By Kirstin Downey and Sandra Fleishman
Washington Post Staff Writers
Monday, July 25, 2005
Washington area temperatures may be sizzling, but the once-torrid real estate market seems to be cooling off as houses stay on the market longer and the number of homes for sale rises.
Home sales tend to slow in the summer, but the number of houses for sale in the Washington area has climbed by 50 percent in recent months. The available inventory has risen to about 35,300 homes, up from an average of about 23,000 in the past three years, according to Metropolitan Regional Information Systems Inc., which runs the local multiple-listing service.
The average number of days a house stays on the market has crept up by two days in Fairfax County, to 16 days in June from 14 days a year earlier. In Montgomery County it has risen to 20 days from 18 days, according to MRIS. Those are, however, still short turnaround times by historic standards.
Meanwhile, the number of houses sold in Northern Virginia's inner suburbs fell by 9.6 percent in June, compared with a year earlier. In the District, the number of houses sold dropped by 8 percent, while in Montgomery County they dropped about 1.6 percent.
Local real estate brokers say they are seeing signs of a change.
"The market has slowed for sure, especially at the high end," said Wes Foster, chairman of Long & Foster Real Estate Inc.
Foster said the market is returning to "normalcy" after a frenzied era of multiple contracts, bidding wars and desperate buyers waiving their right to property inspections or appraisals.
"It's very healthy," he said. "It worried the pure hell out of me the numbers we were seeing. I remember Boston in 1982 to 1989, when [prices] went up 25 percent a year for six years, and then in one year [they] fell 87 percent. The ride up for everybody selling was wonderful but the ride down was awful. . . . It was very painful and I don't want to see that here."
Foster said the recent manic market has been fueled by what he called "crazy fools running around buying houses as investments," with "bad loans, interest-free loans."
"They'll get hurt, and I think they should," as prices inevitably correct themselves, he said. A slowdown is needed because so many average people have been priced out of homes or compelled to pay high prices, he said.
Real estate broker Susann H. Haskins of the Long & Foster office in Potomac, president of the Greater Capital Area Association of Realtors, cautioned that the down-tick may simply be summer-related.
"Is it a major shift? Not necessarily. . . . I don't think we should raise the red flags and send up the alarms yet. . . . We don't have enough data to definitively say the expansion has ended," she said.
The Washington region remains strong, compared with other markets, said Ken Wenhold, regional director for Metrostudy, a housing research firm based in Houston. "Although the resale inventory and days on the market have increased slightly, it is still overall a very tight resale market," he said.
Many area real estate agents said that good houses in good neighborhoods, realistically priced, still sell well and that sales are faster in less-expensive areas. In Prince William County and its largest cities, including Manassas and Manassas Park, the median price is $380,000 and sales rose 10.7 percent in June, compared with the year before. In Prince George's County, where the median sales price in June was $300,000, the number of sales rose 3 percent.
"I still see prices rising and the market is very strong," said real estate broker Donald L. Frederick, with Re/Max International Inc. in Camp Springs, who cited Prince George's County's affordability as the reason for its strength at a time real estate agents from other areas said market activity "is way off."
But in many of the region's inner suburbs, where prices have about doubled in four years, some sellers who expected results within days of posting a for-sale sign have been disappointed. Some are cutting their prices.
At the beginning of the year, buyers were frantically grabbing at anything. Now some have the time to pick and choose among neighborhoods, line up home inspections before buying and carefully consider the lofty prices they are paying.
Computer consultant Will Gibson, 39, put his red-brick Bellevue Terrace duplex, just off Wisconsin Avenue in Northwest Washington, up for sale in the spring. His wife, Jeep, was hoping to move to the suburbs. Gibson listed it at $895,000, but it did not sell. After two months, he took it off the market and stored the for-sale sign in an upstairs hallway. He said he will try to sell it again "after we fix a few things up."
Liza Potter, 31, who owns a townhouse in Burke, has been monitoring the market since March because she wants to move to a larger, single-family house. In March, she said, homes listed for sale on the Internet lasted two days. She often could not drive to them quickly enough to make a bid before they went under contract.
Now, she said, attractive listings are lasting two weeks and the prices seem to be slightly lower. Two weeks ago, she and her husband, Darrell, 41, a computer specialist for the Defense Department, bought a house for $650,000 in a nearby neighborhood they had thought they could not afford. They now are listing their townhouse for sale at $439,000.
"More houses are on the market, so people have a little more time to look around and see what else is out there," Potter said.
Neighbors, for whom watching the home-sale market has been a favorite parlor pursuit, are noticing the slowdown, too. Dimetra Panagakos, 81, who lives next door to Gibson in Northwest Washington, chortled as she discussed the market.
"They used to sell in a week, these houses here, but now no more," said Panagakos, who has lived in the neighborhood since 1948. "Ha, ha, ha, they went crazy in my neighborhood, my neighbor asked $900,000 -- and now no more."
Some renters are also watching with interest. Sabrina Daly, 26, a research analyst who shares a $2,000-a-month rental house in Arlington's Lyon Park with two other young women, said the renovated bungalow next door went on the market three weeks ago for $1.5 million. It has not sold.
"I'm surprised," she said. "Maybe people don't want to pay $1.5 million. Maybe they can't pay $1.5 million."
In Falls Church, Josefina Villegas, 71, thought her house would sell in just a few days when she put it on the market in late June and that she would soon be winging her way, carefree, to visit her grandchildren in Florida.
Houses in her woodsy neighborhood had been selling in the $900,000s, so she priced hers at $925,000 and waited for the bids to come in. She waited some more -- no bids. She dropped the price to $899,00. Three weeks later, still no bids.
"I think houses are going slower now," she said, as she worried about getting the lawn mowed once again to keep up its pristine market-ready appearance. "Send me somebody to buy."
Deborah Davenport, 50, listed her single-family house in Fairfax County last week at $569,000. Her husband, an echocardiographer who does heart ultrasounds, was offered his "dream job" with pediatric cardiologists in Tucson. In the past week, her home has been visited by just one set of prospective purchasers.
"We haven't gotten any nibbles, unlike a month ago, when people put their houses on the market, and poof, they'd be gone," she said. "I figured it had to slow, it had to stabilize; but I hope it hasn't completely stalled -- for our sake."