Despite price rebound, many Washington area homeowners still face steep losses
Monday, January 31, 2011; 12:25 AM
The Washington area is one of the few regions in the country where home values have been consistently climbing in recent months, with typical prices increasing 8 percent since hitting bottom two years ago.
The rebound has given a lift to the local economy and begun to ease the pressure on many struggling homeowners, who became more vulnerable to foreclosure when the equity in their property evaporated.
Single-family home prices have soared 27 percent in the District and 26 percent in the Virginia suburbs from the low point, according to a Washington Post analysis of sales records. In the Maryland suburbs, where housing prices fell later and not nearly as far, the rebound has been more modest, 3 percent since their bottom early last year.
"There are still some issues in the D.C. condo market, but single-family homes are doing well," said Fred Kendrick, a Washington area real estate agent at TTR Sotheby's International. "We are seeing neighborhoods come back that had lost a lot of value, and there are multiple offers on homes in some areas."
Richard Oder, a Long & Foster agent, said that even in Maryland, the well-established close-in suburbs are especially hot. "I'm working with some buyers who are looking for a home in Chevy Chase because they want to be in that school district, but they're having a hard time getting a contract accepted," Oder said. "There are multiple offers and strong demand."
But many homeowners who are looking to sell still face steep losses because the recent gain in home values has been not nearly big enough to offset the steep declines of the previous four years. In the third quarter of last year, 54 percent of sellers accepted less than they had paid for their properties, according to a Washington Post analysis of sales records.
To make up for the shortfall, many sellers are bringing cash to the table - tens of thousands of dollars in the most extreme cases - to offload their homes. Those owners who don't have the cash are renting out their homes or staying put until the market improves.
Some sellers are being forced to take a loss because they must move out of their homes because of divorce or job relocations, area real estate agents said. Angie Isidro Bresnahan, a Weichert agent in Northern Virginia, said that she represented a couple who were divorcing and that one spouse came to the table last month with $67,000 in cash to sell their Loudoun County home. "It's painful, very painful to sit there at the closing table in that kind of situation," Bresnahan said.
The turnaround in home values came faster in the Washington region than in most other parts of the country because of the area's plentiful supply of jobs and federal contracting work, which helps encourage home purchases and drive up prices.
The most recent Standard & Poor's/Case-Shiller index shows that the region was one of only four in the nation to post a year-over-year price gain for single-family homes in November, and the uptick in Washington was the highest, at 3.5 percent.
Homeowners who bought before the surge in prices a decade ago are, on balance, way ahead. The median price of a single-family home in the District is 77 percent higher than in 2000 when adjusted for inflation, the Post analysis shows. Prices are up 42 percent in the Virginia suburbs over that period and 46 percent in the Maryland suburbs.
But homeowners who bought at the peak of the market in 2005 face an especially tough challenge. Median home prices more than doubled between 2000 and 2005, according to the Post analysis. Then the real estate market crashed.