You can feel the change in the air in many neighborhoods this fall. It's not a seismic shift, but it's undeniable: more houses on the market, houses staying for sale a bit longer, and prices no longer galloping up like they were.
The insane days of spring, when people were in a frenzy to buy and multiple bidding pushed home prices up by the week, seem gone.
Is that it, then? Was spring the peak of our incredible real estate market?
Perhaps not, many experts say, citing a powerful mix of healthy job growth, low unemployment, continuing in-migration and limited availability of housing. But some economists warn that the market's fate hinges largely on mortgage rates because low interest rates are the reason buyers have been able to continue to afford ever-increasing home prices here. A spike in rates could put a freeze on the market, they warn.
For now, there's only a slight nip in the air -- caused by what, nobody is really sure. Mortgage rates are still hovering below 6 percent, although they did drift above that mark in the summer. The Federal Reserve may have spooked some buyers by raising short-term interest rates two times recently. Pre-election jitters or a seasonal hiccup are the other two common explanations for the fall chill.
"The insanity is over," said P. Wesley Foster Jr., chairman and chief executive of Long & Foster Cos. "The market is slowing a bit. The multiple contracts are going away and we've seen houses staying on the market longer. But it's still a good market. That crazy market, with 20 to 25 percent appreciation and 50 contracts on one house, wasn't healthy."
Foster said the slowdown started in the summer and has been most pronounced in higher price ranges, that is, properties priced at $700,000 or more in some neighborhoods, or at $1 million or more in pricier areas. He attributed a lot of the change to the coming presidential election.
"I don't see anything else out there that would be causing it," Foster said.
Real estate agents say buyers are shunning inflated list prices, prompting owners to reduce prices if they are intent on selling. Homes and neighborhoods that are well-priced -- and appear to offer value for money -- are still selling briskly, agents and buyers report.
"It's been really strange," said John Welch, an agent with Re/Max Allegiance in Alexandria. "We've been in multiple contract situations with buyers, but then at the same time, we've seen properties sit on the market for what seems like a long time."
Consider two recent transactions that went in opposite directions.
Mark Davenport and Jennifer Vanmeter, who were shopping for a house in the District for less than $500,000, found a two-bedroom, two-bath rowhouse on Capitol Hill recently that was listed at $499,000. Their agent had told them the market was slowing on the Hill because of the political uncertainty caused by the impending election. So they thought they might be the only offer. Wrong. There were three others. They bid up to $527, 000 and waived the home inspection to become the winning contract.
Davenport said they wanted the house because they thought they were getting value for their money. "We felt like we were getting something, to find an 85-year-old home in good condition in a nice urban neighborhood for $500,000," he said.
"We didn't get the feeling the market was slow," Davenport said. "It still seemed quite the seller's market to us."