Yes, you can buy a house in D.C. right now
By WP Creative Group
The DMV housing market has been on a hot streak. Here’s what prospective homebuyers need to know.
The real estate industry is typically an ebb and flow—but over the past year and a half, that “flow” in the D.C., area has been more of a flood.
After a hectic 2020 housing demand crunch, real estate prices in the DMV have remained sky high. In June 2021, the average home for sale closed at 102% of its list price, and the median home price in the District reached $700,000 for the first time. While home prices have been soaring in the region for several years now, historically low mortgage rates and the pandemic have exacerbated the issue of steep housing demand and scarce supply.
Bethesda, Md.-based Malcolm Hollensteiner, head of mortgage production at Sandy Spring Bank — a community bank that’s operated in the area for more than 150 years — has been surprised by the unrelenting market upswing, which has continued well into 2021.
“One of our mortgage bankers went to an open house in Bethesda, and there were more than 40 prospective homebuyers who came through in a two-hour span,” he said. “I think this rally has longer legs than we expected.”
But homeowners and buyers who are armed with the right knowledge — as well as the regional expertise and personalized service that Sandy Spring Bank provides its clients — can navigate this unprecedented market with confidence, feeling empowered to make their biggest financial decisions confidently.
What’s fueling the housing boom
Throughout 2020 and 2021, mother-daughter real estate agent team Rima and Layla Tannous have seen properties in the Greater Washington, D.C., area go for hundreds of thousands of dollars over asking price. One row house they heard about through the industry grapevine garnered a whopping 92 offers.
This housing frenzy has multiple causes. One obvious factor is the COVID-19 pandemic; with a tremendous uptick in remote work during the past 18 months, many people have been looking to leave their small apartments for larger, more comfortable spaces. Single-family homes in suburbs like Arlington and Rockville remain in particularly hot demand.
But Layla Tannous noted that the ingredients for this perfect storm were in place before lockdowns began — ready to be galvanized by historically low mortgage rates.
“There was a major build-up for demand even before the pandemic,” she said. “Then when the Fed lowered interest rates and kept them low, that’s given the market a ton of heat.” Some families or young couples who had not previously planned to become homeowners decided to accelerate their timelines. These first-time buyers gave “buy-up” sellers a chance to upgrade.
A final factor, Layla noted, is that many landlords have taken advantage of the sellers’ market and listed their properties. This has stretched the rental supply thin.
“It’s become a cycle,” added Rima Tannous, who has been selling in the D.C., area since 1993. “It’s an issue of everybody wanting to buy at the same time, paired with very low inventory.”
Working with a bank you can trust
Making a major purchase like a new home can be intimidating, and sky-high demand has made it even more so. Understandably, some buyers are feeling daunted.
But with a lender like Sandy Spring Bank providing specialized expertise to help clients prequalify for financing and land their dream homes, there’s no reason for buyers to get disheartened. As a local community bank, Sandy Spring Bank really understands the market. Bank employees live and work in the region and are dedicated to giving clients personal attention, which helps tremendously when trying to buy in such a hectic real estate ecosystem.
“When it comes to understanding property types and local neighborhoods, as well as certain jobs and career opportunities that are specific to this region, we’re in a better position to help our clients achieve their goals,” Hollensteiner said.
Sandy Spring Bank also offers a number of programs to assist would-be homeowners. Their services can accommodate both first-time buyers and people purchasing multiple homes or investment properties.
One such program, “Closing the Gap,” gives eligible borrowers the opportunity to finance both down payment and closing costs and can be combined with other down-payment assistance programs offered throughout the area. Another Sandy Spring Bank offering, the VA Home Financial Program, helps veterans purchase a home with no money down and favorable financing terms.
Real advice for real estate hopefuls
To best prepare to buy in this still-hot D.C., area housing market, Hollensteiner suggested that home-seekers have all their finances buttoned up before embarking on their search.
“Obtaining a financing commitment prior to shopping is a top-tier priority,” he said. “Not every lender will issue an actual commitment [at this early stage]; Sandy Spring Bank is one of the banks that will do that.” Being proactive in this way, he noted, helps alleviate any concerns a seller might have on a buyer’s ability to follow through on an offer.
The Tannous team also suggested that buyers be prepared to offer a higher-than-usual deposit — while in the past, a strong offer might have included a 5% deposit, in many cases today, that number hits 7% or even 10%.
There’s little room for negotiations right now, Rima conceded. “Many times, buyers need to accept a house in as-is condition. Doing an inspection before making an offer is prudent; offers contingent upon inspections have less than a fighting chance right now.”
It’s also crucial that buyers conduct due diligence about the “true cost of home ownership,” which is about more than just a mortgage, noted Hollensteiner. “This includes those other costs that a homebuyer can get hit with: deferred maintenance, utilities, property taxes, etc.,” he said. Knowing this number ahead of time — something Sandy Spring Bank can help homebuyers figure out—helps buyers manage expectations about the type of home they can realistically afford and the size of loan they should seek.
Despite challenges, there’s still encouragement for homebuyers
Even considering these hurdles, there are still compelling incentives for homebuyers considering a move. Hollensteiner believes that the record-low interest rates we’ve seen over the past year will stick around at least a while longer.
“Interest rates are a little bit higher than we saw at their all-time historic lows from the summer and fall of 2020, but fixed rates are still below 3% — and certain adjustable rates are now 2% or even lower,” he said.
Current homeowners, too, may find that now is a good time to get their financial house in order by refinancing or tapping into a home equity line of credit. For those who have not already refinanced, there are still opportunities available.
Working with knowledgeable agents and a trusted local bank like Sandy Spring Bank can help put buyers in the most advantageous position possible. And when the dust settles and moving day finally arrives, the planning, patience and persistence is all worth it.
“Homeownership has become such an important dream and desire for people in this area,” said Hollensteiner. “We really derive a tremendous amount of satisfaction in helping buyers realize that goal.”
