In a Downswing, Looking Up
Once Locked Out by High Prices, Aspiring Buyers Now Find Reason for Hope

By Kirstin Downey
Washington Post Staff Writer
Wednesday, November 15, 2006

Kristy LaLonde, who rents an apartment in Crystal City, spent the past four years "freaking out" as home prices here climbed relentlessly. She feared she would never be able to own the kind of place she had been raised to expect.

Now, she's feeling better.

A dramatically slowed housing market has disappointed home sellers and left real estate agents waiting for the phone to ring. But it has brought relief to would-be homeowners such as LaLonde, 29, a federal policy analyst, and her fiance, Gregory Daphnis, 35, a project manager for a health insurance plan.

Not long ago, they thought the best they could afford was a condominium. Last month, though, they were delighted to find they could qualify to buy a red-brick Colonial in Wheaton -- because the seller had dropped the price from $499,000 to $435,000.

"We feel like we can begin building our life together, start a family," LaLonde said. "We can move somewhere that's not temporary, with a yard, and with a neighborhood community feeling."

The Washington area remains one of the most expensive places in the nation to buy a home. Still, over the past year, as the number of available homes for sale has climbed, prices have flattened or fallen. That has propelled some buyers toward homes that had slipped beyond their reach. It has allowed them more time to shop and afforded them a greater selection. It has also made sellers much more willing to help with such things as closing costs.

The decline in prices is most evident in the District and Northern Virginia, according to figures released last week. The median price of all types of houses and condominiums sold in the District dropped 12 percent in October from the same month a year earlier, dropping from $425,000 to $375,000, according to Metropolitan Regional Information Systems Inc., the region's multiple listing service. Prices fell 6 percent in the same period in the close-in Northern Virginia suburbs, dropping to $458,850 from $490,000, according to MRIS, and were essentially flat in Montgomery County, at about $430,000. The median is the price at which half the homes cost more and half cost less.

"The shoe is on a different foot," said Diana Whitfield, an agent with Long & Foster Real Estate in Burke. "Buyers are realizing they are more in control."

Buyers, particularly the first-timers who feared they had been priced out of homeownership, are gleeful.

Susan O'Hora, 29, an operations manager in international licensing at the Discovery Channel, felt like she was running as fast as possible but still falling behind. After graduating from the University of Richmond and moving to the Washington area in 1999, O'Hora resolutely scaled the career ladder. She has more than doubled her salary, but real estate prices moved up much more quickly. The median home price in the region was $181,600 in the second quarter of 2000 and $443,000 in the same quarter of 2006, an increase of 144 percent, according to the National Association of Realtors.

"It was kind of sad to get better, better jobs and move up in my career when the progress I was making was being so outpaced by the housing market that I thought I would never be able to get anything livable," said O'Hora, who rents a studio apartment near Dupont Circle. But the recent market shift has left her "excited and optimistic" about her prospects.

"I feel like finally I might be able to get in on this," she said. "I feel relieved."

Daniel Moshinsky, 26, a computer programmer for the Census Bureau, also watched prices climb in the five years after he graduated from college, outstripping his wage gains.

"My reaction was horror," he recalled. "I thought, 'Will I ever get a house?' I felt like I had missed the Gold Rush, that everybody was making money in real estate and that I was left out."

Moshinsky, who lives in a townhouse in Silver Spring with three roommates, still can't afford the home he would like. Now, though, he is "hopeful," he said. "I hope prices keep falling a little bit longer. So far they haven't fallen enough to be affordable."

Some people who already own homes but are looking to trade up to a more expensive house are also pleased, even if they are losing out a bit on the selling side. For Deanna Behnken, 26, part of the pleasure of her recent home-buying experience was that she felt no sense of urgency. In late 2003, when she and her husband, Corbin, bought their townhouse in Gainesville, they felt pressured to buy quickly because they feared if they delayed, the property would be snatched up by someone else.

"It was kind of 'Hurry up, find a house, anything,' " she recalled. "Now, time is on your side."

Earlier this year, they found a new, single-family house in Haymarket with granite countertops, stainless steel appliances and a yard that backs up to a forested area. The price had been cut from $624,000 to $544,000 -- a stretch, but one they could afford. The builder was eager to make a deal because it had been sitting vacant since April.

"It's much nicer than I ever thought I would have," she said. "Everything is top of the line."

First, though, the Behnkens had to sell their townhouse. It took four months and a $50,000 price reduction.

"I still made a profit, and in the grand scheme I was able to upgrade and come out ahead," said Behnken, a hospital contract specialist with a medical diagnostic laboratory. Her husband is an engineer.

The decline in prices is making other buyers wary because they fear purchasing in a declining market. Scott McCrimmon, 34, a software engineer, has been studying the market for a year, since he and his wife moved to the Washington area from Miami. They are renting a house in Germantown and will wait to see what happens in the spring.

"I have a strong suspicion the market is still a bit overpriced," McCrimmon said. "There may be some basis for why others are not buying, so I'm holding back, too."