co-owner,
Encompass Design/Build
Mortgage Rates
"Both short- and long-term interest rates move up in 2005. If you have an adjustable-rate mortgage or a home equity line tied to the prime rate, those rates will go up commensurate with the Federal Funds rate.
"Long-term interest rates will go up too. We're looking at 6.6 percent by the fourth quarter of 2005."
-- John Silvia
chief economist,
Wachovia Corp.
"I've been amazed that mortgage rates have stayed as low as they have for as long as they have. I'll be very surprised if they stay this low throughout the coming year. It doesn't make sense. I see mortgage rates going to a little over 7 percent next year."
-- Dean Baker
co-director,
Center for Economic
and Policy Research
"We have mortgage rates gradually rising about half a percentage point over the course of 2005, ending the year at 6.25 percent. Just a very gradual rise over the year.
"ARM rates [adjustable-rate mortgages] will go up more than half a percentage point since the Fed is intent on gradually increasing short-term rates. More borrowers will go with fixed-rate mortgages rather than ARMs over next year."
-- Frank Nothaft
chief economist,
Freddie Mac
"Both short and long-term rates will be higher a year from now. Mortgage rates will be at 6.75 by late next year. The increases won't be dramatic."
-- David Seiders
chief economist,
National Association
of Home Builders
"We see mortgage rates going up to probably only 6.25 percent by the end of the year. We have a range of 6.25 to 6.5 percent."
-- Orawin Velz
economist,
Fannie Mae
Rental Market
"The apartment industry in the Washington area will continue to recover in 2005. We'll begin to see rent increases in Northern Virginia. That's happening right now. In Montgomery County, we won't see any increases through the year, but you will see the apartments filling up again. In D.C. you'll see rent increases next year. Metro-wide, you'll see 3 to 5 percent rent increases, perhaps higher in the District and Northern Virginia."
-- Tom Bozzuto
chief executive,
Bozzuto Group
"We're going to see rent spikes in Northern Virginia next year, rent increases of 8 to 9 percent starting in the summer-fall leasing season. In D.C., we'll see rents increase in the 4 plus percent range. But rents in Montgomery County will stay relatively unchanged, maybe up only modestly.
"Vacancy rates are going to tighten next year. They already tightened this year. The overall metro vacancy rate is likely to stay the same at 2.4 percent, but vacancies will be tighter in northern Virginia and looser in suburban Maryland. The problem in suburban Maryland is that a lot more product is being developed there."
-- Gregory H. Leisch
chief executive,
Delta Associates
"Hopefully, the rental market will be better in 2005 than it was in 2004. We're hoping to see some improvement next year. Renting is a relative bargain these days as a housing choice.
"In terms of rents, we're almost back to where we were in mid-2001. We reached our peak for rents in the middle of 2001 and then they went down. I'm projecting that in 2005, we'll get back to 2001 levels. . . .
"New residents moving to the area who compare the cost of ownership to the cost of renting will find renting increasingly attractive these days since condo prices have gone up so much. There was a point, when prices were lower and interest rates were really low, that renting looked less attractive.
"There are still lots of concessions in this market. Two months free rent downtown is pretty typical because a lot of projects are in lease-up now. We're expecting to see that get cut back to one month's free rent in 2005."
-- Stanley Sloter
president,
Paradigm Cos.
