By Dina ElBoghdady
Washington Post Staff Writer
Sunday, March 25, 2007
Christopher Hertz expected to "move out any minute" when he signed a month-to-month lease for an apartment near Dupont Circle.
That was nearly two years ago.
"Six months ago, I just finally hung my paintings and pictures on the walls," said Hertz, 30. "But I'm still looking for a place to buy."
Hertz is suffering from the common "have-prices-bottomed-out-yet?" syndrome that has gripped many house hunters in the Washington area. More than half expect prices to decline this year, according to a survey of 1,017 prospective local home buyers by Fulton Research and Consulting.
Plenty of other people -- financial types, academics, bloggers and certainly real estate agents -- are trying to guess whether that's true, and if it is, how much more prices would slide. The doomsayers believe that a big drop has just begun. Conventional wisdom is that the real estate market should stabilize next year, if not earlier. But there is no sure answer.
That is what is making it so challenging for Hertz to decide and for his real estate agent, Elysia Brown, to help him.
Hertz grew up in the Washington area and left in 2003, when the market was red hot, to study at MIT's business school. He returned in 2005 and now owns his own information-technology consulting business. He did not disclose his income, but says it is in the low six figures.
"I know enough people who have bought homes in past few years and they're now trying to refinance and they can't because their property has lost value," Hertz said. "I don't want to get in a position like that."
Add to that what Hertz described as his extreme pickiness about what kind of place he wants and where he wants it.
Hertz has focused on the western half of Dupont Circle. He wants outdoor space, which limits him to townhouses or terrace-level units of smallish condominium buildings. He wants about 1,000 square feet of living space. He wants plenty of light, a decent kitchen and a floor plan with a "nice feel" that suits his antique furniture.
And he wants it all for $450,000 to $550,000.
"I've tried to take him into other neighborhoods, like Columbia Heights, where you can get more for the money. I've tried Van Ness and Chevy Chase," said Brown, an agent for Long & Foster in Bethesda. "But he wasn't really interested. He knows what he wants."
Brown said they have made a few low-ball offers that were rejected. They have also waited for prices to drop on places that Hertz was eyeing, but the sellers did not budge.
Hertz said he thinks there is often a disconnect between what sellers are demanding and the value of their homes. He's gauging that disconnect in a spreadsheet he has created that tracks the listed price, square footage and other features of homes in the Dupont Circle area.
"I want to be careful because I'm buying something that I expect to hold onto for years," Hertz said.
With that in mind, Brown thinks Hertz should worry less about price trends.
"Although real estate is investment, it's also where you live," Brown said. "You have to buy something that makes you happy, and if you're looking at it from a long-term perspective you'll be fine. . . . The more time you own a home, the less affected you are by the peaks and valleys that the market goes through."
Brown wants Hertz to keep an eye out for fixer-uppers and for what she calls "local catalysts" that can transform a neighborhood for the better, such as the Target store scheduled to open in the Columbia Heights neighborhood.
Hertz said that Brown has "expanded my horizons" by having him look elsewhere, but he lacks faith that the District's more transitional neighborhoods will ever actually transition. After all, "for years people have been saying that the Shaw neighborhood is up and coming and it's never made it out of the not-so-great neighborhood category," Hertz said.
That is why he keeps coming back to his first choice of Dupont Circle and to his worries about whether prices have bottomed out.
For more insights, John Fitzgerald, a partner at the Tenacity Group in the District, weighed in with his thoughts.
Fitzgerald, whose company specializes in developing workforce housing, said buyers should understand that "bottom" means different things to different people.
In entry-level housing, where homes might start at $275,000, there is not much bottom, he said. Sellers or builders might not be able to cut prices much lower than advertised.
But with condos in the range of $800,000 to $2 million, where people are buying for lifestyle and not necessity, there is more negotiating room. "If you're the individual seller of a high-end place, and you're moving to Miami and you have an offer for $850,000 instead of $900,000, you might just take it," Fitzgerald said.
Instead of fearing that he might buy too high, Hertz should worry more about passing up an opportunity he might later regret, Fitzgerald said.
Hertz can relate to that.
"I've considered purchasing before," Hertz said. "I'm kicking myself to think back to 1997, when I wasn't sure if I should buy at those prices at that time. Now I look at that situation and I feel kind of foolish. It can certainly be the situation now."