Real Estate in D.C. Area Comes Down to Earth
Two topics tend to dominate dinner discussions in Washington: politics and real estate. Both are in a period of change and uncertainty.
The good news on the real estate front is that the nations capital has been spared some of the severe disruptions that have occurred in other parts of the country. The strength of the real estate market almost always tracks the strength of the job market, and Washington, D.C., is fortunate to have a stable employment base.
Thats not to say were immune to problems related to the economic downturn. The real estate outlook varies widely across the greater Washington area. After several years of dramatically increasing property values, some neighborhoods have suffered double-digit-percentage declines. Others have held their value or have experienced relatively modest price declines.
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Overall sales for single-family homes, condos and co-ops in the District are down about 15 percent from last year. The median price for a single-family home in Washington ($520,000) is down about 13 percent. Home prices in Montgomery County, Md., are down 10 percent, and Arlington County, Va., has seen an 11 percent price decline. Despite those decreases, most sellers are still making a healthy profit as a result of the red-hot market over the past few years.
As a general rule, the farther you go from Washington, the more prices have dropped. They are down 29 percent over a year ago in Fairfax County, Va., and down 40 percent in Fauquier County, Va.
The overheated market of the recent past has become far more sensible. Buyers and sellers are on more equal terms. Not so long ago, a seller wouldnt have been shocked to get a dozen bids with a final sale $200,000 over the asking price, with no contingencies, no inspection, no appraisal, no financing.
But that doesnt happen anymore. While a house might still receive more than one offer on occasion, the sales price seldom exceeds the asking price, and buyers can get inspections, appraisals and other contingencies. Its a far more rational market, which is better for everyone. And the recent drop in prices means there are some bargains out there.
At the end of September, the inventory of homes on the market in Washington hit the highest level in 11 years, but the supply of homes was still about half the national average.
If youre looking to buy, it is important to contact a loan officer and get pre-approved for a loan before making an offer. And do not expect the seller to accept a contingency that would let you sell your current home or condo before completing the transaction.
As always, location matters. Commuting is a big issue in the D.C. area. Property near a Metro stop is almost always more valuable. Commuting time is key factor to consider. Buyers and renters can usually get more for their money the farther they go from Washington, but the trade-off comes in the time and expense for commuting. Finding the right balance is a personal decision.
The question of whether to rent or buy is another decision that hinges on individual circumstances. There are some bargain rents available in overbuilt areas (although they may not seem like such a bargain for arrivals from other parts of the country).
On the other hand, with prices down in some areas, it may be a good time to buy, especially if you are interested in a particular neighborhood.
Conventional wisdom suggests that a change in administration and the election of a new Congress leads to a flurry of real estate activity. Dont believe it. While there is obviously some turnover, my experience is that the churn is relatively small. Thats partly because the newcomers are spread throughout D.C., Maryland and Virginia. Plus, many of the people who come to this city never leave; they just change jobs.
The market varies widely in neighborhoods that tend to be popular with many newcomers to Washington. According to the Metropolitan Regional Information Systems, the Web site used by area realtors, the prices of single-family homes changed little in some areas from 2007 up until the most recent data available, Nov. 3. For instance, the prices of Capitol Hill homes were down just 1.1 percent (from $813,053 to $803,840) and American University Park down just 1.6 percent (from $909,909 to $894,932). Other areas saw more significant changes, such as Columbia Heights, where sales of single-family homes were down 13.3 percent (from $513,195 to $444,855). In Cleveland Park, prices were up by 32.9 percent (from $1,661,795 to $2,207,827) and in Georgetown, up by 18 percent (from $3,178,900 to $3,750,996). However, the volume of sales in the D.C. neighborhoods is down considerably from 2007.
There is some truth to the conventional wisdom that Republicans tend to favor Virginia, while Democrats are more likely to settle in D.C. and Maryland. Many neighborhoods in Arlington, Va., are sprinkled with workers and families with Defense Department connections. On the other side of Washington, Takoma Park, Md., embraces its reputation as a liberal bastion and a nuclear free zone.
Whether its politics or real estate, the Washington area has something for everyone. It is a great place to live, with a vast array of choices and prices for every budget. Take the time to explore it and enjoy it, and you can find the right place for you.
Katherine Buckley is a real estate agent with W.C. & A.N. Miller, a Long & Foster company based in Washington, D.C. She can be contacted at email@example.com or 202-243-3302.