Washington area housing market expected to heat up in fall, but buyers are wary

A much sharper-than-expected plunge in U.S. existing home sales in July added to worries about the health of the U.S. economic recovery.
By Elizabeth Razzi
Special to The Washington Post
Saturday, September 11, 2010

The Washington area real estate market is entering its second-busiest sales period of the year under a yellow flag of caution.

Following a sharp plunge in July, when the number of existing home sales in the Washington area fell nearly 19 percent, statistics just released for August show that, by most measures, the real estate market continued to weaken, although not as dramatically.

RealEstate Business Intelligence, a subsidiary of the local multiple-listing service, reported Friday that 518 home sales were closed in the District during August, a 2.1 percent drop-off from July. The average price declined 8.8 percent to $502,436. But District homes were selling a bit faster. On average, a home remained on the market 58 days before selling, compared with 62 days reported in July.

In Fairfax County, the number of home sales dropped 0.7 percent, and prices fell 3 percent to an average of $489,387 in August. Average time on the market lengthened to 52 days, up 8.3 percent from July.

In Montgomery County, the number of home sales fell 2.2 percent, and prices declined by 3.6 percent to an average of $474,376. Homes remained on the market an average of 67 days, an increase of 17.5 percent from July's statistic.

Home sales in Prince George's County remained steady in August, with 613 sales, and average prices fell 3.4 percent to $198,123. Days on the market increased 13 percent from July to an average of 87 days.

More statistics for August can be found at rbintel.com/statistics.

Jonathan Hill, president of RBI, said areas closer to the District appear to be performing better than some of those on the outermost edges of the metro area. For example, he said, Arlington has only about a three-month supply of homes for sale at the current sales pace. But just across the Chesapeake Bay in Kent County, there's about a 23-month supply of homes on the market.

The week after Labor Day usually marks the beginning of the Washington area's fall real estate season -- a flurry of buyer and seller activity that typically lasts through mid-November, before dropping off severely through the November and December holiday season.

"For September, I'm already seeing buyers and sellers ready to come on the market," said Pamela Jones, an associate broker with Long & Foster in Ashburn. "They've been kind of waiting things out." Summer is the slowest time of year, she added, except for the period between Thanksgiving and Christmas.

She said she has seen hesitation on the part of buyers since the federal tax credits expired this spring. What mattered wasn't the dollar amount of the credit, which ran up to $8,000, she said, but rather the excitement and hype it brought to the market. "I think it was the mentality," she said.

There's about a five-month supply of homes for sale in Loudoun County now; Jones said between three and five months is about normal for that market. "Anything that's been on the market about 30 days or longer, there should be a price reduction," she said. "But it's averaging about 60 days for a seller to cut the price. They're thinking summer was a great time to sell, and traditionally, it's not."

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