Looking for the Bottom
Saturday, September 29, 2007
If you think the real estate market in the Washington region still looks fuzzy, you get the picture.
The average number of days a house sits on the market is dropping in some places but not in others. The supply of homes for sale in the region, particularly condominiums, remains large, but it's tight in certain Zip codes. And prices are slipping, although in some coveted neighborhoods, some properties are selling for their asking prices, if not more.
Still, it's the slowest market in years, nationally and around the region, with fewer sales of both existing and new homes. Rising foreclosure rates and a tight mortgage market continue to threaten.
And many experts don't see a turnaround in sales and prices until well into next year.
"The buyers are definitely in the driver's seat," said Lawrence Yun, a senior economist with the National Association of Realtors. "Because there's so many choices, if the seller is very stingy about the price, [buyers] can just move along to the next home."
Ron Sitrin, a real estate agent with Long & Foster in Friendship Heights, sums up the mind-set: "Sellers are reluctant to lower prices, and buyers are waiting for the market to soften. At the moment, there are more motivated sellers than highly motivated purchasers."
A more detailed examination of local market statistics shows that the median sales price in outer counties, including Prince William and Loudoun, has dropped from a year ago. However, it has risen in close-in Montgomery, Arlington and Fairfax counties, as well as in Alexandria. Generally, though, prices have fallen or stalled since the high point of about two years ago, as the five-year boom ended.
In the inner counties, "we're seeing both a rise in sales and home prices," Yun said, "and the outer counties are continuing to be negative in both." He added: "This pattern is certainly an improvement" compared with last year, "when both inner and outer counties were consistently getting negative figures.
"The mixed signals are usually the first sign of recovery," he said.
The Realtors' association's forecasts have been criticized by market bears as overly optimistic. Critics say the group's members have a financial interest in promoting the real estate business.
Different market watchers measure housing-price changes differently. According to one index, S&P/Case-Shiller, prices in the Washington region peaked in April 2006 then declined 7.2 percent from July 2006 to July 2007. The index tracks prices over time on houses that have been sold at least twice.
Prices during that same July-to-July period rose 1.16 percent according to the Office of Federal Housing Enterprise Oversight. That widely followed index also tracks same-house sales, but many higher-priced homes are not included in the database.