The economic aftershocks of this summer's corporate meltdown have weakened a few markets, but on the whole buyers seem intent on ignoring the bad news. By Matthew Power

Last year at this time, you could type in a search for single-family homes in Ashburn, Va., and you might come up with a dozen," notes Barb Northam, with RE/MAX Choice Real Estate in nearby Fairfax. "The result now is exponentially different. You might find 30 homes that have been sitting on the market for more than 30 days. That's simply a staggering amount of inventory for this area, where homes usually have multiple bidders and sell immediately."

The story behind the story: Ashburn has a major WorldCom facility, where about 1,700 employees were recently handed their pink slips. For builders, that's where things get personal. Lost jobs typically translate into putting new-home construction on hold.

Of special concern are regions where the economy depends heavily on telecom and high-tech firms, such as Northern Virginia and Southern California. WorldCom has now filed one of the largest bankruptcies in U.S. history. AOL/Time Warner's stocks plummeted on news that the company was under investigation. Can job cuts be far behind? And according to the Chicago-based employment consulting firm Challenger, Gray & Christmas, telecom companies have hemorrhaged about 166,000 employees so far this year, 27 percent more than in the first half of 2001.

Photo: Franklin Hammond

Reality check? So what happens when a WorldCom goes down in flames? Historically, business failures mean that executive homes go back on the market, and new construction slows. But in today's supercharged market, orders for new homes have decreased only slightly--even in the most directly affected job markets. It's as if demand for homes has resumed a more "typical" pace.

"These are strange times," notes Leonard Bogorad, managing director for Robert Charles Lesser Co. in Washington. "In one way, the drop in the stock market has actually been supporting housing, by lowering mortgage rates. People see housing stock as far less risky than stocks in volatile times.

"It used to be that when the stock market dipped, so did housing, but that's not as predictable anymore. There's still an awful lot of pent-up demand."According to Northam, corporate bad news has had at least one positive effect--helping buyers make sound decisions with their money. "Many of the people in Ashburn had just purchased [homes] in the $300,000 to $400,000 range. Those prices had really gotten out of control--but now, the combination of overly aggressive seller pricing and WorldCom have made people in that area feel like they can shop around more."

Lowering the bar

While it's irresponsible to suggest that corporate graft might lead to a more equitable housing market, the impact of this summer's turbulent Wall Street numbers has left few experts willing to make sweeping predictions. The biggest question remains an open one. Will airing corporate America's dirty laundry ultimately undermine the housing market by eroding consumer confidence?

Photo: Franklin Hammond

So far, says Bogorad, there has been only a slight dip in that critical indicator, but it may be too soon to tell. And housing has developed a certain resilience, in part due to skyrocketing home values in many regions. "The good news is, this is more of the same as what we saw last year when the stock market dipped. We're certainly seeing signs of weakness in the job market, but things are hard to predict. We end up giving explanations after the fact.

"You also have to keep in mind that when a company like WorldCom lays off people in Northern Virginia, that's not going to have a major effect. That's one of the hottest markets for new housing, and that's not likely to change because of a single company in trouble. It would take much more to really change things."

Sources: Fort Worth Star Telegram, Associated Press, The Wall Street Journal, NAHB Press Releases