The District's booming real estate market of the past several years has begun to subside, according to a survey yesterday of industry sources. The gap between asking prices and sales prices for houses in the city is widening and the number of sales in the area is dropping.
After years of a booming real estate market with annual double-digit inflation in housing prices, the market may be returning to normal, with price increases of 3 to 4 percent a year, said William Ellis, vice president for residental sales of shannon & Luchs, a major area real estate firm.
In the context of the past few years, "that's going to feel like a bit of a collapse," said Ellis. "Like the man who's used to having three television sets reduced to one. It's a collapse only an American would understand," said Ellis.
According to figures from the Washington Board of Realtors, the average gap between the asking price and the sales price for houses in the District has widened from 6.4 percent at this time last year, to sales prices 14.4 percent below asking price this month.
Most of the houses for sale in D.C. are used, rather than new houses, which means that sellers can be more flexible about sale prices, according to industry sources. A seller who bought his house relatively cheaply several years ago can take a lower price more easily than a builder who has to recover the costs of putting up a new house.
According to Ellis and others in the real estate industry, money is still available for buyers looking for mortgages to finance their housing purchase -- but at much higher rates.
But the slowdown precipitated by the federal government's actions in making credit less available is beginning to manifest itself in slower sales and slightly less inflated prices.
The Montgoemery County Board of Realtors expects the number of sales in October to be down by almost 20 percent from the number of sales in October, 1978. And Shannon & Luchs expects a reduced number of housing sales for this month, although the company expects dollar volume to be above last October's.
Even more telling, said several real estate industry officials, will be the figures in months to come when sales already in the pipeline have gone to settlement and the government's actions have a more apparent effect on the market.
As money becomes harder to find and if interest rates continue at record high levels, the impact on the real estate market is expected to take its toll of real estate brokers and title company employees, as well as mortgage company employees who have lost jobs in recent weeks.
"Basically its going to be a rough winter for brokers. There's going to be a lot of houses for sale and nobody's going to have any money" unless the federal government takes steps to make money available, said Ferdinand Latrobe, director of research for the commerical sales department at Shannon & Luchs.
Housing sales usually slow down this time of year, said Ellis and others. But the slowdown this year seems to signal more than just the change in seasons. $"tI would guess we're moving from a sellers' market into a little bit of a buyers' market," said Ellis.