A few weeks ago, a small one-bedroom unit with nice finishes came on the market on Logan Circle. Amir Taba of TTR Sotheby's International Realty showed his client the listing, the client liked it and so Taba reached out to the listing agent. As it is in the DC housing market these days, Taba wasn't the only interested party. The agent had received 24 other showing requests for the condo, and several parties were indicating that they were going to submit an offer.
"We got our offer in quickly," Taba explained. "We were all-cash, over list price, no contingencies, and we were able to lock it up. Had we not been all-cash and substantially over list price, we wouldn't have even competed."
Multiple offer stories in the DC housing market have been a dime a dozen over the last couple years, but as the market got off to a bit of a slower start this year, it was unclear how competitive the landscape would be. In the last several weeks, however, the market has returned to the frenzied pace of years past.
"All neighborhoods are selling and all price ranges are selling. The one thing I'd say about the market is it's inconsistent," said Daryl Judy of Washington Fine Properties. "It's not this crazy market where you can just throw a number on a house and think it'll sell. People are very discerning and they're looking closer as to whether homes are good investments and will hold their value."
There are two factors that have been a constant in the DC area market that keep it competitive: a low inventory of homes for sale and a high level of buyer demand. Andrew Strauch of Bright MLS recently told UrbanTurf that there is a 1.7 month supply of homes on the market in DC; the benchmark for a healthy market is six months, a level that the city has been well below for years. As interest rates creep towards 5 percent, buyer demand could diminish and price growth could slow, but that hasn't happened yet.
Case in point: Kathryn Schwartz of Wydler Brothers recently listed a home in Chevy Chase DC that received 11 offers.
"Every offer but one had zero contingencies; all of the offers were getting financing, but ten got rid of their financing contingency," Schwartz explained. On the other side of the city near Union Market, Washingtonian recently highlighted a home that received 17 offers and sold for $338,000 over list price.
Many DC real estate professionals believe that the competition in the market has made new construction a more enticing option for buyers, as the ability to select a home often six months prior to delivery (and even potentially choose your own finishes or features) can offer some measure of security in a hectic market.
"This year, we've outpaced last year's sales pace by 10 percent," shared Chris Masters of real estate sales and marketing firm McWilliams|Ballard. "Buyers are hungry for new product at every level, but the mid-range product is kind of what's moving the needle. We see things spending a little more time on the market when you get above that $550,000 price point; it's still absorbed, it just takes a little bit longer."
As prices rise and competition is commonplace, many homebuyers are also expanding the geographic parameters of their search. A few weeks ago, UrbanTurf looked at the neighborhoods in DC where homes on the market were receiving the highest volume of offers. Four of the top five were east of the Anacostia River.
"We have two lots on V Street right around the corner from where Busboys and Poets will be," Darrin Davis of Anacostia River Realty told UrbanTurf, speaking of Anacostia. "It's not on the market yet, but I posted it on social media and have been getting a lot of requests. It's prime real estate, and a lot of people in the area, especially the Anacostia area, know what's coming."
Davis has focused on the East of the River real estate market for the last sixteen years, and says that buyers are now coming from other parts of the city because they know that the area has some of the last affordable neighborhoods in DC.
Despite the solid seller's market that the region is experiencing, the climate may be creeping back in favor of buyers. Andrew Strauch noted earlier this month that he is encouraged by the increase in listing activity in the region which could offer more options to prospective buyers and balance out the market.
The economic climate may also play a role. Long-term interest rates reached their highest level in seven years this week, and while it isn't affecting buyer demand yet, the idea that rates may eventually hit 5 percent will undoubtedly begin to affect buyers' psyche.
- The 5 Most Competitive Neighborhoods for DC Homebuyers
- Blind Offers: Are DC Homebuyers Really Bidding on Homes They Haven't Seen?
- The Demand Metric That Keeps DC Housing Inventory Low
This article originally published at http://dc.urbanturf.com/articles/blog/above-asking-with-no-contingencies-the-climate-of-the-dc-housing-market-in-/13996
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