Washington real estate has fared better in recent years than the national housing market, which has been swamped with foreclosures, falling prices and homes that are worth less than than their owners owe on them.
Now, a new report set for release this week by Delta Associates, an Alexandria-based research company, suggests that the Washington market may be back to full health.
“The news is pretty remarkable. The market is in full recovery, with prices up like they were in the early 2000s,” said Greg Leisch, the firm’s chief executive. “It makes us very different from the rest of the country.”
Delta based its findings on a broad range of data about the local housing market, including an analysis of all home sales in the Washington region through the end of June.
The numbers tell a story of revival, of normalcy returning at an impressive pace.
Sales volume through the second quarter of 2012 rose almost 10 percent over the past year, and prices climbed 5.2 percent during the same period. Inventory is the lowest it’s been since about 2005, which suggests an abundance of willing buyers. The average number of days it takes to sell a home in the Washington area has fallen to 59, well below the long-term average of 78.
Leisch also said that the structural shift that unfolded in the area during the downturn — fewer people owning and more people renting — has begun to reverse during the past year, as rising rents and historically low interest rates have created a new wave of aspiring buyers.
“We’re back to bidding wars, multiple contracts, sellers cherry-picking what kind of financing they want to work with,” said Morgan Knull, an agent with Re/Max who deals with properties in the District and its suburbs. “I can’t think of anywhere I’d rather be selling real estate right now than in the Washington, D.C., area. It’s kind of a golden place to work right now.”
That’s not to say that every area homeowner has felt the warm glow of recovery.
About one-third of local borrowers remain underwater on their homes, meaning they owe more than the house is worth. But Leisch said that one-third of those homeowners — many of whom live in the outermost suburbs in Virginia and Maryland — are underwater by 20 percent or less, meaning that they could find themselves in the black again if the market continues to improve.
Despite the remaining hurdles, such as the sluggish condo market, the Washington area has plenty of good fortune on its side to help bolster the housing market. The region largely avoided the crippling unemployment and plummeting home prices that have plagued much of the country. The area has continued to produce jobs — about 47,000 last year alone — and the unemployment rate remains one of the lowest in the country. In addition, some jobs common to the Washington region, including government work and contracting, traditionally have proven more secure than job bases in other areas.
And this much seems certain, at least for now: There is no shortage of eager buyers in many parts of the region.
“I’ve been saying all year that something has changed,” said Joan Caton Cromwell, an agent with McEnearney Associates who handles properties in the District, Maryland and Northern Virginia. She said she has seen countless houses in recent months sell for above asking price after receiving numerous offers.
Still, she maintains a certain level of caution, having seen plenty of ups and downs in the past. “It’s a fragile peace,” she said. “A good seven months does not a market make.”
And yet, it’s hard to hide her optimism that the worst has past and that a sustained good streak lies ahead.
“I believe that this is the beginning of the beginning,” she said. “I feel very positive about where this is headed.”
Still, the resurgence of Washington’s housing market remains tenuous. With widespread talk on Capitol Hill about reducing government spending and hundreds of billions of dollars in automatic cuts scheduled to kick in at the beginning of next year unless Republicans and Democrats finalize a budget deal, many local employees could lose their jobs. Debt troubles in Europe continue to carry the threat of adverse affects in the United States.
Meanwhile, actions taken by the D.C. council to aid struggling homeowners have all but ground foreclosures to a halt in the District, and it remains unclear how many of those seizures eventually will go forward and what effect that might have on the housing market. In addition, uncertainty about the outcome over a presidential election always causes a measure of consternation among local buyers and sellers, local real estate agents said.