Raja, I don't want to bore you by reiterating what everyone else has said. This link will bring you to a recent article in the Loudoun-Times Mirror about the current state of the market. Let me know if I can be of help.

Terms like decling market can be misleading... the market is shifting, however, in late spring of last year, the prices in Loudoun very suddenly dropped about 10% in 1 month, bringing them about 25% below the prices from the year before. Since that happened, activity levels in price points below $500K have been very high in Loudoun (incl. Ashburn) with most homes that are priced right getting multiple offers, often selling above list price. The prices in that market ot the market place have been stable, with some neighborhoods even increasing slightly, for the past 9 months. Check the stats at http://www.mris.com if you don't believe me - they are straight from the MLS system that serves that area. It's a crazy market, and the buyer process is quite agonizing as buyers compete over "fire sale" prices.

Hire a stong agent that knows what's going on, and hang on for the ride. However, I feel STRONGLY that it is a great time to buy, especially if you plan to live there long term (5+ years).

This is the best time to buy over the past 10 years, especially in Loudoun County, Ashburn specifically. House prices are down to 2002-2003 levels, interest rates are in the high 4%'s and sellers have realized if they want to sell, they have to price their homes accordingly.

If the media only understood that Real Estate Markets are Local, not National, then they would be saying Northern Virginia is faring much better than most areas of our country. Our unemployment rate is lower than most, our new job creation is much greater than, thanks to our Federal Government, Contractors, and several Corporations are moving their headquarters into NoVA, out of other areas of our Country.

If all of those facts made the local news, buyers would not be sitting on the fence, but in fact purchasing homes.

So, bring me the buyers, I am ready, optimistic and very enthusiastic about 2009! And also, a very qualified Realtor!

It is an incredible time for First Time Buyers to finally enter the Real Estate Market, but only if they are going to stay in their home for 4 or more years!

Sincerely, Kyle Davis, REMAX Select Properties, Inc.

Raja,
In terms of what is happening with the market in Ashburn right now, this is going to surprise you, but the townhome market there is very busy right now. While the whole of Loudoun County has an inventory level of homes that would take around seven months to sell at the current rate they are going under contract, the townhomes in Ashburn are at around a two to three month supply. What this means is that townhomes that are coming on the market in good condition and/or priced well are going under contract quickly. I have seen multiple offer situations taking place, too, although we aren't seeing a jump up in prices like we have in the past. Whether this recovery is short lived or signs of a more stable trend, only time will tell.
If your goals are to purchase in Ashburn and stay for three to five years, you should feel comfortable buying now. Please feel free to call or email me with any questions about the market, or visit my website.

Sincerely,
Heather

Fannie / Schmannie...
NEWS CAST for the "short-bus" people: The whole NATION is in a declining market now. NOT just the Ashburn area for God's sake.
Turn on the news... Its a pendulum effect and it is swinging the other way.
Life isn't fair. But whats fair(?)... A circus with pigs - so hang in there.

A decliing market is as he describes but. Fannie/freddie will be removing this stigma. however Lenders and /or you will be responsible to aquire Insurance(M/I) if your purchase is going to be higher than 85% CLTV or combined loan to value. Unless said Lender has a program that allows for a higher LTV.

Is it declining market as deemed by fannie mae or based on actual property values? They are different.

"Declining market" is a phrase that Fannie Mae and Freddie Mac created a while back due to the mortgage and housing crisis. It was created during the downward spiral of the real estate market and focused on areas (such as part of Northern VA including Loudoun County) that saw huge price drops. It has since been adopted by some of the big banks as well.

In areas determined as being in a "declining market", the lenders were requiring an extra 5 percent down payment. So if you were doing a 5 percent down loan originally, you would now need to put down 10 percent. That's the direct affect to you as a borrower/purchaser.

There is a strong rumor that Fannie and Freddie will no longer be following the "Declining Market" guidelines of old moving forward. Media such as MSNBC, CNN and AP have been reporting on it over the last few weeks and have citing inside sources that are deemed credible. We'll see what happens...

Let me know if I can be of assistance in any way. Feel free to check out my Loudoun County real estate blog for more information about the area (link below).

Don't let it worry you ... pretty much all of the DC Metro area is rated as a declining market. The good news for you is that you're buying while the prices are relatively low (at least compared to what they were 3 years ago). A "declining market" is a term used by lenders and underwriters to indicate a market where the market values have been falling. They use this as a reason to require a higher down payment to protect their investments. By the way, FHA doesn't factor declining markets into their financing so you might want to look into FHA financing as an alternative to conventional. Talk with your lender to find out more. If you want the names of a few lenders who are experienced with FHA financing, let me know.