Virginia’s top housing official cautioned yesterday that serious danger is on the horizon for tens of thousands in the region whose home mortgages “are premised on escalating home prices.” William Shelton, director of the Virginia Department of Housing and Community Development, told an audience gathered for the annual awards breakfast of the A-Home affordable housing advocacy group in Tysons Corner that “if there is a decline in home prices, there are going to be a lot of folks in a very difficult situation.”
He commented that this assessment has not received much attention yet, but added, “There is a storm cloud on the horizon that I am concerned about.”
Shelton called the current “housing affordability” squeeze in the region “a crisis.”
“It’s a tough environment,” he said. “More people are spending more of their income for housing than ever before.” But despite the crisis, among the most virulent impediments to the introduction of affordable housing remains the “NIMBY” (Not in My Back Yard) factors, he said.
In addition, federal and state subsidies for housing have either declined or not grown, making the gap between growing costs and resources even greater. “There is a very real reduction in buying power.”
He said the old guidelines that paying for a home should not exceed 30% of income “has been turned on its head.”
The conditions are impairing economic development in the state, he noted. “Companies are looking at the housing crisis here, realize there are no places their employees can afford to live, and are not coming here as a result.”
The squeeze will also be impacting regional jurisdictions and their ability to generate new tax revenues, he added.
Meanwhile, September data provided by the Northern Virginia Association of Realtors this week showed a dramatically-slowing residential real estate market throughout the region.
The month’s home sales marked a 34.92% decline in sales from a year before, while active listings grew by 66.55%. The two trend meant that out of 11,147 active listing on the market last month, only 1,547 sold.
The average number of days on the market for a home grew to 76 days, a huge jump over the 26-day average in September 2005.
The average price of a home in the region dropped by 5.71% compared to a year ago, from $543,170 to $512,152.
Overall year-to-date, average sales prices show a net gain of 1.01% compared to the same period a year ago.
By years’ end, however, based on the current trend, that net gain could turn to a negative, which could have drastic consequences on local government revenues.
Falls Church Mayor Robin Gardner told the News-Press that at a two-day retreat last weekend, the City Council was alerted by the City assessor that home values may grow by only 3% this year, a rate far less than that of recent years. “We’re going to have to get ready for the impact of this,” she said, adding that she’d heard Fairfax County may be expecting an overall increase in value of only 1%.
At the A-Home awards luncheon yesterday, Bill Berry, a co-creator of A-Home and 20-year advocate on behalf of affordable housing, was honored as the recipient of the organization’s first-ever “lifetime achievement award.”