Open houses, bidding wars and road signs announcing new developments are appearing with more regularity in several segments of the Washington region, indicators that the local real estate market is starting to perk up.
What does this portend for the local economy and for people seeking a home and those trying to get rid of one?
As buyers and sellers emerge from the sidelines and jump back into the game, this is a great time to take over as editor of the Real Estate section. On Saturday, we begin a month-long examination of the region’s post-recession market called Navigating the Market. Our cover stories will zero in on the new rules of the game in this sellers market and highlight strategies to help buyers and sellers navigate it. We’ll also take a look at the resumption of new home construction in many communities across the region.
For the average American, there are few investments that are as rewarding yet fraught with as much anxiety as buying or selling a house. After buying four houses and selling three, I’ve learned how crazy it can be:
●House 1: My wife and I bought a five-year-old, two bedroom with a gambrel roof in southern Rhode Island. It had an unfinished basement and second floor, but the ¼-acre lot and above-ground swimming pool more than made up for it.
A year and a half after we bought it, I got a job at the Chicago Tribune. By this time, the country had plunged into a recession and we were stuck with a house that had lost a substantial amount of its value. We rented out the house at a loss for three grueling years, waiting for recovery. While we never got behind on the mortgage, we finally sold it in a short sale.
●House 2: We bought a raised ranch in the western suburbs of Chicago in a county known for its good schools. Our kids at the time were toddlers, and we fell in love with the house as soon as we saw the swing set and jungle gym in the back yard.
A year and a half later, the Tribune relocated me to the Los Angeles bureau. We broke even on that sale. But to us, we had won the jackpot because we made substantial progress from our first sale.
●House 3: This time we bought a new house — a two-story, Spanish-style stucco in a down-and-out yet up-and-coming community in the northeast part of the city. It had a tiny yard, but an unforgettable back yard view of mountains and a broad swath of the San Fernando Valley.
By the time we left L.A. five years later, the house had doubled in value and we made a nice profit when we sold it.
●House 4: We felt like savvy investors when we poured our profit into a brand new 3,000+-square-foot home in Southern Maryland. But now, while our house isn’t under water, it has lost some value.
I recently rode along with Redfin realty agent Stuart Gavan as he toured four properties on Capitol Hill. This is one of the most desirable locations in the region, where many homes are the object of intense bidding wars with multiple offers.
Sellers don’t necessarily hold all the cards in this sellers market. He showed me some properties that had sat on the market for weeks because they were priced too high and/or needed relatively simple things like updated carpeting and kitchens. He showed me two others that had just gone on the market that were priced competitively and nicely refurbished. He predicted they would be snapped up fast.
Despite more stringent lending standards, low inventory and high demand, buyers in this sellers market are making adjustments. Many, Gavan said, are simply waiting to get a bigger down payment. Others, in light of intense bidding wars, are going to great lengths to impress sellers like they are potential employers or dates. They are waving contingencies such as home inspections, making cash offers and even writing what amounts to love letters.
I think a lot of people are like me, optimistic about real estate despite disappointments in the market.
We want to keep a dialogue going. Please share your thoughts on our reports as well as your buying and selling tales. Also let us know what you’d like to see us cover.