Date published: 4/25/2008

BY HOWARD OWEN

Sometime in the second half of this year, experts probably will tell us what we suspect already: We're in a recession.

The good news: We're in Virginia, and the Old Dominion handles recessions pretty well.

In a quarterly report on housing in Virginia done by teleconference yesterday, John McClain, a senior fellow at George Mason University's Center for Regional Analysis, said: "'Recession' is a word no longer whispered but is being said overtly. We are in some slow economic times. It probably will be that way for a while."

The economy probably will be in a recession the first half of this year, McClain said, and conditions likely won't improve until the second half of 2009.

However, he added, "Virginia has fared very well in past recessions, relative to the national picture."

For instance, the national unemployment rate after the last recession peaked at 6.4 percent in 2003. At the same time, Virginia's rate was 4.2 percent, only slightly above normal.

The report, under the auspices of the Virginia Association of Realtors, focused on the effect the economy is having on home sales, and vice versa.

Dr. Lisa Fowler, director of housing policy research at GMU, sees "no evidence of a huge decline" in Virginia's home sales.

She did say that some areas of the state are doing better than others. For instance, the foreclosure rate for the last quarter of 2007 was 111 per 10,000 owner-occupied homes in Northern Virginia but only 45 in Hampton Roads and 28 in Richmond.

"It is unlikely that the market will worsen considerably [in Virginia]," she said. "Overall, dramatic, double-digit price declines are very unlikely." She noted that the Richmond, Roanoke and Virginia Beach markets are more affordable than the nation as a whole.

Asked about figures in the Fredericksburg area, Fowler said Stafford and Spotsylvania counties have 10-12 months of housing inventory, which is among the highest rates in the Washington metro area.

Several real-estate professionals expressed optimism in the face of some daunting numbers.

Frank Hughes, president-elect of the Williamsburg Area Association of Realtors, saw the downturn in sales as "a tremendous opportunity. Buyers sitting on the sideline, in my opinion, are making an egregious error. There's a great opportunity to roll that appreciation into a new home."

Scott Brunner, CEO of the Virginia Association of Realtors, said: "I know Realtors lose credibility when they say it's a great time to buy, but at this time, under some conditions, this is the right time to buy. We've got some real opportunities in the market, statewide."

It was hard, though, to ignore some basic facts:

Home sales in Virginia were down 26 percent for the first quarter compared with the first quarter of 2007.

Home sales also were down 26 percent in the Fredericksburg area, and the median and average sales prices were down 12 percent in the area.

Statewide, the average sales price was down 5 percent, while the median sales price was unchanged from a year ago. In Stafford and Spotsylvania counties, though, the average price was down 17 percent.

The glut of foreclosed properties on the market is leading some local real-estate firms to get creative in their efforts to reduce inventories.

Last night, Century21 AdVenture in Spotsylvania held an event at which prospective buyers could take a "virtual tour" of more than 30 foreclosed homes in Fredericksburg and Orange, Stafford and Spotsylvania counties.

The event was for first-time homebuyers, investors and more, said Jennifer Kleczkowski, Century21 AdVenture's marketing director. It gave buyers a chance to see all the firm's foreclosed listings in one place, ask agents questions and then decide if they wanted to tour any of the pictured homes.

Howard Owen: 540/374-5539
Email: howen@freelancestar.com

Date published: 4/25/2008