Will DC See Discounted Home Prices This Spring?

• March 22, 2011
• 15 Comments

by UrbanTurf Staff

This morning, The Wall Street Journal reported that recently-released data regarding a sharp drop in existing home sales and median price nationwide combined with low interest rates could make for a spring season when home buyers will find bargains in markets across the country.

From the WSJ:

The silver lining [to this data], say economists, is that bargain prices, coupled with low interest rates, might finally spur some buyers off the fence as the real-estate industry prepares for its busiest season. Even without the $8,000 federal tax credit that stoked sales last spring, industry watchers predict a larger number of transactions this year.

While this news could be good for the country on the whole, DC buyers should not hit the pavement this spring thinking they will see deals at every open house they visit.

In February, the DC area had the largest year-over-year increase for pending sales of existing homes in a decade, according data released recently by RealEstate Business Intelligence (RBI). Specifically, 4,044 homes went under contract in the area last month, a 33 percent increase over February 2010 (3,041 contracts). This data is in stark contrast to the nationwide drop of 9.6 percent in existing sales reported by the National Association of Realtors recently.

David Bediz, an agent with Coldwell Banker in Dupont Circle, also noted that there are other factors that make a buyer’s market for the area seem unlikely. In addition to an average median home sales price that is 5.5 percent higher than a year ago, Bediz said that the inventory of homes on the market is particularly low right now.

“I can report all my buyers’ frustration that supply in the DC area is very low. They feel the supply of homes that are desirable to them at what they consider a reasonable price is virtually nil,” Bediz explained. “In addition, they feel that any home they do consider desirable that is priced well usually receives multiple offers and they almost always get outbid.”

This article originally published at http://dc.urbanturf.com/articles/blog/will_dc_see_discounted_home_prices_this_spring/3198

15 Comments

1. Maggie said at 7:26 pm on Tuesday March 22, 2011:
   That last paragraph sums up my experience as a prospective homebuyer to a tee. It's beyond frustrating out there right now.

1. East H said at 6:58 pm on Tuesday March 22, 2011:
   “In addition, they feel that any home they do consider desirable that is priced well usually receives multiple offers and they almost always get outbid.” Yep. Welcome to DC real estate. A lot of basket case houses, a lot of beautiful out of reach houses, and not much in between.

1. Janson said at 7:41 pm on Tuesday March 22, 2011:
   Wonder when the banks will dump all their foreclosures onto the DC market? And I wonder what a federal gov closure/furlough would do for demand? On the other hand, one big economic risk, $4+ gasoline, would probably be a big positive for District real estate. Guess I'll just stay put...

1. sgb said at 8:39 pm on Tuesday March 22, 2011:
   That last paragraph does indeed sum everything up. And the fact that people are pricing property in gentrifying neighborhoods for what they will be worth in 5 years.

1. Rob said at 8:51 pm on Tuesday March 22, 2011:
   The key phrase in Bediz's quote is "priced well." When sellers are reasonable in pricing, the properties seem to sell quickly. But there are also plenty of sellers who are asking peak-of-the-market prices and as a result, their properties sit on the market for months and months. So there's plenty of inventory, but a lot of it is priced unrealistically high, and thus there's a shortage of properties that are priced well.

1. Property Virgin said at 8:57 pm on Tuesday March 22, 2011:
   I definitely feel the frustration. As a first time home buyer, I thought I had a pretty decent income but what the heck do some of these people do to afford some of these places?! Apparently a 2/2 is much harder and more $ than I thought. 😕

1. Mike said at 9:41 pm on Tuesday March 22, 2011:
   Piling on this one...so true for DC. Inventory is so amazingly low for good properties that when a good one comes on the market, it gets swarmed. I visited a place that had come on the market 12 hours before, and there were already 20+ visits by the time I got there. Needless to say there were multiple bids. This gets repeated every week. I'll probably rent again for a year, because I don't want to drop 500+ large on something that I settled for.

1. GS said at 3:43 pm on Wednesday March 23, 2011:
   Funny . . . when I look at the comments in response to this article I could swear I am reading a cache of DC real estate related blog posts from 2003-2005, at the height of the market before the bottom dropped out. The complaints are exactly the same - how can anyone afford these prices? all the decent homes get swept up by multiple bids? everything is overpriced.

1. Redline SOS said at 4:14 pm on Wednesday March 23, 2011:
   Last paragraph nails it. And local government is doing nothing to fix the problem. Oust your local leaders. They ARE the problem. Do you hear me Ike Leggett?

1. Mike said at 6:11 pm on Wednesday March 23, 2011:
   GS...you are right. I am struck by this same feeling. the only difference is that it's only DC and in many neighborhoods (I'm looking on the Hill), the inventory is so low, which is driving a lot of the behavior. Maybe everyone is underwater/has low equity so can't sell. Cherry properties have been bid up 20-50k over asking...it's seems odd.

1. It's a Supply and Demand Problem said at 7:43 pm on Wednesday March 23, 2011:
   It is fierce out there. We have lined up two prospective buyers for our Silver Spring townhouse and have yet to even sign any realtor related paperwork. There are many people looking to move to the District to realize job security and to live in one of the hottest cities in the US. DC also isn't Detroit nor is it New York where there are countless, deluxe apartments in the sky.

1. Rob said at 7:56 pm on Wednesday March 23, 2011:
   Job security? Wait until the federal budget cuts hit. Then you'll see prices start dropping here.

1. roots said at 10:57 pm on Thursday March 24, 2011:
   Yes budget cuts will affect DC but you do know that the VAST MAJORITY (like almost all) of the federal jobs are way, way, way outside of DC. Like hundreds of miles.

1. Tres said at 6:33 am on Friday March 25, 2011:
   It's not a bubble, it's gentrification. Gentrification affects well-to-do people. Just because you think prices are high, doesn't mean they're not fair. The truth is you got priced out. Gentrification is fast and ruthless. That and the fact (as someone mentioned above) that people can't or won't sell below a certain price due to equity issues. That'll continue to put upward pressure on prices until all the boom-bought properties are cleared from the market. Seems like we're about 2 or 3 years out from that, minimum. You also have to think about the fact that the surge of boom-buying effectively locked up the market of today, even absent a price breakdown. Even if all these people could sell today, the fact that greater numbers of people bought during the boom than are able to today (due to tighter lending policies, other factors) makes for a supply-demand mismatch. In RE, the people you're buying from are people who bought 5 years ago or more. Today, we're buying from the people of 2006 and before. There were more buyers in 2006 than there are buyers now. That's the reason supply is so low relative to the demand. That's why buyers are complaining.

1. Tres said at 6:58 am on Friday March 25, 2011:
   Sorry, it's late and I realize the last part of what I wrote doesn't make sense. The idea is that even if the market didn't crash, there are still years like 2007 where an outsized percentage of housing inventory was snatched up, and it's not going to be available for at least another year or two. Hence, supply is withheld because of the frenzy of less than 5 years ago. Zzzzzz.