On May 2, I was struck by the “good news” about average home prices in Northern Virginia posted by Anthony Carr on his excellent blog at www.RealEstateology.org.
Carr pointed out that prices in Northern Virginia peaked in March 2006 at $537,832. Three years later, prices had dropped $157,004 on average and bottomed out in March 2009 at $380,828. That reduction represented a 29.2% decline from peak to bottom. Bad news.
Today, four years after the bust, average home prices in Northern Virginia have almost returned to their 2006 peak with a price of $528,224 in March 2013. That’s a rebound of $147,396 on the average home price in Northern Virginia since the blackest days of March 2009. (See Anthony Carr’s Northern Virginia price chart above.)
What is striking about the price recovery is that the “good news” of returned prices represents an increase of 38.7% from the worst bottom…even though today’s prices still have not quite reached 2006 levels. (When local prices DO match their 2006 peak, the rebound of $157,004 will represent a 41.2% recovery.)
How can this be? On the one hand, we had a $157,004 drop or -29.2% in 2006. Now we have a $147,396 rebound or +38.7% in 2013? How can percentages rebound more than they dropped and still prices are not as high as they were seven years ago?