Washington area’s housing market recovering more quickly than most
By Brady Dennis,
Uncertainty over the presidential election and a looming showdown over government spending is causing plenty of anxiety around Washington these days, but those worries have yet to translate into a slowdown for the region’s housing market.
A new report from Alexandria-based research company Delta Associates offers the latest evidence that Washington’s real estate market, which weathered the housing bust better than nearly any other major metro area, continues to outpace much of the country.
Among the findings: Prices in the area rose 4 percent during the third quarter of 2012 over the same period last year; the number of sales rose nearly 7 percent, while average days on the market has shrank from 70 to 56. In addition, the steady sales volume has “dramatically” reduced existing inventory in the past year, the report says, and sellers on average are getting 98 percent of their asking price.
“We believe the Washington area housing market is in the recovery phase of the cycle,” the Delta report says, while predicting that modest gains will continue into 2013.
Housing markets around the country have seen marked improvement this year despite the massive fallout that remains from the financial crisis. But Washington’s real estate climate has remained particularly resilient, and not by accident. The area enjoys a combination of economic advantages over almost any other region: namely, a highly educated workforce, growing industries such as technology and health care, attractive salaries and the stability of having the federal government based nearby.
The result: Washington’s unemployment rate remains the lowest in the nation among major metro areas, at about 5.5 percent, with a large supply of would-be home buyers eager to take advantage of historically low interest rates.
The average home price in the area stands at $430,817 — with prices higher in the District and close-in suburbs, and lower in outlying areas such as Loudoun and Frederick counties.
While the data bodes well for the trajectory of Washington’s housing market, the reality of falling inventories and rising prices has increasingly frustrated many people trying to buy a home and discouraged those who worry they could never afford one, particularly in desirable neighborhoods that have seen steep price increases.
“It’s going back to the days of 2004, when it was escalation clauses, no home inspections, buying the home as is . . . it’s a roller-coaster ride,” said Nick Chaconas, an agent with Llewellyn Realtors in Rockville. “In any market of supply and demand — whether bricks or cars or houses — if you have a decent product at a good price, it will sell. Especially when demand outpaces supply.”
People such as Dan Garry, 43, and his girlfriend know all too well about demand outpacing supply in Washington. They looked at countless homes around Capitol Hill during the past year and were outbid on multiple properties.
Garry said that in the summer, the pair had grown “burned out” by the process. That changed in a flash recently when a three-bedroom, two-bath home east of Lincoln Park went on the market. The couple pounced, beating out other buyers. They closed on the house this week, less than three weeks after signing a contract.
“I will not miss it,” Garry said of his drawn-out house hunt.
Across town, Tom Neeley also spent much of the year fighting a sense of resignation. The 32-year-old management consultant made offers on home after home with no luck. For one rowhouse in Petworth, Neeley’s was one of nearly 30 offers on the property.
“You kind of have to be a sadist during this process and accept a lot of rejection,” Neeley said. “It just takes a lot of patience.”
He recently secured a contract on a four-bedroom rowhouse in Petworth that needs some work but fit his price range. The closing is scheduled for Friday.
“I’m not holding my breath until it’s over,” Neeley said. “I’m not going to be happy until the contract closes and the key is in my hands.”
Not every part of the region is booming. Thousands of homeowners in the area owe more on their mortgages than their houses are worth, though those numbers are shrinking as home values slowly rise. Thousands of others are facing the prospect of foreclosures or short sales.
The Delta report also underscores that the resurgence of Washington’s housing market is tenuous. With widespread debate on Capitol Hill about government spending and hundreds of billions of dollars in automatic cuts scheduled to kick in at the beginning of next year, a tidal wave of local employees could lose their jobs unless lawmakers and the White House forge a compromise.
“These uncertainties continue to plague the purse strings of consumers and businesses,” the report states. “We expect economic conditions in the Washington region to improve after the start of 2013, as the outcome of the federal budget is better established.”