Don Monahan, a 30-year-old carpenter, last fall looked around the Capitol Hill neighborhood where he has lived for several years and decided it was time to move on.
Muggings and thefts seemed to be more frequent. There was no yard space for his first child to play.
But Monahan has decided to wait. He still wants out -- and plans to leave, along with some of his neighbors -- but he says real estate prices and rising interest rates are combining to keep him where he is.
Monahan's situation is not unusual. Faced with interest rates hovering above 13 percent and the uncertainty about the economic future of the country and area, many people have been putting off buying a home in recent months, particularly people who normally would be "buying up" -- people who already own a home but wanat something bigger and better, local real estate agents report.
Overall real estate activity may be down 15 to 20 percent, experts say.
Indicators of local housing activity point to fewer people applying for home mortgages, a severe slowdown in homes sold, and fewer new houses being constructed. Some agents interviewed said houses appear to be staying on the market waiting for buyers a little longer now, and some sellers are lowering their asking prices substantially.
Sales figures show that housing activity increased some last month compared to the dismal last few months of 1979, but that at the same time January of this year was the worst January in several years.
No one can predict with certainty when interest rates are going to go down. The Federal Reserve recently lifted the interest rate it charges on loans to member banks, prompting some of the nation's largest banks to raise their prime lending rates.
But Monahan says he's going to take a chance that things may be better later.
"Interest rates are outrageous," Monahan said. "I'm just not going to buy at 12 7/8 percent interest."
At the higher rate, even moving to a similar house in another neighborhood could add $200 a month to his current $725 a month housing cost, he said. "That $200 more a month is crazy," Monahan said.
At Perpetual Federal Savings and Loan Association, the District's largest, president Thomas Owen said loan applications are received for about a million dollars worth of loans a week -- about one-third less than normal. It is a trend that he said he began to notice last fall.
"I'm beginning to think I've lost all my popularity," Owen joked. He added that the picture seems to be brightening somewhat recently, however.
"Most people have resigned themselves to the fact that we'll be lucky if we get [down] to 11 percent," said Foster Shannon, president of the Shannon and Luchs Co., one of the area's largest real estate firms. "When the rates jumped from 6 to 9 percent, they didn't go back down to 6. They went back to only 8 percent. Now, people who might have thought they could buy a $200,000 house can buy a $150,000 house."
The more expensive, $125,000-plus homes seem to sit on the market longer waiting for buyers, while homes priced under $100,000 are selling much more quickly all over the area, most agents reported.
Demand for homes in January is high after the holidays, brokers and agents pointed out. Washington for years has had a strong housing market because of the demand for homes from the many families who make job-related moves here.
The sales occuring now often involve creative financing arrangements -- the seller may offer the buyer a second trust, for example.
When Roger Harrison put his Capitol Hill house on the market last summer, he thought it easily would sell within two months. After all, sales of instant killings in the Washington area real estate market are legend.
Harrison, a businessman who moved to Philadelphia, finally sold the house last month, after it had sat on the market for more than six months and its asking prioce had been slashed from $178,000 to $159,000. He accepted a price of about $152,000, with quick settlement on the sale as part of the deal.
"We used to be able to judge the market by how many offers we had on a house, when people came in and offered $1,000, $5,000 more than the asking price," said William Ellis, vice president and residential sales director for Shannon and Luchs. "The years 1976, 1977, and part of 1978 were absolutely outstanding. Those days are over for now, although there continues to be a general appreciation [in value of homes]."
Local real estate industry statistics indicate a severe slowing -- and, in some instances, large reductions -- in the pace of home sales recently compared to previous years. The dollar amount of home sales has increased in most cases because of inflation and higher home prices, but the number of sales is down.
Sales through multiple listing services, which for a fee provide computerized information to member real estate agents and brokers primarily about "used" homes that have been sold and are for sale, showed the number of sales decreased by more than 1,500 in Prince George's County between 1978 and 1979. In Montgomery County, sales were down by 850.
Sales figures for the District and Northern Virginia showed slight increases, but in Northern Virginia the increase was nothing like earlier years. For example, there were nearly 18,000 residential homes sold through the service in Northern Virginia in 1977. In 1978, the figure jumped nearly 5,000. But last year, the increase was only about 200.
The District has had a listing service only since February 1978, when it started with 33 members. Multiple listing service sales totaled 39 in both January and December of last year and 59 last month. But the average price of the homes sold last month was $125,000 -- less than the average sales prices in both January and December of 1979.
James Banks, an executive officer with the Washington Board of Realtors, said sales prices were 6 percent lower than asking prices in January of last year. Last month, the difference was 10 percent.
Renay Regardie, president of Housing Data Reports, Inc., a marketing research company for newly constructed homes, said that sales of new homes in the area appeared to reflect the trends of resales.
"Traffic was horrible in November and December," Regardie said. "It improved markedly in January. We're getting qualified buyers who are more cautious and shopping carefully."
Nationally, the number of "housing starts" -- the beginning of construction on new residential units -- declined by about 13.6 percent between 1978 and 1979, according to Census Bureau data. Last month, new housing starts dropped to the lowest level since 1976, according to the Commerce Department. d
Locally, housing starts increased phenomenally in the Washington area during 1975, 1976 and 1977, and then declined slightly in 1978. Local figures for last year were not available but are expected to be lower.
Sales of homes vary at individual real estate sales offices. Some said residential sales have been slow, with sales to investors almost nonexistent. Others said business has been good and growing.
Gordon T. Carey, senior vice-president of the Colquitt-Carruthers, Inc., real estate firm, another of the area's largest, said his company had about 20 fewer sales last month than during January 1979, mainly because sales in Prince George's, Prince William and Montgomery counties were down. "1980 won't be a banner year," Carey said, "but we think it will be as good or better than 1979."