According to economists who follow the local housing market, early indicators show that the 2012 spring season could mark the first year in a long time that we see any kind of real price appreciation. The number of foreclosed homes for sale is now a much smaller part of the market than it was even a year ago. Real estate agents say they are encouraged to see more multiple offers.
But don’t get too excited — many experts caution that price appreciation is likely to be modest and will apply to only to the most highly desirable neighborhoods, not across the board. And what’s happening in Northern Virginia is not the same story for suburban Maryland or even one quadrant of the District compared with another.
But generally speaking, real estate experts say the spring season is showing signs of strength compared with last year; the question is whether the region can build on that momentum.
In February, the median sale price for a Washington area home rose 6 percent, to $317,900, compared with February 2011. More people put their home on the market last month than the same month a year ago. The total was the highest since May 2011, and fewer of those homes are foreclosures, which indicates the market is growing some sea legs.
“We’re on a trajectory upward,” said research assistant professor Lisa A. Sturtevant of George Mason University’s Center for Regional Analysis. Sturtevant said the center’s forecast predicts 24,000 more jobs will be added to the region this year, and many of those will be high-wage jobs, which should stimulate the housing market.
However, other economic analysts are cautious about the likelihood of federal spending cuts, which probably would hit the region hard because so many government contracting jobs depend on federal spending.
“The first half of 2012 is going to be paralysis, as people are trying to wait for an answer on the federal budget,” said Sandy Paul, national research director at Delta Associates. That unknown factor — spending cuts — makes the market more volatile, he said.
Overall, Delta projects that the Washington region will see modest improvements in sales volume and prices, perhaps a low single-digit increase compared with 2011.
One bright spot: the condominium market. The region’s condo market had been hard- hit, as first-time home buyers shied away from investing, and financing has become tougher. But Delta predicts 2012 will be the first year since 2008 in which prices of condos appreciate, in the range of 1 to 3 percent, said William Rich, a vice president.
Rents have risen so high that some people who can afford to buy are taking the plunge.
Also, new properties with higher-quality units have come on the market recently, while the less-desirable properties that sat on the market for a long time have cleared out. More than 60 percent of condos on the market have been for sale for two years or less. That compares with the last quarter of 2010, when 90 percent of condos on the market had been for sale for more than two years.