Intense bidding wars, along with high demand and historically low inventory, are driving the Washington area’s real estate market this spring, experts say, leaving many buyers with the impression that the ideal house in the ideal neighborhood is simply out of reach. The market has presented them with difficult trade-offs to consider: Buying in a high-demand community may mean paying so much for the house that they have little left for much else.
Or buying a house they can afford may mean settling for a less desirable neighborhood with longer commutes to work, iffy schools and few amenities. Many house hunters, particularly first-timers, simply give up.
The Washington Post set out to find some communities where buyers have managed to level the playing field in this fierce seller’s market. We asked data firm RealEstate Business Intelligence (RBI), a subsidiary of Rockville-based MRIS, to help us identify communities where buyers have a better chance of negotiating down the list price on a non-distressed house.
Our criteria were to find communities with rising home sales and decreasing days on the market, two key indicators of growing demand.
In consultation with RBI, we determined that neighborhoods where houses sell at 95 percent or more of list price are weighted in the seller’s favor. On the other hand, houses that sold at less than 90 percent of list prices were, for the most part, not in areas that are experiencing significant demand.
So our sweet spot was popular neighborhoods where houses sold in the 90 to 94 percent range of list price (although Great Falls fell outside that).
“We looked at seller concessions where home buyers got the greatest discounts off the asking price,” said Jonathan Hill, president of RBI.
Inventory in the six communities is low, just like elsewhere in the region. But unlike many other parts of metropolitan Washington, the number of distressed properties in the six communities has dropped to next to nothing, Hill said, and so homeowners there may be more willing to list their houses.
For instance, foreclosures in Capitol Heights dropped from a peak of 39 in January 2010 to zero in the past few months. And Great Falls has only had five short sales since June 2010.
Maybe the sellers are “not getting what they hope to get, but if you get 94 percent or 90 percent [of the asking price] that appears to be enough to get them to ratify a contact,” Hill added.
Carisa C. Chappell is a freelance writer.
D.C.-area neighborhoods where it’s still possible to get a good deal
For more information on the neighborhoods, click on the link underneath each neighborhood.
Days on market: 66 in 2011; 45 in 2012
Median sale price: $505,000 in 2011; $482,500 in 2012 (down 4.5 percent)
Sales: 195 in 2011; 210 in 2012 (up 7.7 percent)
Sales price ratio of original list price: 93.9 percent
Days on market: 34 in 2011 and 2012
Median sale price: $770,500 in 2011; $727,500 in 2012 (down 5.6 percent)
Sales: 412 in 2011 and 474 in 2012 (up 15 percent)
Sale price ratio of original list price: 95.8 percent
Days on market: 74 in 2011 and 50 in 2012
Median sale price: $78,750 in 2011; $89,900 in 2012 (up 14.2 percent)
Sales: 443 in 2011 and 536 in 2012 (up 21 percent)
Sale price ratio of original list price: 90.5 percent
Days on market: 61 in 2011 and 37 in 2012
Median sale price: $205,000 in 2011; $219,000 in 2012 (up 6.8 percent)
Sales: 795 in 2011 and 818 in 2012 (up 3 percent)
Sale price ratio of original list price: 93.4 percent
Days on market: 72 in 2011; 57 in 2012
Median sale price: $334,102 in 2011; $345,000 in 2012 (up 3.3 percent)
Sales: 80 in 2011 and 117 in 2012 (up 46 percent)
Sale price ratio of original list: 92.9 percent
Days on market: 73 in 2011 and 62 in 2012
Median sale price: $1.010 million in 2011; $961,250 in 2012 (down 4.8 percent)
Sales: 195 in 2011 and 210 in 2012 (up 8 percent)
Sale price ratio of original list price: 93.1 percent
Source: RealEstate Business Intelligence and MRIS