The pair already had looked at dozens of properties, and in the process they uncovered an all-too-common problem for homebuyers in the District and inner suburbs: There are too few houses available in the less-than-$400,000 price range, as low mortgage rates and high rents have pushed demand to an all-time high.
“It’s very difficult to get a house in a desirable neighborhood for less than $400,000,” said Andrew Riguzzi, a managing partner at D.C. Real Estate. “If they’re out there, they probably haven’t been cared for and need several thousand to bring them up to conditions.”
So Albersheim and Cohen had adjusted their price range up slightly and their aesthetic expectations down. They house hunted almost every weekend, but they had thus far only bid on one: A $350,000 Petworth fixer-upper, located a block from Section 8 housing. That house sold the same day they placed their offer; it had been on the market for 48 hours.
From the rowhouse in Northwest, the couple headed to a nearby $500,000 open house, where a handful of other house hunters were peeking in closets and inspecting the (aged) countertops. Downstairs, rainwater leaked into the basement.
“Most of these houses need too much work put into them,” Albersheim said. “And yet they think they can charge whatever they want because the D.C. market is, you know, hot, hot, hot.”
By Monday, there were already offers on both homes, but Albersheim and Cohen bid on the rowhouse anyway.
Even though there’s a glut of homes throughout parts of the country, the Washington region seems to have the opposite problem, especially in the lower price ranges.
Of the 30,000 active listings on the market in late April, only about 20,000 were priced below $400,000 — a 30 percent drop from this time last year, according to regional sales data analyzed by the real estate company Redfin.
Many of the outer suburbs still have plenty of houses in the lower price ranges. But less-expensive homes are very hard to find closer to central D.C.: 68 percent of homes offered for less than $350,000 are located in the outer suburbs beyond Montgomery County, Arlington and Alexandria. In the District, Redfin counts only 862 listings for less than $350,000.
So how did it get this way? As John Heithaus, chief marketing officer at MRIS, describes it, a “perfect storm” of economic issues and policy decisions have created the gap between the supply of affordable homes and demand for them.
Development slowed during the recession, and in the District, housing starts have been at historic lows for years. Meanwhile, in 2011, D.C. enacted legislation requiring mediation for all foreclosures — a process that stalls the foreclosure process and, according to some experts, keeps the number of available foreclosed houses at artificially low levels.