Housing prices in the Washington area rose just slightly in the first three months of the year over the same period of 1989 while residential sales fell, according to a new study of the local real estate market.
The figures, compiled by the Rufus S. Lusk & Son real estate information service, show that affordability continues to be the pivot point for residential sales.
In some areas, condominiums proved to be a hotter product than more expensive single-family homes, and the area's less expensive counties showed the best price appreciation and the strongest sales.
Overall, sales of single-family homes were down 12 percent during first quarter of 1990 compared with the first three months of 1989 -- to 10,146 from 11,484. Sales of condominiums fell 8 percent -- to 3,778 from 4,097.
Prices were generally flat throughout the region, with the median price of single-family homes increasing about 3 percent, to $191,507 from $186,072, and condominiums climbing 7 percent, $99,238 to $105,834. The median is the point at which half of the homes cost more and half less.
"The encouraging news, at least from the seller's point of view, is that median prices have remained firm," said Rufus S. Lusk III, the Silver Spring company's president. "But some of the real estate brokers I talk to have argued that it is precisely because prices have held up that sales volume has fallen. Sellers are so determined not to sell at less than their home's peak market value that they simply don't sell at all."
For the most part, the less-expensive markets performed better than the costlier areas, according to the Lusk statistics. In particular, Prince George's County was the region's most stellar market, with single-family home sales up 3 percent and prices up by 11 percent. The median price of a single-family home there was $126,318 in the first quarter, or nearly $100,000 less than in Fairfax County, which had the region's highest median at $223,896.
Alexandria also did well. Condominium sales there, with a median price of $100,000, posted a 30 percent increase over the year-earlier figures. Single-family home sales fell slightly, but prices rose by 9 percent to $205,280.
Alexandria's success is partly because condominiums dominate the housing market there, Lusk said. In that city, there were only 220 sales of single-family homes, but 445 condominiums were sold.
In pricey Fairfax, on the other hand, the market continues to be sluggish. Although single-family home prices have risen by 5 percent, the number of sales fell by 21 percent. The condo market there also is moribund, with sales falling 18 percent and prices rising 1 percent.
High prices also may be taking a toll on the District of Columbia, where single-family home sales were off by 25 percent in the first quarter, with prices falling 1 percent. Condominium sales there fell 8 percent, although prices rose 12 percent.
The District's median prices -- $177,900 for single-family homes and $104,536 for condominiums -- are misleading because of the great price disparity between the Northwest quadrant of the city and the rest of the city, Lusk said. West of Rock Creek Park, for example, many single-family homes sell for upwards of $400,000, Lusk said.
Lusk added that Fairfax and the District may be less popular among buyers now because they have been inextricably linked in people's minds to serious problems. "D.C.'s perception problem is crime, and Fairfax's is its traffic," Lusk said.
Lusk said he believes the overall market in Washington still is good, and it is showing signs that further recovery is on the way. He said that the 32.6 percent decline in housing starts in the Washington area in April will ultimately prove a blessing in disguise because the oversupply of housing will be whittled away.
Montgomery County is showing particular signs of improvement. While real estate agents there a few months ago reported that sales had fallen commensurately with Fairfax County, single-family home sales instead were down only slightly -- 4 percent -- for the first quarter. The number of condominiums sold fell 15 percent, but their median price rose 16 percent to $115,593.
Lusk also said that Washington homeowners are foolish to be concerned that price-appreciation is no longer on a stratospheric plane. He said he is reminded of a friend of his who bought a house three years ago for $250,000, put in $30,000 in improvements, and has placed it on the market for $475,000 -- when he should be asking $350,000, Lusk said.
"People complain a lot here," Lusk said. "We have a lot of professional complainers. But what we consider a bad market others would give anything to have. We've just been spoiled by so many years of double-digit price increases."