As we frequently hear in the media, the overall real estate market is hurting. However, the market in Metro DC is not as drastically affected as other areas in the nation.
Metro DC continues to have hot spots in addition to areas that are cooling down. Competitive bidding still exists in the first weeks that a property is on the market, but we also have properties that have been on the market for months (and in rare cases over a year+).
Are you looking to buy in AU Park, Dupont, or Capitol Hill? You’d better move fast: the housing inventory has thinned. Properties that show well and are priced appropriately do not stay on the market long.
Are you thinking about pouring your blood, sweat, and tears into a fixer-upper in a transitional neighborhood? You should take your time and find a bargain heading toward foreclosure.
Overall for the Metro DC area, prices are up 2.5% percent over 2006 (prices have not declined in the last eight years). Even though a 2.5% increase does not match the exponential 22% price increases that we witnessed from 2004 to 2005, it’s certainly not a sign of a tanking market. Overall sales volume is down approximately 22% in 2007 from 2006, but is still 40% over the 2005 sales volume.
As you can see, sales volume and pricing are not to be confused. Prices are holding in many zip codes in DC. But let’s look a little closer at the sales:
You will find that the market conditions for real estate worsen the further that you travel beyond the Beltway. Prince William, Loudoun, Prince George’s counties and parts of Fairfax County are hurting, just to name a few areas seeing drastic declines in the housing market. In Prince William County, for every listing sold in December 2007, there were roughly 16 other listings. In Stafford County, there were 22 listings for every 1 sold. In DC, however, for every listing sold in December 2007, there were only 5 other listings. Quite a large difference, eh?
And as for foreclosure rates: in DC, for every 10,000 owner-occupied units, 24 are in foreclosure. In Prince William County, for every 10,000 owner-occupied units, 288 are in foreclosure.
The moral of the story…the numbers don’t lie, but they do need to be kept in perspective.
So let me answer some questions you may have:
1. Should I buy a house in this turbulent market?
A. It depends on what you want to buy and for how long you plan to occupy it. If you are looking to flip a property for profit, this may not be the best time. Are you looking to invest in a property and hold on to it for over 5 years (either to occupy it or rent it out)? Then, yes, buy now! Rates are low, prices are low. Are you looking to make a home and enjoy the benefits of homeownership? Then, yes, buy now! Rates are low, prices are low.
2. Should I sell my house in this market?
A. If you are reasonable about pricing and will work with an agent to stage and present it well, then yes. If you’re looking to realize the profit that you could have had last year or two years ago, it’s not going to happen. If you bought a house last year and want to break even or make profit, you may want to consider rental options for your property.
3. What are short sales vs. foreclosures?
A. That’s a whole other blog post, but contact me if you want more detail (or keep an eye on here as I’m sure I will write about it soon enough).
All statistical data was provided by GMU’s Center for Regional Analysis (www.cra-gmu.org). They have pretty charts that help make more sense of all this data!!!