The Washington real estate market has been trudging up a long, steep hill for years now, trying to make up lost ground.
So, where do we stand?
In some areas, there are signs of a stronger market: foreclosures and short sales comprise a smaller portion of the total number of houses for sale; in some neighborhoods, prices are appreciating modestly; and in some places, houses are even fetching multiple offers.
But local economists and real estate experts have noticed that the market’s health varies greatly in Virginia, Maryland and the District, making the area’s real estate recovery a tale of two states (or three jurisdictions.)
Northern Virginia is outpacing the Maryland suburbs in several metrics. The median sale price of houses in Northern Virginia, which in February was $335,000, has been increasing steadily since 2009, according to RealEstate Business Intelligence (RBI), a division of the region’s multiple listings service. Suburban Maryland’s median sale price continues to decline, and was at $230,000 in February. The District, which had the second-highest median price before the housing crash, now leads the region (with a much smaller number of houses), at $398,500, according to RBI.
Thinking of putting your home up for sale in suburban Maryland? On average, a house there sits on the market 39 days longer than a house in Northern Virginia does.
Although there are many reasons for the difference, Maryland and Virginia’s diverging real estate pattern can be attributed to how the two states suffered through and then handled the large glut of foreclosed houses that came on the market, said Lisa A. Sturtevant, assistant research professor at George Mason University’s Center for Regional Analysis.
In 2010, Maryland put in place a court mediation process that allowed homeowners to negotiate with banks to try to remain in their homes. The process results in more foreclosed houses sitting on the market longer, which then drags down prices. A foreclosed house can sell for up to 50 percent less than a non-foreclosed house.
In Virginia, there is no court process, which is less beneficial for the homeowner facing foreclosure. But the result is lenders have been able to take possession of foreclosed houses more easily, which then allows the property to be sold more quickly.
“We got hit so hard by the first wave of foreclosures,” Sturtevant said, noting that Northern Virginians lost their homes far faster in the early part of the housing crash compared to Maryland.
Around 2010, the Obama administration offered the home buyer tax credit, which spurred housing sales in the area overall, particularly in Northern Virginia, where prices started to modestly appreciate. But Maryland’s prices did not get a similar lift because the state was still working through its troubled mortgages.
“Maryland didn’t quite get that bump” from the home buyer tax credit, Sturtevant said.
Two counties, two stories
Local economists point to the difference in recovery for Prince William County in Virginia and Prince George’s County in Maryland — both suburban communities hit hard by foreclosures.
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