter). By comparison,
Northern Virginia establishments grew by 4.1%
in one year and 19.1% since 2003; statewide,
establishments grew by 2.2% in the last year
and 15.3% since 2003. At-place employment
in Prince William County grew by 0.2% in the
last year and 17.9% since 2003. By
comparison, Northern Virginia employment
grew by 0.7% in the last year 12.0% and since
2003. Employment growth in the
Commonwealth actually declined by some 738
jobs (a growth rate of 0.0%) in the last year but
grew by 8.1% since 2003. The average weekly
wage in Prince William County grew by 7.1%
in the last year and 22.6% since 2003. At-place
average weekly wages in Northern Virginia
grew by 7.9% in the last year and 24.5% since
2003. In Virginia, weekly wages grew by 7.7%
in the last year and 23.1% since 2003. The
impact of the housing downturn has been
acutely felt in those industries related to
housing. Construction employment, for
example, declined in Prince William County by
over 4,000 net jobs (-25.1%) between
September 2005 and June 2008. Likewise, jobs
in finance and insurance and real estate
experienced a net loss of nearly 700 jobs
(18.1%) since their respective peak months of
the real estate boom.
•
Source: Virginia Employment Commission
• Commercial Inventory - According to Costar
Realty Group, a multiple listing service for
commercial property, 2008 was a year in which
the Prince William County commercial
inventory exhibited mixed signals compared to
previous years, probably in response to an
overbuilt supply, increased vacancy rates and
cautionary economic conditions. In 2008,
1,645,012 net new square feet of commercial
space (including retail) was added, compared to
over 1.634 million the previous year and 7.3
Our local index of economic indicators for the
4th Quarter 2008 was 90.00, an indication of
slightly negative performance. In the 3rd
Quarter 2008, the local index was 102.63
At-Place Establishments, Employment and Wages
Prince William Co., Northern Virginia and Virginia 2003-08
Economic Indicators Newsletter 7
million since 2004. This represents a growth
rate of 4.4% in the past year, down from an
annual average increase of 5.8% over the last 4
years. Fifty-eight new commercial buildings
(including retail) were added in 2008.
In 2008, 15 net new Office buildings were
added to the inventory; 267,444 net new square
feet of Office space were added, an annual
growth rate of 5.1%, compared to an annual
average of 14.1% since 2004. Eight net new
Flex building was added in 2008 with 278,788
net new square feet, an annual growth rate of
7.3%, compared to an annual average of 7.2%
since 2004. Five net new Industrial buildings
were added in 2008; 156,031 net new square
feet of Industrial space were added, an annual
growth rate of 1.5%, compared to the annual
average of 3.8% since 2004. Thirty net new
retail buildings were added in 2008, with
942,749 net new square feet of space; retail
space grew by 5.4% in 2008 compared to an
annual average of 4.9% since 2004.
Vacant space and vacancy rates climbed,
largely the result of a dramatic increase in
supply over the last four years that clearly has
outpaced economic expansion. In December
2008 a total of 3.46 million square feet of
vacant space (including retail) was reported by
Costar, a vacancy rate of 8.9%. This represents
an increase of over 810,400 square feet since
December 2007, when the total vacancy rate
was 7.1%. In December 2008, 818,250 square
feet of vacant Office space were reported, an
increase of 0.5% since 2007. The Office
vacancy rate was 15.0% in December 2008,
compared to 15.6% a year earlier. Costar
reported 832,322 square feet of vacant Flex
space in Prince William County in December
2008, an increase of 25.9% since 2007. The
Flex vacancy rate was 20.3% in December
2008, compared to 17.3% the previous year.
Costar reported 893,616 square feet of vacant
Industrial space in Prince William County for
December 2008, an increase of 30.6% since
2007. The Industrial vacancy rate was 4.9% in
December 2008, compared to 3.2% in
December 2007. Costar reported 911,849
square feet of vacant Retail space in December
2008, an increase of 61.6% since 2007; the
Retail vacancy rate was 4.9% in December
2008, compared to 3.2% in December 2007.
Newsletter Notes:
The Quarterly Economic Indicators Newsletter
reports on national, regional and local economic
conditions as they impact Prince William County.
Key national indicators, such as job creation,
housing data and retail sales will have clear
meaning at the local level. Other national
indicators, industrial production, gross domestic
production and consumer confidence, for example,
may seem more prosaic and less important at the
local level. However, given the county’s proximity
to the federal government and its participation in
the metropolitan Washington economy, Prince
William County is profoundly affected by the ebbs
and flows of national conditions.
Local indicators are presented with at least two
gestures in mind: a wink at monitoring on-going
trends in the county (housing, population and costof-
living, for example) and a nod towards their
impact on the citizens of Prince William County
(labor and housing markets) and the county’s
ability to provide goods and services to its
residents.
Published By:
The treasury Management Division of the
Prince William County Department of Finance,
Editor:
Bill Vaughan
bvaughan@pwcgov.org
Commercial Inventory 2004-08 (4th Quarter)
Source: Costar Realty Group
Source: Costar Realty Group
Prince William County
ECONOMIC INDICATORS NEWSLETTER
Volume 8, Issue 4 October - December 2008
ECONOMIC INDICATORS NEWSLETTER
Volume 8, Issue 4 October - December 2008
Economic Focus
WOW. What a year it was. Viewed from the
vantage point of January 2009, the year just ended,
2008, must be considered, for better or worse, a
critical juncture in our economic and political
story. It began with the springtime of our cautious
hope and finished a veritable winter of our shaken
despair. What Casandra among us foresaw the
depth and breadth of our current situation? And is
there a Champollion in our ranks who can decode
the economic Rosetta Stone we face over the next
year or so?
Consider these numbers, if you will:
In January 2008 unemployment in the United
States was 4.9%; in Prince William County it stood
at 3.2%. By December 2008, the unemployment
rate in the United States had increased to 7.2%, as
nearly 3 million jobs were lost to payrolls; by
November 2008 (the latest date available) the
County’s unemployment rate was 3.9%, translating
into about 1,500 more unemployed workers locally
over the course of the year.
The nation’s gross domestic product (GDP) was
reported at 0.9% in the first quarter and a rather
robust 2.8% in the second quarter, contracted in the
third at -0.5% and -3.8% in the fourth, prompting
at the end of the year, the economic world to
announce what the rest of the world already knew
was a recession. As we moved forward towards
the end of the year, the economy seemed to spit out
one bad story after another, as the housing market
spilled over into the financial and credit market,
which spilled over into retail and auto sales and the
plague spread.
The Dow Jones Industrial Average in January 2008
was hovering at around 13,000, actually peaking
during the year at over 13,100 in early May before
plummeting to just over 8,000 by November.
Estimates of lost wealth range from $10 to $50
trillion over the last year. In January, Merrill
Lynch, Bear Stearns, AIG, Fannie Mae, Freddie
Mac, Countrywide and Washington Mutual were
mainstays of strength in their respective markets;
by December, no more. Profoundly changed or
gone with the wind.
Highlights
• Fourth quarter 2008 GDP: -3.8%, follows 3rd
Quarter at -0.5%, expected to continue negative
over next 2 or 3 quarters.
• National unemployment rate: 7.2% in December
2008 an increase from November’s 6.8%.
• County real estate market mixed– prices are still
decreasing, inventory still high, though sales
have remained strong—over 800 monthly.
Commercial real estate seeing a rise in total
vacancy rates.
• County and area labor markets still healthy
relative to the nation, but unemployment is
increasing now, at 3.9% (November 2008).
• At-place employment: 104,892 (2nd Quarter
2007)—2.2% decrease from the previous
quarter.
Economic Indicators Newsletter 2
Housing starts, at over 1 million in January 2008,
sagged to 550,000 in December their lowest point
since the 1991 recession; locally, the average sold
price of a house in the County stood at $318,000 in
January 2008 and by December, shed about a third
of its value at $212,403.
In January 2008, Hilliary Clinton and Rudy
Guilanni appeard headed for an empire state
showdown on the national stage. By December,
the nation awaited the first African-American
president-elect. The political names of Spitzer,
Edwards, Blagojevich, Palin and Stevens were
small-print, unblemished or non-existant in the
national consciousness. Scandal may have peaked
our interest, and it is possible that the elctorate was
ready for a change, but the final political
kingmaker of 2008 was the tanking economy.
As the troubled old
year of 2008 gives
way to 2009, this
much is certain:
many more questions
than answers are
apparent and a time
of volatility and
challenge are here for
the present, and
likely for some time
to come.
Fears of inflation during the first half of the year—
led by dramatic increases in energy and
transportation costs—have largely dissapated. The
new concern is a spiral of deflation, led by drop in
worldwide demand for fuel as a result of the global
economic downturn. Deflated costs for fuel,
housing, apparel and transportation are greatly
appreciated by the consumer. But in a time of
consumer nervousness and drawback, deflation will
mean lower profits—particularly in retail and
transportation. This will in turn result in more
layoffs, which fuel the spiral.
Consumer confidence during the quarter reflected
the gloom and doom of the economy. In December
2008 consumer confidence stood at 38.6—the
lowest reading since the index began in 1967.
Throughout 2008 the severity and scope of the real
estate downturn spread into other areas of the
economy, notably credit and banking markets, and
has now rippled into retail.
Retail activity in the nation was down markedly as
a result of the shaken consumer. December retail
sales dropped 2.7% in December, posting one of
the worst holiday seasons in memory.
Despite the acute crisis in the housing market, the
local economy still exhibits some resilience. In
Northern Virginia, and in Prince William County,
unemployment, while increasing throughout the
year, continues to outperform the national rate. The
predominance of the federal government and
Prince William’s enviable proximity to it will help
to soften any downturn in economic activity. And,
like the impact locally of homeland security
measures in the
aftermath of 9-11, the
creation a massive
federal program to
bail out the troubled
financial sector may
well be a boon to the
Northern Virginia and
Prince William
economy. However,
the importance of real
estate revenue in
Prince William County’s fiscal considerations,
particularly from residential real estate, serves as a
major cautionary note over the next several years
and factors into all fiscal discussions.
National Economic Conditions
National economic indicators exhibited markedly
negative trends during the quarter, with relentlessly
bad economic reports, and an edgy, nervous
consumer and investor. Non-farm payrolls
declined by 584,000 in November and 524,000 in
December, establishing declines in every month of
2008. The goods-producing sector declined by
634,000 jobs during the quarter, specifically in
Source: Bureau of Labor Statistics
Economic Indicators Newsletter 3
manufacturing, which shed 376,000 jobs and
construction, which declined by 265,000 jobs.
Service-providing jobs declined by 897,000 during
the quarter. Retail trade jobs declined in the
quarter by 234,000 and business services declined
by 339,000 jobs. Real Gross Domestic Product
(GDP) is the broadest measure of economic
activity in the United States and is a reliable
indication of the overall strength and performance
of the national economy. The 2007 annual rate of
2.5% was slightly less than the average over the
last 4 years of 2.8%; the Fed’s target is 3.0%. U. S.
Gross Domestic Product began 2008 with a rather
modest 0.9% in the first quarter (revised in July),
but grew at a rather robust pace of 3.4% in the
second quarter. GDP for the 3rd Quarter 2008 was
-0.3% a reflection of a slowing economy. This was
followed by a dismal 4th Quarter decline of 3.9%.
Most predictions are for contraction for the first
half of 2009 as the economy reacts to the financial
crisis and tightening retail activity.
This publication includes an index of economic
indicators for the United States economy and is
provided quarterly. This index is based on 53
major indices, each nominally scored from 0 to
200. A score of 100 indicates expected or neutral
impact to the economy; a score of 0 indicates
severely negative impact or under performance,
while a score or 200 indicates a tremendously
positive impact or better than expected
performance.
• Labor Market – Payroll jobs declined by
1,531,000 during the quarter, compared to
699,000 job loss in the previous quarter. For
the year, non-farm payrolls in the United States
declined by 2,979,000. Initial claims for
unemployment benefits for the week of
December 29 were 499,000, well above the
400K weekly level which economists consider
the benchmark for a weak job market. The
national unemployment rate in December was
7.2% an increase from August’s 6.1%; in
January 2008, unemployment stood at 4.9%
Unemployment among women aged 20 and
above was 5.9%, compared to 4.2% in January;
among men 20 years and older, unemployment
stood at 7.2%, compared to 4.2% in January.
• Leading Indicators – The index of leading
indicators was -0.3% in December, as
compared to -0.4% in November, either a false
positive or an early glimmer of hope. The index
is designed to signal changes in economic
activity over the next few months.
• Automobiles – The nation’s auto industry
continued to feel the effects of both the ongoing
financial and credit crisis as well as consumer
uneasiness over the economy in general.
Domestic auto sales in November were
reported at 3.3 million, a 13.2% decline from
October’s 3.8 million, continuing a serious
erosion over the course of the year. Sales of
light domestic trucks were reported at 4.4
million in November, a 7.3% improvement
from October’s 4.1 million, but still troubling
when compared to August’s 5.9 million. Total
sales of automobiles and light trucks, including
foreign, was reported at 10.2 million in
November, a 3.8% decline from October’s 10.6
million. Domestic sales as a percentage of all
sales in the United States was reported at
75.5% in November. The industry may need to
consolidate. The National Automobile Dealers
Association (NADA) estimates that 700
dealerships may have closed in 2008 on top of
430 that closed in 2007. Fewer dealerships will
result in the loss of approximately 37,000 jobs
Our national index of economic indicators for
the 4th Quarter 2008 was 49.06 an indication
of substantial under-performance. In the 3rd
Quarter 2008, the national index was 63.39.
Economic Indicators Newsletter 4
and impact retail sales. Auto sales make up
18% of retail sales in the United States.
• Housing Industry – Some 550,000 housing
starts were reported in December 2008, a
15.5% decline from November. Housing starts
reached a 17 year low in March as did permits
to build. There was some improvement in early
summer, but this gave way to further
deterioration in the last half of the year. The
continuing bad news in this regard probably
served as a downward catalyst in financial
markets here and abroad. The plunge has been
a large drag on economic growth as further risk
surrounds the defaults/foreclosures that come
as a result of falling home prices and high loan
to value ratios. Any upturn in new construction
could be a long way off. The correction for the
inflated housing market was expected (and
needed) but not to the severe extent we are
witnessing. Poor quality mortgage
underwriting has added strongly to the
downturn. Stability will have to wait for new
home sales to tick higher and unsold inventory
to decline. For now, the majority of existing
homes that are selling are lower-priced and
foreclosed properties. Housing starts have
fallen over 60% since the January 2006 peak.
Building permits registered a 10.7% decrease in
December from November, with 549,000 new
permits reported nationally in December 2008.
By comparison, 786,000 permits were issued
nationally in September, a number which at the
time was considered a troubling indicator.
New home sales followed housing starts and
permits, reaching a 13 year low in December, at
331,000 reported nationwide, a 2.1% decline
from November’s 338,000. Existing home sales
were reported at 4.74 million in November, a
6.5% increase from November’s 4.45 million—
fueled by increases in sales of foreclosed and
other distressed properties. Indications are that,
despite modest improvement in existing home
sales during the quarter, and the imposition of a
moratorium on new foreclosures in December,
a new wave of pre-foreclosed, auction and
bank-owned properties can be anticipated in
2009 that will substantially add to an already
burgeoning inventory of unsold homes on the
market. The data suggested that more
Americans could lose their homes--many now
as the result of the troubled economy and not
necessarily due to bad judgment--and that the
housing market’s troubles might persist longer
than many analysts have been predicting.
• Inflation – The Consumer Price Index (CPI)
for December was -0.7 compared to August’s –
1.7%. Energy, motor fuel, transportation and
apparel led the declines, with fears of inflation
checked for the present. In fact, the new
concern is for deflationary pressures, resulting
in lower profit margins for businesses and
increasing unemployment. The core CPI, which
removes energy and other costs, was flat in
November and December. The Producer Price
Index (PPI), a measure of wholesale costs,
decreased by 1.9% month over month in
December following November’s decline of
2.2%. The core PPI increased by 0.2% in
December 2008 from November’s 0.1%.
Local Economic Conditions
Prince William County economic indicators were
mixed: continued downward trend on prices in the
housing market, but with strong volume of sales;
increased commercial inventories but also
increasing vacancy rates; increasing unemployment
rates, but still outperforming the state and the
nation. But still dominating the local economy: the
local real estate market.
According to data from Metropolitan Regional
Information Systems (MRIS), home sales in 2008
(single family, townhouses and condominiums) in
Prince William County totaled 8,398 - an 80.9%
increase from the 4,642 units sold in 2007 but a
25.7% decline from the peak year of 2005 when
11,301 homes were sold in the County. In the fiveyear
period 2001-2005 an average of 9,334 homes
were sold annually in the County; in the three year
period 2006-2008, an average of 6,537 homes were
sold annually (approximately 70% of the 2001-
2005 average). The average sale price of homes
sold in 2008 was $257,927—a decline of over
$137,000, or 34.8%, from the previous year, when
the average sold price was $395,616. Clearly,
while the volume of homes sold in the County has
Prince William County
Economic Indicators Newsletter 5
rebounded during the year, and particularly in the
second half of the year, the average sold price has
continued to drop, an indication that homes in the
more modest ranges and bank-owned homes
comprise most of the market in Prince William
County.
Home sales in Prince William County for
December 2008 continued to reflect a troubled
market, though some positive signs were apparent.
Some 3,596 properties were in the County’s
inventory of homes for sale in December 2008, a
decrease of over 2,200 (39%) since April. Home
sales, which increased dramatically over the
summer, continued at a healthy pace during the 4th
Quarter, with an average of over 800 homes sold
monthly. These numbers indicate a significant
trend as compared to January and February 2008,
when fewer than 400 homes were sold monthly,
but must be tempered with the knowledge that a
large proportion of sales in the County are
currently made up of foreclosed properties.
The volume of foreclosures and bank sales in the
County is reflected in the ratio of homes on the
market to sales. The inventory-to-sales ratio has
declined during the year from 16.5 in February to
4.3 in December—the lowest point since December
2005 and a definite improvement since September
2007, when the ratio stood at 18.6. By comparison,
the ratio of homes on the market to sales in
Northern Virginia was 4.9 in December.
Manassas, Manassas Park and Prince William
County currently rank first, second and third
respectively in Northern Virginia in this category.
Home sale prices continued to decline throughout
the quarter, with the average home in the county
selling for $212,403 in December. This represents
a decline of over $246,000 (-54%) in the average
sale price since December 2005, when the average
home in Prince William County sold for over
$458,000. The increase in sales, coupled with
decreased prices from a year earlier, suggest that
lower priced homes, such as those found in
foreclosure, bank auctions and short sales, are what
are moving in the market. This may be the
precurser to the entire market’s moving to a more
reasonable state, but a turn around is quite some
time off with a still substantial inventory of homes
on the market—a market still swollen with
foreclosed properties; and chances are that any
upturn will see much more modest appreciation of
home values over longer periods of time.
A further indication of intransigent problems in the
real estate market is the number of “distressed”
properties, meaning homes in pre-foreclosure
(mortgagee has missed at least 3 mortgage
payments), auction (property has been publicly
advertised and put up for auction) and bank-owned
(lender has foreclosed). Realtytrac.com is an online
service that tracks this type of activity across
the nation. In April 2007, a total of 1,103
distressed properties were reported in Prince
William County, including 70 pre-foreclosed, 448
auction and 585 bank-owned. By January 2008,
the number shot up to over 5,000 distressed
properties, with expectations that at least one more
wave was on the way. In December 2008,
Realtytrac.com reported an average of over 8,300
distressed properties in Prince William County.
The number of foreclosed properties in Prince
William County, as recorded by the County, have
followed this dramatic trend. In 2006, Prince
William County recorded a total of 249
foreclosures; by 2007, this number had increased
by over tenfold to 2,805; in 2008, some 6,549
Source: Metropolitan Regional Information System
Source: realtytrac.com
Economic Indicators Newsletter 6
foreclosures were reported in Prince William
County, an increase of 134% in one year. In late
2008, a moritorium was imposed on foreclosures
that was extended thorough the early part of 2009.
This is reflected in the diminished number of
distressed properties in December 2008.
Expectations are that once this moritorium is lifted,
distressed properties will increase and continue this
trend, at least through the first half of the year.
This publication includes an index of economic
indicators for the Prince William economy and is
provided quarterly. The index of economic
indicators for Prince William County includes
nineteen local economic indices each nominally
scored from 0 to 200. A score of 100 indicates
expected or neutral impact to the economy; a score
of 0 indicates severely negative impact or under
performance, while a score or 200 indicates a
tremendously positive impact or better than
expected performance.
• Labor Market – The civilian labor force was
205,771 in November 2008; there were
197,846 employed persons in the county in
November 2008; the unemployment rate for
Prince William County was 3.9% in November
compared to 3.5% in October—a troubling
trend, but still well below the national
unemployment rate of 6.8% in November.
• At-place Employment - According to data
from the U.S. Department of Labor and the
Virginia Employment Commission, Prince
William County has outpaced regional, state
and national economies in businesses, and job
growth over the last five years but has mixed
results when comparing growth over the last
year. In 2008 (2nd Quarter) there were 6,960
establishments in Prince William County, a
growth rate of 4.8% since 2007 and 28.2%
since 2003 (2nd Quarter). By comparison,
Northern Virginia establishments grew by 4.1%
in one year and 19.1% since 2003; statewide,
establishments grew by 2.2% in the last year
and 15.3% since 2003. At-place employment
in Prince William County grew by 0.2% in the
last year and 17.9% since 2003. By
comparison, Northern Virginia employment
grew by 0.7% in the last year 12.0% and since
2003. Employment growth in the
Commonwealth actually declined by some 738
jobs (a growth rate of 0.0%) in the last year but
grew by 8.1% since 2003. The average weekly
wage in Prince William County grew by 7.1%
in the last year and 22.6% since 2003. At-place
average weekly wages in Northern Virginia
grew by 7.9% in the last year and 24.5% since
2003. In Virginia, weekly wages grew by 7.7%
in the last year and 23.1% since 2003. The
impact of the housing downturn has been
acutely felt in those industries related to
housing. Construction employment, for
example, declined in Prince William County by
over 4,000 net jobs (-25.1%) between
September 2005 and June 2008. Likewise, jobs
in finance and insurance and real estate
experienced a net loss of nearly 700 jobs
(18.1%) since their respective peak months of
the real estate boom.
•
Source: Virginia Employment Commission
• Commercial Inventory - According to Costar
Realty Group, a multiple listing service for
commercial property, 2008 was a year in which
the Prince William County commercial
inventory exhibited mixed signals compared to
previous years, probably in response to an
overbuilt supply, increased vacancy rates and
cautionary economic conditions. In 2008,
1,645,012 net new square feet of commercial
space (including retail) was added, compared to
over 1.634 million the previous year and 7.3
Our local index of economic indicators for the
4th Quarter 2008 was 90.00, an indication of
slightly negative performance. In the 3rd
Quarter 2008, the local index was 102.63
At-Place Establishments, Employment and Wages
Prince William Co., Northern Virginia and Virginia 2003-08
Economic Indicators Newsletter 7
million since 2004. This represents a growth
rate of 4.4% in the past year, down from an
annual average increase of 5.8% over the last 4
years. Fifty-eight new commercial buildings
(including retail) were added in 2008.
In 2008, 15 net new Office buildings were
added to the inventory; 267,444 net new square
feet of Office space were added, an annual
growth rate of 5.1%, compared to an annual
average of 14.1% since 2004. Eight net new
Flex building was added in 2008 with 278,788
net new square feet, an annual growth rate of
7.3%, compared to an annual average of 7.2%
since 2004. Five net new Industrial buildings
were added in 2008; 156,031 net new square
feet of Industrial space were added, an annual
growth rate of 1.5%, compared to the annual
average of 3.8% since 2004. Thirty net new
retail buildings were added in 2008, with
942,749 net new square feet of space; retail
space grew by 5.4% in 2008 compared to an
annual average of 4.9% since 2004.
Vacant space and vacancy rates climbed,
largely the result of a dramatic increase in
supply over the last four years that clearly has
outpaced economic expansion. In December
2008 a total of 3.46 million square feet of
vacant space (including retail) was reported by
Costar, a vacancy rate of 8.9%. This represents
an increase of over 810,400 square feet since
December 2007, when the total vacancy rate
was 7.1%. In December 2008, 818,250 square
feet of vacant Office space were reported, an
increase of 0.5% since 2007. The Office
vacancy rate was 15.0% in December 2008,
compared to 15.6% a year earlier. Costar
reported 832,322 square feet of vacant Flex
space in Prince William County in December
2008, an increase of 25.9% since 2007. The
Flex vacancy rate was 20.3% in December
2008, compared to 17.3% the previous year.
Costar reported 893,616 square feet of vacant
Industrial space in Prince William County for
December 2008, an increase of 30.6% since
2007. The Industrial vacancy rate was 4.9% in
December 2008, compared to 3.2% in
December 2007. Costar reported 911,849
square feet of vacant Retail space in December
2008, an increase of 61.6% since 2007; the
Retail vacancy rate was 4.9% in December
2008, compared to 3.2% in December 2007.
Newsletter Notes:
The Quarterly Economic Indicators Newsletter
reports on national, regional and local economic
conditions as they impact Prince William County.
Key national indicators, such as job creation,
housing data and retail sales will have clear
meaning at the local level. Other national
indicators, industrial production, gross domestic
production and consumer confidence, for example,
may seem more prosaic and less important at the
local level. However, given the county’s proximity
to the federal government and its participation in
the metropolitan Washington economy, Prince
William County is profoundly affected by the ebbs
and flows of national conditions.
Local indicators are presented with at least two
gestures in mind: a wink at monitoring on-going
trends in the county (housing, population and costof-
living, for example) and a nod towards their
impact on the citizens of Prince William County
(labor and housing markets) and the county’s
ability to provide goods and services to its
residents.
Published By:
The treasury Management Division of the
Prince William County Department of Finance,
Editor:
Bill Vaughan
bvaughan@pwcgov.org
Commercial Inventory 2004-08 (4th Quarter)
Source: Costar Realty Group
Source: Costar Realty Group
Prince William County
ECONOMIC INDICATORS NEWSLETTER
Volume 8, Issue 4 October - December 2008
Housing Stimulus Plan (National Association of Realtors)
NAR's Housing Stimulus Plan Our nation is facing an unprecedented lack of liquidity throughout every sector of the economy. This has placed insurmountable barriers in the path of too many homeowners wishing to avoid foreclosure and save their home and home buyers wishing to take advantage of the low mortgage rate environment and realize the American dream of owning a home. The NATIONAL ASSOCIATION OF REALTORS® believes it is imperative that Congress take action and restore consumer confidence in homeownership. We are calling on Congress to enact measures that address foreclosures, stabilize housing and real estate, energize credit markets, restore bank lending capacity and revitalize the economy.
Make the $7500 first-time homebuyer tax credit available to all buyers, eliminate the repayment requirements and extend the credit to December 31, 2009. In July 2008 Congress passed legislation creating a refundable tax credit for first-time homebuyers. The $7500 credit is in effect for purchases between April 9, 2008 and July 1, 2009. Consumers have shown little interest in the credit, in large part because it is not available to all purchasers and because, unlike other credits, this tax credit must be repaid.
Restore the FHA, Fannie Mae and Freddie Mac maximum loan limits to $729,750 and make them permanent. The economic stimulus loan limits for Freddie Mac, Fannie Mae and FHA expired on December 31, 2008. As a result, the maximum limit for Fannie Mae, Freddie Mac and FHA dropped from $729,750 to $625,500. Returning these limits to their 2008 levels and making them permanent will strengthen the availability of mortgage credit and expand mortgage affordability in a time when home sales and refinance activity are necessary to stabilize the housing market and move the broader economy towards recovery. This will also assure that a wide range of borrowers have access to fair and affordable mortgages.
Get Treasury’s Troubled Asset Relief Program (TARP) back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to bring down interest rate spreads to historical averages and reduce mortgage interest rates. It is crucial that the government continue its actions to bring down interest rate spreads between mortgage and Treasury rates to historical norms which will significantly reduce mortgage interest rates. Recent actions by the Federal Reserve and the Treasury are making mortgage interest rates more affordable. Mortgage rates are near 50-year lows but the spread between mortgage rates and Treasury rates are abnormally high. If rates drop in line with historic trends, home sales could rise nationally by 10 to 15 percent and stabilize prices in many parts of the country. While this is a good boost, mortgages need to be more attainable. There continues to be continuing problems impeding the delivery of mortgage credit to home buyers and those trying to avoid foreclosure. The federal government must step in and address these problems. Corrective actions that NAR is advocating include:
The Treasury Department should provide additional TARP funds to make added loans for housing, establish foreclosure prevention programs, modify more mortgage loans to prevent foreclosures to the maximum extent possible, establish an efficient and effective short sales process, or a combination of these activities.
All mortgage lenders, their servicers, Fannie Mae and Freddie Mac, and investors in mortgage assets should adopt and implement aggressive policies that result in more mortgage loan modifications to prevent as many foreclosures as possible. Where sustaining homeownership is not possible, these entities should facilitate short sales that will benefit all parties.
Mortgage lenders and private mortgage insurers should (1) reexamine underwriting standards to determine whether they have over-corrected in response to abuses in the mortgage market, and (2) remove unnecessarily strict underwriting standards (such as requiring excessively high credit scores that result in qualified borrowers being arbitrarily denied a loan).
Consumer reporting agencies (credit bureaus) should improve compliance with the Fair Credit Act, including prompt responses to consumers who seek to correct files and errors.
The FHA should make investors eligible to participate in its Section 203(k) Rehabilitation Loan Program to help dispose of large numbers of vacant foreclosed properties for rehabilitation and conversion to homeownership. Additionally, Fannie Mae and Freddie Mac should increase their selling guide ceilings on investor loans to facilitate investor participation in the housing recovery.
Congress should oppose the imposition of fees or increased fees by Fannie Mae and Freddie Mac that translate into major new costs on homebuyers and homeowners seeking fair and affordable mortgage loans.
FHASecure, which helped more than 450,000 families modify their mortgages and stay in their homes before it was sunset, should be reinstated. In addition, reforms to the Hope for Homeowners program should be made to increase its efficiency and effectiveness.
Make the $7500 first-time homebuyer tax credit available to all buyers, eliminate the repayment requirements and extend the credit to December 31, 2009. In July 2008 Congress passed legislation creating a refundable tax credit for first-time homebuyers. The $7500 credit is in effect for purchases between April 9, 2008 and July 1, 2009. Consumers have shown little interest in the credit, in large part because it is not available to all purchasers and because, unlike other credits, this tax credit must be repaid.
Restore the FHA, Fannie Mae and Freddie Mac maximum loan limits to $729,750 and make them permanent. The economic stimulus loan limits for Freddie Mac, Fannie Mae and FHA expired on December 31, 2008. As a result, the maximum limit for Fannie Mae, Freddie Mac and FHA dropped from $729,750 to $625,500. Returning these limits to their 2008 levels and making them permanent will strengthen the availability of mortgage credit and expand mortgage affordability in a time when home sales and refinance activity are necessary to stabilize the housing market and move the broader economy towards recovery. This will also assure that a wide range of borrowers have access to fair and affordable mortgages.
Get Treasury’s Troubled Asset Relief Program (TARP) back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to bring down interest rate spreads to historical averages and reduce mortgage interest rates. It is crucial that the government continue its actions to bring down interest rate spreads between mortgage and Treasury rates to historical norms which will significantly reduce mortgage interest rates. Recent actions by the Federal Reserve and the Treasury are making mortgage interest rates more affordable. Mortgage rates are near 50-year lows but the spread between mortgage rates and Treasury rates are abnormally high. If rates drop in line with historic trends, home sales could rise nationally by 10 to 15 percent and stabilize prices in many parts of the country. While this is a good boost, mortgages need to be more attainable. There continues to be continuing problems impeding the delivery of mortgage credit to home buyers and those trying to avoid foreclosure. The federal government must step in and address these problems. Corrective actions that NAR is advocating include:
The Treasury Department should provide additional TARP funds to make added loans for housing, establish foreclosure prevention programs, modify more mortgage loans to prevent foreclosures to the maximum extent possible, establish an efficient and effective short sales process, or a combination of these activities.
All mortgage lenders, their servicers, Fannie Mae and Freddie Mac, and investors in mortgage assets should adopt and implement aggressive policies that result in more mortgage loan modifications to prevent as many foreclosures as possible. Where sustaining homeownership is not possible, these entities should facilitate short sales that will benefit all parties.
Mortgage lenders and private mortgage insurers should (1) reexamine underwriting standards to determine whether they have over-corrected in response to abuses in the mortgage market, and (2) remove unnecessarily strict underwriting standards (such as requiring excessively high credit scores that result in qualified borrowers being arbitrarily denied a loan).
Consumer reporting agencies (credit bureaus) should improve compliance with the Fair Credit Act, including prompt responses to consumers who seek to correct files and errors.
The FHA should make investors eligible to participate in its Section 203(k) Rehabilitation Loan Program to help dispose of large numbers of vacant foreclosed properties for rehabilitation and conversion to homeownership. Additionally, Fannie Mae and Freddie Mac should increase their selling guide ceilings on investor loans to facilitate investor participation in the housing recovery.
Congress should oppose the imposition of fees or increased fees by Fannie Mae and Freddie Mac that translate into major new costs on homebuyers and homeowners seeking fair and affordable mortgage loans.
FHASecure, which helped more than 450,000 families modify their mortgages and stay in their homes before it was sunset, should be reinstated. In addition, reforms to the Hope for Homeowners program should be made to increase its efficiency and effectiveness.
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