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Virginia Real Estate Market: When will Home Values Return?

The problem with the Virginia real estate market can be summed up with just one word: unemployment. How does this impact the value of your Virginia home – and when will the prices return to their peak values?

The Unemployment Problem

Between January and March of 2010, Virginia posted 15,563 foreclosures - a six percent increase from the last quarter of 2009. Unfortunately, the unemployment problem for the Commonwealth seems to be the major problem.

The unemployment rate in Virginia stands at 7.4 percent; although this makes Virginia better than 36 other states in terms of unemployment, it is the highest unemployment rate seen in Virginia in decades. The high unemployment rate in Virginia has prevented many homeowners from paying their bills, including their mortgage. This sad fact means foreclosures and plummeting home values.

According to the Fiserv Case-Shiller Analysis, your Virginia home value is expected to return to its 2007-2008 peak levels in the third quarter of 2016.

The Effect of the Expiration of the Homebuyer Tax Credit

A quick recovery for the Virginia area is far off, as sales are sure to slip due to the expiration of the homebuyer tax credit. The natural ebb and flow of the market are expected to take over now that the government stimulus has expired. Many real estate experts are expecting home sales prices to drop about $8,000 as a result, as demand decreases and supply increases.

According to the Virginia Association of Realtors, however, all news is not bad news. This organization sees housing on the mend in Virginia as the economy continues to improve, along with consumer confidence.

Many real estate agents across the region have seen multiple offers and a sharp increase in activity during the first part of 2010, even as foreclosures and short sales continue to plague the market.

In the Richmond metropolitan area, for example, the median sales prices for a home was $190,067 in the first quarter of 2010, which was a decrease of 4.3 percent from a year prior. Sales in the region, however, rose 9.1 percent during the same period.

Richmond-area realtors all agree that the federal tax credits have been a saving grace for Richmond. Home sales in Northern Virginia saw a boom, as median prices rose nearly 13 percent to $366,407 in the first quarter of 2010. This, of course, is a positive sign, as Northern Virginia was the first area to see the onslaught of foreclosures.

Overall, Virginia has faired much better than the majority of the states in the Union, but it still has struggled with its share of problems, including a high unemployment rate and foreclosures. Home values are expected to return to this region by 2016.

10 Largest Cities in Virginia: