DC Area High-End Housing Market Makes a Comeback

• January 28th 2011

by Andrew Siddons

In November, a row house at 1731 Riggs Place NW sold for its asking price of $1.699 million. On its face, this was not a particularly noteworthy sale, as homes in Dupont Circle rarely sell for less than $1 million. But the fact that the property sold in an all-cash deal and received multiple offers turned some real-estate minded heads in the neighborhood.

“We looked all over for comparables, and we priced it at the very top,” listing agent Dwight Mortensen of Coldwell Banker said.

While the all-cash sale of a one million-dollar home does not by itself mark the return of the area’s high-end housing market, it is one of many signs that the luxury home buyer who was scared to hop off the fence 18 months ago is now back in the market.

“Generally, the $1 million+ market has been doing well,” Keith Gibbons, the founder of DC Home and Condo Prices, told UrbanTurf. “Monthly sales in 2010 for this high-end bracket averaged 44.58 units, about 34 percent higher than 2009.” Michael Rankin of Tutt, Taylor Rankin at Sotheby’s International Realty echoed Gibbons, saying that at his firm, sales for properties above $1.5 million increased 30 percent between 2009 and 2010.

However, the increase in high-end sales was not just a year-over-year trend.

Housing data from Real Estate Business Intelligence shows that toward the end of 2010 in the 20007 zip code, which includes tonier neighborhoods like Georgetown and Foxhall, ten homes priced between $2.5 and $5 million sold. While this may not seem like a rush of sales, that two-month figure matched the total number of homes sold in that price point during the previous six months from May to October. In 20008, which includes Kalorama and parts of Cleveland Park, 11 properties priced between $1 million and $2.5 million sold in October, and in November, six more properties were sold in that range, plus three more priced between $2.5 million and $5 million. To put that in perspective, no properties in the latter price range sold in August, September or October. Sales surged even more in December as 11 properties sold for between $1 and $2.5 million, making the fourth-quarter total 75 percent stronger than the same period in 2009.

The sales surge is not limited to single-family homes within DC proper either. Turnberry Tower, perhaps the highest-end new condo project in northern Virginia, has been averaging about 10 contracts a month since sales restarted last April. So far in January, the project has ten units under contract, four of them with list prices north of $2 million.

Turnberry’s Dan Riordan estimates that 60 to 70 percent of the buyers are condo owners who live within the Beltway and were able to sell their home in a market that is loosening up.

“A year ago, people were pretty shell-shocked and those who wanted to sell their homes couldn’t,” Riordan said. “Now that the DC area market is firming up, those owners are able to sell and trade up.”

Kevin McDuffie of Coldwell Banker’s Dupont Circle office seconded the trading-up theory saying that the sales of average-priced houses creates a new buyer looking towards higher-priced properties.

“If activity is starting in the lower price ranges, it creates a domino effect in the higher ranges,” McDuffie said. “If someone sells a $750 or $850,000 condo, then they will likely move up to the next price point.”

While a number of factors are at play in making sales volume in the higher-end market increase, the inventory of available homes for sale is now decreasing. McDuffie said that in December, there were 41 percent fewer condo listings priced above $1.5 million in the 20009 zip code than at the same time in 2009. In Chevy Chase, W.C. & A.N Miller’s Claudia Donovan said that there are about 70 homes on the market priced between $1.5 and $3 million, which represents slim pickings for buyers.

Still, for those willing to spend a lot of money on a home, there are options. Jim Bell of Washington Fine Properties has a listing on R Street in Dupont Circle that is now on the market for $15.5 million, and it appears that there are buyers out there looking in this nose-bleed range. In December, an eight-bedroom home at 3210 R Street NW in Georgetown sold for just over $11 million, making it the biggest sale of the year in the ritzy DC neighborhood.

“I have no clue [why this is happening] other than guessing that money’s almost free for those who finance, and there’s no sense keeping money in a CD since interest rates are near zero percent,” Gibbons said. “And, of course, everyone wants to be in DC!”

This article originally published at https://dc.urbanturf.com/articles/blog/dc_area_high-end_housing_market_makes_a_comeback/2908.